The REAL cost of getting payroll wrong

By 30/12/2020 Payroll

You may think getting payroll wrong is a simple mistake, but have you considered the impact this has on your team?

Recently staff at the University of Edinburgh experienced disastrous payroll mistakes. This started when the University switched to a centralised payroll and HR system in June, but there have been pay delays ever since, with some people not being paid in both September and October.

The lack of pay and communication caused significant stress for employees, which led to much bigger issues, including not being able to pay for rent, food and bills.

It’s been proven that money concerns can impact physical and mental health – the impact that payroll mistakes have on employees should not be disregarded. Employers must do all they can to ensure payroll errors are reduced.

How do payroll mistakes affect people?

Increased money concerns

Being paid incorrectly can cause huge money concerns for employees, as they may be unable to pay rent, bills, childcare fees and more.

For example, reports show that staff at Asda previously had to take out high interest loans due to the company underpaying staff between £100 and £500 a month. Find out how to avoid making similar payroll mistakes to Asda.

A survey by Money and Mental Health revealed that 86% of people’s mental health issues were exacerbated by financial problems. And almost one in five (18%) people with mental health issues are in problem debt.

When you underpay or delay paying your team, people’s stress levels are drastically increased as they may have to put themselves in further financial debt to pay for necessities.

Increased stress and poor health

There’s a clear link between money-related stress and mental health issues. If your payroll team is constantly making mistakes, it will cause a huge impact on your team members both mentally and physically. This also has a knock on effect on motivation and productivity at work.

It can also lead to relationships breaking down and losing interests in hobbies, all of which are then felt in the workplace.

1 in 6.8 people experience mental health problems in the workplace, with 12.7% of sickness absences being attributed to mental health conditions. This highlights the negative impacts mental health issues have on both people’s home and work lives.

Getting payroll wrong may seem like a small thing, even if you only do it once. But the huge impact financial problems have on people’s work and personal lives is far too big to be ignored.

Investing in a payroll software that helps you minimise payroll issues is extremely important for both your company and colleagues.

Poor company culture

When payroll errors are made, employees feel like you don’t care about them, creating a bad company culture.

A report on The Culture Economy found that poor workplace culture is costing the economy £20.2 billion a year. This is something that needs to be stopped!

One way in which we can do this is by ensuring companies are paying their teams correctly and on time. This will improve company culture, therefore increasing productivity, employee engagement, drive organisational purpose and improve results.

Poor company culture can affect a number of outside factors, such as:

  •       Leaking a toxic culture into another business – if a business with a poor company culture closes, it forces those with bad attitudes and a lack of motivation into other businesses, infecting them with a toxic culture.
  •       A lack of trust – this can lead to unethical behaviour both inside and outside of the workplace, which can have a negative impact on our communities.
  •       Negative impacts on employee health – According to a national report published by Deloitte, the annual cost of poor mental health for employers has increased by 25% since 2019, making the annual cost between £53-56 billion in 2020-2021. This had a huge impact on both companies and the NHS, highlighting that improving company cultures will have positive effects on communities physically, mentally and financially.

Employees are forced to consider new roles

Continually getting payroll wrong could force staff into having to look for a new role that’s more reliable to help create some stability within their everyday life and reduce stress.

Continually getting payroll wrong could force staff to look for new roles to help provide a more reliable and stable work and home environment. A new role should offer financial stability and reduce risk in payroll issues.

Continuous payroll mistakes could also force employees to gain a second job to try and pay their bills or any loans they had to take out to cover previous payroll mistakes.

Payroll mistakes can have huge negative impacts on your employees and your business.

Request a demo with Payescape today to see how we can minimise your risk in making payroll mistakes.

 

Leave a Reply