Business Resources

3 In-House Payroll Issues You May Have Not Anticipated

In the era of outsourced payroll today, there are several companies, regardless of size, that still choose to handle their payroll processing in-house. The reasons cited varies from company to company, including having control over timing, processes and costs as well as ability to customize systems and integrate the company’s payroll with other HR processes and accounting systems.

While there are certainly several advantages to having payroll processed in-house, there are numerous distinct issues that comes with in-house payroll processing. Payroll miscalculations, late payment to employees and incorrect payroll data entry are some of the common payroll mistakes that comes with processing payroll in-house. Moreover, in the case of small businesses, it might result in an overstretched team – thus exacerbating the possibility of making payroll errors.

Regardless of whether in-house payroll works for a company or not, here are some hidden in-house payroll issues that companies might not have anticipated.

The power of two payroll processing errors

According to a survey conducted by The Workforce Institute at Kronos Incorporated, it takes only two payroll processing problems to spur 49% of Amercian workers to look for a new job. This goes to show how fragile employee engagement is when employers fail to live up to its core business functions.

Negative perceptions

Regardless of how hard employers try, an employee’s perception of the company is something which employers can never truly capture. Based on a survey conducted by British payroll service provider SD Worx, majority (88%) of the respondents who had received their salaries late mentioned that they now have a negative perception of their employer.

Active disengagement

Late or missing salary payments can be the catalyst for employees to be actively disengaged within the organisation. Employees might adopt a “If you cannot be bothered to pay me, why should I bother” behaviour, which can be a toxic and infectious attitude within the workplace.

Of course, this does not mean that every company should steer clear of in-house payroll. Regardless of in-house payroll processing or outsourced payroll, there are always two sides to the coin. There are several ways to rectify issues that have arise from in-house payroll processing.

Some short-term options that can be undertaken include regular review of the company’s in-house payroll processes to ensure employees’ working hours, allowances or overtime are correctly logged as well as establishing a clear process to handle any potential payroll issues.

If payroll issues continue to occur, then perhaps it is time to consider outsourcing the company’s payroll to an external payroll vendor.

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