1. In your experience what makes up a successful payroll department?

Understanding the intimacies of a team is vital, and the pressures that can fall on the shoulders of payroll are only understood by those working in it. So, what makes a payroll team tick in the eyes of our respondents? 

• Integrated, business-wide technology = 25% agreed

• Achievable service level agreements = 21% agreed

• A small, but expert team = 21% agreed

• Other = 13% agreed

• Manageable payments = 12% agreed

• A large team to spread the work = 8% agreed

The results lean towards a department where the quality of people is respected over the quantity of headcount. Integration with the broader business is also deemed vital, and SLAs being realistic. 

2. What have been the biggest challenges for payroll managers?

Businesses up and down the UK and beyond have had to respond quickly to keep pace with soaring costs, switches to legislation and complete u-turns make for difficulties. But, understanding the micro aspects that affected individuals rather than the macro topics that impacted them. 

The key finding was around simple, yet all too common flaws in any business. 

Internal Processes and a Lack of Communication were heralded as the biggest challenges for payroll managers. And most would wager that these answers would be similar, regardless of COVID, Brexit, and whatever else the World throws up. 

With uncontrollable conditions raging outside, it’s always surprising to see process and communication at the forefront of a business’s pain points. For any CEO, COO or senior leaders reviewing or shaping their internal processes and culture, communication is key.

3. Has processing payments become easier?

As a payroll software supplier, this question doubled down on our service promise – to make people’s lives in payroll easier through technology. Despite the issues in question 3, the responses paint a pretty healthy picture for businesses embracing tech. 

50% of respondents believed their day-to-day role was easier in 2022 than in 2021. 

Which can only point to being positive. Payroll, by and large, needs to tread a fine line between being “simple enough” to do but “accurate to a T” when done so. So, it’s refreshing that the responses show encouraging signs regarding the process. 

4. Does your business have a long-term technology?

Coupled directly with question 3, long-term technology strategies are, we’d argue, vital. 

Systems and processes are becoming increasingly reliant on tech, whether through one piece of software or multiple APIs. 75% of respondents said their employer HAD a long-term plan for new technology integration. 

So, if you’re a business that hasn’t got one, it’s time to start strategizing. Embracing technology is no longer a case of competitive advantage. If you don’t, you’ll get left behind.

5. Does the Payroll Department have a large enough say?

Belonging is an essential component of our social needs. As people, we want to be part of something, and the theory dates back to 1943’s Maslow’s Hierarchy of Needs paper. 

Although times have, arguably, moved on from a cultural perspective, having your views heard and actioned is no longer viewed as “strictly for management”. Yet, not every business has adopted this approach, causing frustration beyond the payroll department. 

50% of the survey felt that the payroll department DIDN’T have a large enough say in the future direction of their current employers.  

When you look around the SMTs and C-Suites, the all-encompassing CFOs, CPOs and COOs of this world can cover the topic of payroll within any business update. As a critical cog to any business in processing thousands, if not millions, of pounds weekly, does the payroll department need a more prominent seat at the table?

The insights provided also go a little deeper. Some of the more vocal feedback included: 

“We are often informed of decisions affecting us after they’re implemented”, was one comment. 

Another stated that “payroll is the bread and butter of our business, and the frontline has the biggest insight”. Lastly, a respondent said, “payroll should be the start of the process, not the end. We celebrate the win of a new client without considering the impact to payroll”.

But there was also evidence on why payroll might not be needed in the more significant decisions. “I’m not sure if we’re large enough for a big say, and the structure of the payroll department is very complicated”. 

6. The single most important factor in efficient payroll processing

We opened the floor to free-form answers with question 6. And describing something in a single word is easier said than done. Yet, the feedback was still insightful. 

Teamwork was mentioned on several occasions, along with People and Accuracy. Yet, the most comprehensive answer was spread over two areas:

Correct payroll input data is essential for efficient processing and keeping all the other factors constant. The other one I would impress upon how well you understand the working of your payroll software. Otherwise it’s garbage-in garbage out.

Which, in long form, perfectly summarises the three already outlined with rationale.

7. Does the UK Government engage well with the sector?

Admittedly, with the u-turn into another u-turn from the Government in September 2022, it’s a wonder there was any constructive feedback from question 7. But, as with most payroll people, they’ve rolled their sleeves up and got stuck in. 

Our first opinion was around a simple construct – a better understanding of the industry. The respondent felt that the Government needs to learn how to roll out policies with a BIG impact. The solution? Speak to the leaders, businesses and experts within the sector and potentially look at a think tank approach. 

Echoing this, one piece of feedback suggested they should “at least be consulting with the likes of Chartered Institute of Payroll Professionals (CIPP) and any other professional bodies”. But how far-reaching this community is and whether there would be a meaningful impact is another thing. 

One piece of feedback highlighted getting to grips with reality. 

“They need to be more realistic regarding how the changes affect business and workers. Five years of IR35 reforms for it all to be redacted then switched back is hard to believe”. 

It’s hard to argue with such honesty. 

Lastly, a potentially leftfield but nonetheless accurate suggestion would be if the Government “formally recognises umbrellas as a method of paying contractors and standardised umbrella calculations for payroll and illustrations”. Could something as simple as this make things easier? 

In all likelihood, yes. 

In Conclusion

The first Inside Payroll has given us a lot of food for thought. The challenges of the macro environment have all been well documented. But it’s the common threads of better communication, more robust processes and a larger degree of input that provide the most valuable insights. 

Technology is certainly being embraced within companies across the UK and beyond, with payroll forming a large part of that digital adoption. As a business unit with such a high degree of accuracy needed, the constant uncontrollable shifts by the powers that be, inside and outside of their business, must surely impact two of the most vital aspects of running a business – its employees AND its clients. 

We’d therefore say one thing to any company within the worlds of recruitment, the gig-economy or worlds of umbrella. Look after your payroll department, and it’ll look after your business.