Risky business: 34% of employers neglect payroll compliance
The 2023 Australian Payroll Survey has shed light on some statistics regarding the experiences of payroll professionals in Australia. Both concerning and enlightening, this report highlights the urgent need for employers to consider how outsourcing their payroll functions could benefit their employees, reduce key-person risk and burnout, help build a solid reputation, and significantly increase accurate processes and compliance needs.
Payroll turnover and efficiency
A significant 31.2% of payroll managers and professionals expect to change jobs in the next 12 months. This high number is a cause for concern, but it also points to an opportunity. 39.6% of these professionals identified efficient payroll technology and processes as the most important factor in their search for a new role, which underscores the crucial role technology plays in retaining talent.
Outsourced payroll services can provide employees access to the technology and expertise that streamlines processes, reduces errors, and ensures timely and accurate payments. When employees experience efficient payroll procedures, they are more likely to remain engaged, satisfied, and committed to their roles.
Payroll professional’s experience and burnout
Two out of five payroll professionals are suffering from burnout, and a staggering 55.7% of them claim that their workload has increased. The challenges they face, such as managing payroll processes and technology, interpreting complex Awards and Enterprise Bargaining Agreements (EBAs), and ensuring payroll compliance, take a toll on their well-being.
Outsourcing payroll functions relieves these burdens from in-house payroll teams. Expert providers can manage the intricacies of payroll compliance and technology, allowing payroll professionals to focus on more strategic and value-adding tasks. Reducing burnout and workload is a win for both employers and employees.
Payroll compliance and employer reputation
It's concerning that over 34% of surveyed employers have not conducted a payroll process and compliance audit in the last two years. In an era of constantly evolving regulations, this negligence can have far-reaching consequences. Employers risk costly penalties (millions of dollars), legal battles, and damage to their reputation if they fall short of compliance requirements.
Outsourcing payroll services helps ensure that compliance is a top priority without the stress, time, and cost it takes to ensure your in-house payroll team is across everything. Payroll providers are experts, they stay up to date with changing laws, relieving employers of the compliance burden. When employees see that their employer is committed to following regulations, it boosts their confidence and trust in the organisation. A strong reputation as a compliant and responsible employer can be a significant asset in attracting and retaining top talent, in all areas of the business.
What does this mean for small businesses, specifically?
Key employee risk
Small businesses often operate with limited resources, including personnel. When key staff members leave, the impact is more pronounced as there are fewer individuals to distribute the workload. Small business owners may struggle to find immediate replacements, leading to increased workload on existing employees and potential burnout. The departure of a key employee, such as a payroll manager, in a small team can result in a loss of specialised knowledge, making it challenging to maintain operational efficiency and deliver consistent payroll services.
On top of this, staff turnover can have a more significant financial impact on small businesses compared to larger enterprises. The costs associated with recruitment, training, and onboarding are relatively higher when considering the scale of a small business. Additionally, the learning curve for new employees in smaller teams is steeper, leading to a prolonged period of decreased productivity. Small businesses may find it challenging to absorb these costs, potentially affecting their bottom line and overall financial stability.
Keeping up with compliance requirements is a constant struggle for small businesses. Unlike large enterprises that may have dedicated HR departments or legal teams, small business owners often handle compliance tasks themselves. The departure of a staff member, especially one responsible for compliance-related functions, such as a payroll manager or professional, can leave the business vulnerable to regulatory risks.
Small businesses may find it difficult to navigate complex and evolving regulations, potentially facing penalties or legal issues if they fail to comply. The absence of a dedicated payroll team to monitor and adapt to changes in employment laws can exacerbate these challenges for small business owners.
The way forward: Outsourcing payroll
The 2023 Australian Payroll Survey has brought to light the challenges faced by payroll managers, professionals, and employers alike. The statistics paint a clear picture: the demand on payroll is increasing and outsourcing is not just a viable solution; it is a strategic move that benefits all stakeholders.
By leveraging outsourced payroll services, employers can streamline their payroll operations, enhance the employee experience, and help ensure compliance with the changing regulations. The result is a workplace where employees are satisfied, employers reduce risks, and reputations shine.
As the business world continues to evolve, outsourcing payroll is a beacon of efficiency and reliability. It is time for employers to consider this step toward a better experience for both the businesses and the valued employees.
Outsourcing payroll can provide the tailored solution you need: An example
One example of a payroll management arrangement that has worked well with small to mid-sized businesses is a hybrid solution.
A hybrid payroll management solution involves a payroll coordinator that works within the business, and directly with the team of outsourced payroll specialists. This creates a more seamless process and negates many risks and downsides of having a complete in-house payroll team or outsourcing all your payroll needs.
For example, if your payroll coordinator resigns, there is a natural redundancy in place to support the ongoing management of the payroll via the outsourced provider. The payroll will continue to be managed effectively and limit any potential disruption that may have occurred had the payroll been managed in-house. From an Employee, HR, and finance perspective, the payroll function continues without disruption.
What you can do for your business now
Book a complimentary review of your payroll needs with our Australian payroll professionals and discover how easy payroll management can be when you work with a reliable payroll management team. With no upfront costs* for a limited time, there is nothing for you to lose, but a lot more time, money, and confidence to gain.
The views and opinions expressed in this article are those of the author/s and do not necessarily reflect the thought or position of Findex.