A recent study highlights that nearly half of public sector organisations in the UK and Ireland are grappling with inadequate payroll and HR systems, leading to significant productivity challenges.

The research, commissioned by payroll and HR software provider Zellis, reveals that 48 percent of these organisations resort to technical or manual workarounds to mitigate the shortcomings of their primary payroll and HR systems.

To address these gaps, 42 percent of public sector entities have invested in secondary software solutions. Additionally, 40 percent have hired extra staff or invested additional hours to troubleshoot technological issues.

These findings raise concerns about the efficiency of public expenditure, especially as the new government prioritises growth and productivity.

Public sector productivity

The survey, which included responses from 500 managers in payroll, HR, IT, and finance across the UK and Ireland, sheds new light on the ongoing debate surrounding public sector productivity. Ensuring the right workforce skills and capabilities was the top concern for 37 percent of respondents, while outdated or inefficient technology was cited as the second biggest issue by 31 percent. Many also expressed frustration over the lack of scalability and adaptability in their current systems.

Despite these challenges, the research points to a promising future through technological advancements. Half of the respondents believe that automating payroll and HR workflows, as well as integrating AI, holds the greatest potential to enhance HR productivity. This view outpaces the perceived benefits of skills development (35%) and more effective leadership (31%).

Also, 50 percent of those surveyed think that more advanced payroll and HR software could significantly improve the cost-efficiency of their operations. This sentiment is underscored by 10 percent of respondents rating their main payroll and HR system a mere one out of five for cost-effectiveness and ease of use.

Cost reduction is crucial

Rebecca Mullins, Director of HCM Solutions at Zellis, commented on the findings: “Public sector organisations are being asked to do more with less, making productivity and cost reduction crucial. With the public sector employing six million people—nearly 20 percent of the working population—the importance of effective payroll and HR systems cannot be overstated.”

Mullins continued: “Our research identifies AI and automation as key to boosting productivity. By reducing administrative burdens through automation and AI, the public sector can achieve substantial cost savings and allocate more time to strategic HR initiatives that enhance engagement and retention. For a government focused on improving public sector productivity, these technologies present the greatest opportunity.”

This research underscores the critical need for modernising payroll and HR systems in the public sector to drive efficiency and support the workforce more effectively.

Amelia Brand

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.