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Payroll is fundamental to all organisations and good payroll management is vital as it affects every aspect of an organisation, from its reputation and perceived financial stability to the morale of its employees. The payroll department is not only responsible for paying the employee it also plays a vital role in protecting the company’s reputation by ensuring compliance with legislation. To see payroll as simply a processing function is a mistake and one that can lead to a failure to recognise the importance of good payroll and the enormous effect it has on a business.

Where the payroll is the responsibility of HR it is important to understand how critical its impact can be on the wellbeing and attitudes of employees.  If payroll is late, inaccurate or both, employees can start to question the financial integrity of the company, which can ultimately lead to underperformance through lack of perceived job security and a ‘couldn’t care less’ attitude.  Payroll should always be paid in a timely manner to keep employee morale high and, given that employees form the base of all organisations, the importance of a reliable and accurate payroll cannot be overstated. 

As payroll is a key driver for every employee, HR can build engagement through recognition. Building a culture of recognition and appreciation will help keep your employees engaged. They will work harder and stay longer with employers that demonstrate appreciation for their work.  When it comes to payroll, actions speak louder than words, and a salary increase or bonus can boost employee performance, which translates to a positive effect on your organisation.

It is vital to your relationship with both your employees and HMRC to keep payroll records in order and to ensure everyone is paid the right amount on time. Mistakes can be corrected, but there are fines for late reporting and if employees dislike being paid late, they dislike being told they’ve underpaid tax and it’s coming out of their next pay even more.

This article was publish in HR Grapevine on 5 September 2018