The price of poor payroll: new research reveals the impact poor payroll management is having on UK SME growth, operations and employee engagement

• The YouGov study reveals how a quarter of businesses believe managing payroll requires too much of their time and affects their overall business performance 
• 38% of businesses say payroll has become more stressful than pre-pandemic, with nearly half (48%) making changes to how they manage payroll as a result of Covid-19 
• As a result, a growing number of businesses are looking for better payroll options; one in five (20%) of these businesses have changed their payroll system entirely. While 17% have started outsourcing payroll. 

London, UK, 24 November 2020: Research from IRIS Software Group (IRIS), one of the UK’s largest software companies, has found the UK’s small businesses are struggling to manage payroll for their staff during the pandemic, and it is impacting business performance.  

The YouGov Study revealed how nearly a third (29%) of businesses owners think managing payroll requires too much of their time. Despite a quarter (25%) agreeing that the amount of time spent managing payroll affects how their business performs.  

A further quarter (25%) said their business can’t keep up with other staff demands due to the time they have to dedicate to payroll processes, and a similar number (26%) also believed the amount of time spent managing payroll is preventing them from developing business opportunities. A figure that rises to over half (54%) of business leaders in the capital and over a third (36%) in Scotland. 

With payroll impacting overall business performance, the study further indicates that pressure to remain in business has meant managing payroll has become more difficult. Two in five business owners (38%) think payroll is more stressful now than before the COVID-19 pandemic, with just under half (48%) making changes to how they manage payroll in the last nine months in an attempt to free up time to focus on stabilising and growing their business.  

Of those businesses surveyed who have furloughed staff during the COVID-19 pandemic, over half (59%) have had to make changes to how they manage payroll as a direct result of the pandemic. One in five (20%) of these businesses have changed their payroll system entirely. While 17% have started outsourcing payroll. Less than one in ten (7%) have moved to using more automation such as cloud-based software or digital software, to streamline payroll. 

Yet overwhelmingly, payroll has been found to be a key driver for employee happiness. Nearly all (81%) of the payroll professionals surveyed said whether the business gets payroll done correctly directly impacts their employee’s happiness. Interestingly, of those who reported this, nearly all (94%) have had to make changes to how they manage payroll as a result of COVID-19. 

Nick Gregory, Chief Marketing Officer at IRIS Software comments on the findings, “As we move into the next normal, business leaders need to have the bandwidth to work on their business, not in it. There is a way to take the pain out of managing payroll. And turn it into something that doesn’t result in stressed payroll professionals, unhappy employees or businesses struggling to move forward with confidence. 

“Harnessing automation and cloud-based software quietens the noise coming from payroll. And gives leaders peace of mind that the ever-increasing complexities around payroll are being handled appropriately. This in turn means they can focus on investing in staff and growing their business.” 

All figures, unless otherwise stated, are from YouGov Plc.  Total sample size was 101 Business owners with 10-49 employees. Fieldwork was undertaken between 4th – 12th November 2020. The survey was carried out online.