The first peak of the coronavirus pandemic has shifted key priorities of large and small businesses alike, making payroll services a top concern for British companies with employee wellbeing a close second. This is according to SD Worx, the payroll and HR services provider. 

At the same time, 48% of UK companies surveyed by SD Worx have admitted to not having a dedicated Human Resources department. 39% of businesses said their in-house HR teams have to combine HR tasks with other roles such as corporate management and accounting. A further 9% of businesses said their external service providers oversaw HR as part of its accounting or consultancy remit with the firm.

During these unprecedented times, the lack of dedicated HR departments impacts a company’s ability to fully support the HR-related pastoral and performance needs of employees. 

The importance of going back to basics

Coronavirus has brought payroll concerns back to the fore. More than half of UK companies (50.6%) are convinced that COVID-19 will have a lasting negative financial impact on their businesses, forcing them to reprioritise HR strategies and objectives.

46.5% of British businesses believe their organisation will look radically different after the crisis. Moreover, 41% of European companies state that on-time payroll will be ‘very important’ going forward, with British businesses stating it’s their number one priority with employee wellbeing a close second. When asked if they would ever consider making the date of salary and benefits payments flexible, 50.6% of UK businesses said they are not considering this option. 39% said the arrangement is either already in place for them or will be implemented soon.

Brenda Morris, Global Chief Operating Officer at SD Worx said: “In times of crisis getting the basics right is key. If you don’t have a fully dedicated HR resource ensuring fluid and on-demand employee support can become a challenge. 

“But what’s even more important in this time of uncertainty is ensuring the reliability of your payroll systems. Without on-time payroll there can be no employee trust, dedication or focus. As more businesses start relying on flexible and temporary staff working a variety of shifts and hours, it is almost impossible to be nimble and agile especially if payroll isn’t done right. Payroll is a core function that cannot be taken for granted in times like these. 

“When managed correctly, it is the foundation of productivity, openness and staff morale. Whether companies opt out for fixed or flexible pay dates with extra seasonal rewards on top – any unexpected deviation from the fixed payroll schedule could be a huge setback for the business and staff especially when change is the only constant.” 

Payroll outsourcing: three big benefits

The importance of payroll means that companies are facing a crucial dilemma: do they outsource their payroll, or do they manage everything in-house? The figures show that the last option is still the most popular – especially among smaller companies, with less than 250 employees.

Although COVID-19 is bringing processes in-house for many companies, payroll remains within the top 5 of most or entirely outsourced HR tasks.

The figures, however, are still low in total uptake. When it comes to payroll outsourcing, only 11.2% of UK companies fully rely in third parties, while 69.9% of businesses manage payroll fully or mostly in-house. Those companies that choose to outsource payroll, highlight these main benefits: reduced administrative burdens (36.9%), continuity of HR activities (29.7%) and enabling staff to focus on more value-adding tasks (27.3%). 

“If someone in my team gets sick or leaves the company, that doesn’t affect our payroll handling. Everything is well documented and in the safe hands of SD Worx”, says Bart Van der Wee, Global Cost Management Director at Cleary Gottlieb Steen & Hamilton LLP.

When it comes to outsourcing the preparatory tasks of payroll (e.g. gathering of data such as absences, bonuses and allowances), Belgium leads the pack, with 26.1% of companies entirely or mostly making use of third-party services, while UK is in the middle (13.6%) and Switzerland is last (5.9%). Companies that make use of this type of outsourcing highlight these main benefits: reduced administrative burdens (36.9%), continuity of HR activities (29.7%) and enabling staff to focus on more value-adding tasks (27.3%).