Payroll is vital to any business, and getting payroll right is critical to employee retention. According to The Workforce Institute at Kronos, half (49%) of American workers would start looking for a new job after only two issues with their paycheck.
That may be because 87% of American workers live paycheck to paycheck; they can’t afford payroll problems – despite the fact that more than half (54%) say they have been affected by payroll problems.
Unfortunately, homegrown payroll solutions “have an average error rate of 11.4%, nearly twice the rate of those using a third-party solution or service at 6.1%,” according to Aptitude Research Partners.
And remember, it’s not just employees who care; the Internal Revenue Service (IRS) is watching too. The IRS reports that 40% of small and midsize employers end up paying penalties on inaccurate payroll filings, with an average penalty of $845.
But if you’re going to look for a third-party solution, what should it offer?
We’ve previously written about this question in our article, “What Makes a Modern Payroll Service.” In addition to the usual suspects – handling compensation, tracking time off, withholding and filing payroll taxes, web- and mobile-access – integration with existing services is also crucial. That’s because one of the areas of payroll most prone to error is the manual transference of data between payroll and time and attendance (TLA) systems. Human workers make mistakes! But when the two systems can speak directly, errors are eliminated.
In fact, industry advisory firm Aberdeen Group has found that the payroll processing error rate is almost 30% lower when payroll and TLA systems are integrated.
Of course, errors in payroll aren’t the only consideration. Payroll services should fundamentally be able to help employers save time and costs too. A survey by InfusionSoft found that the most common challenge cited by business owners is “time to get everything done.”
As a result, payroll services should relieve business owners and leaders from spending so much time on payroll-related administration and oversight, while still giving them easy access to payroll-related information and reports. Therefore, comprehensive web-based dashboards are vital for executives to be able to understand their payroll situation at a glance without having to waste unnecessary time.
CoAdvantage, one of the nation’s largest Professional Employer Organizations (PEOs), helps small to mid-sized companies with payroll, HR administration, benefits, and compliance. To learn more about our ability to create a strategic HR function in your business that drives business growth potential, contact us today.