In an organisation with 500 employees, payroll errors could cost businesses £150,000 annually, according to research from MHR.

It is a widespread issue, too, as more than nine in ten (91%) businesses across the UK and Republic of Ireland admit to making payroll errors every month.

In light of this, MHR has provided four actionable steps businesses can take to build an effective payroll system that eliminates these errors and improves operational efficiency.

As National Payroll Week begins, HR, payroll, and finance expert MHR is calling for businesses to understand the profound impact that inefficient payroll systems can have on their business resiliency.


      1. Eliminate human error with automation

Payroll has relied on legacy technology for many years – in fact, nearly three quarters (72%) of organisations still use dated manual processes, despite technology for automated and real-time payroll being available.

With fewer manual workflows, data entries and calculations, there is much lower risk of human error. For example, an automated process avoids duplicate data entries into multiple systems, ensuring HR, payroll and finance teams are all on the same page.

A digital solution provides better accuracy and frees up much needed time that employees can spend elsewhere on more business-critical tasks. 

Indeed, 36 percent of respondents in MHR’s research said that manual payroll systems distracted them from critical business tasks. 


      2. Improve financial wellbeing

The transparency provided by real-time payroll engines gives businesses an up-to-date view of their employee data. 

With this, HR, payroll and finance teams can make more informed business decisions, improve accuracy of reporting and crucially means any potential errors can be spotted, investigated and corrected before pay day.

Data inaccuracies and payroll errors have consequences. Of those respondents who had experienced incorrect or late pay in the last year, over a third (35%) had to borrow money from family members or friends and a quarter (25%) struggled to pay essential bills.

Unhappy employees are not afraid to act, either, as half (50%) of respondents said they would consider switching roles if they experienced repeated payroll errors.

      3.  Stay compliant

Legislation is constantly changing, and it can be difficult for professionals to keep up – especially when procedures need updating manually. Payroll teams need to stay on top of environmental changes, too, with black swan events, such as the coronavirus pandemic or the looming recession, capable of having huge knock-on effects on payroll. 

Digital solutions are scalable and can be adapted to match specific business and regulatory requirements, and respond to changes in the market. 

When technology is steering the ship and driving a company’s compliance, businesses will be more resilient to market shifts and be far less likely to be caught out by legislative breaches and their associated costs.


     4. Outsourcing payroll

Nine in ten (90%) organisations surveyed by MHR run their payroll in-house. Yet, when asked how they might improve their processes, half (50%) said they would use a managed or part-managed payroll service.

By outsourcing payroll to the experts, businesses can benefit from at least 98 percent accuracy, providing a significant reduction in errors compared to the average in-house process and freeing up valuable time within the business.  

As well as the savings in cost and improved accuracy of outsourcing payroll, businesses can also benefit from expert advice, with a third (34%) of organisations agreeing external vendors can provide guidance on improving internal processes.

Mark Jenkins, CFO at MHR said: “It is staggering that so many organisations are still doing their payroll manually given the risk of human error and huge amount of time and resources it takes to complete. These errors – such as a late payslip – have consequences, and can do great harm to an employee’s financial wellbeing. With so many businesses admitting to making such mistakes every month, the need to transition to an automated process is clear. 

“With a stronger digital approach, businesses can benefit from minute-by-minute reconciliation, a smoother payroll process, reduced risk, and crucially, reduced costs. Our payroll software is fully scalable to meet any organisation’s needs, available to manage in-house, outsourced to our experts, or a combination of the two.”





Amelia Brand is the Editor for HRreview, and host of the HR in Review podcast series. With a Master’s degree in Legal and Political Theory, her particular interests within HR include employment law, DE&I, and wellbeing within the workplace. Prior to working with HRreview, Amelia was Sub-Editor of a magazine, and Editor of the Environmental Justice Project at University College London, writing and overseeing articles into UCL’s weekly newsletter. Her previous academic work has focused on philosophy, politics and law, with a special focus on how artificial intelligence will feature in the future.