The Risks of Poor Payroll for Businesses

Having a poor payroll system in place can be extremely costly to businesses, and not just in a financial sense. A company’s reputation can be left in tatters if its employees are not paid on time and/or correctly. Late payment is guaranteed to lead to disgruntled employees: of those surveyed who had been paid late, that delay caused a predominately negative perception of employers. The majority (varying from 80% in Netherlands to 93% in Switzerland) of employees who experienced payment delays felt their perception of their employer had a ‘slightly negative’ to ‘highly negative’ impact.

In addition, surveyed employees believed that the reason for their late payment was predominately down to poor management (61% of UK respondents) or financially unstable employers (on average 33% in all countries). When word gets out, it’s unlikely any employer with continually poor payroll will be perceived as reliable.

The research carried out by SD Worx revealed that 79% of employees that had been paid incorrectly identified the issue themselves and, on average, 44% respondents would consider leaving their jobs after been paid incorrectly.

The fact that so many employees are having to identify the payroll error themselves opens a question in terms of how many others are being paid incorrectly, without realising it, and consequently, how many further employees would consider leaving their jobs because of this. With close to half of those surveyed stating they would consider leaving, poor payroll is clearly a mistake that businesses can’t afford to make in terms of keeping their employees.

The results of the survey are shocking in regards to the impact that payroll error has on employee engagement. An increasing number of employees are becoming actively disengaged in their workplace due to late or incorrect payments, something that employers need to fix to ensure that their employees are have high morale and trust in the workplace.

If businesses struggle to retain employees because of poor payroll, thus creating a negative workplace environment, this will inevitably have an impact on the ability to attract new talent as part of recruitment processes. Potential hires will not want to be part of a company that fails to pay its employees correctly (and has gained a bad reputation as a result).

Payroll and HR is often overlooked as an essential aspect of an organisation, but SD Worx’s survey results emphasise the importance of ensuring that employers are paying their employees correctly. It is of upmost importance that businesses select an effective global payroll provider who understands its needs and can be relied upon to deliver payments correctly and consistently.