How Payroll Impacts People & Culture Of A Company


The success of a Business is an outcome of mutual respect between an employee and the organization. An organization expects the employees to do their best and employee expects an honest and customary incentive package from the Organization. The payroll cycle manages employee salary, allowances, load deduction, and incentives. The absence of an optimum payroll cycle and system leads to a loss in company resources. The payroll process not only manages the salary of employees, but it also handles the working time of employees, calculates wages, pays taxes as well.

How Payroll Contributes to Organization People & Culture

The importance of company culture cannot be overstated. Maintaining a great business culture is vital if retaining personnel and having a reputable image are important to a business. Employees that are satisfied and engaged are the result of a positive corporate culture. To make it work, however, it necessitates several factors, including the company’s mission, values, communication, work environment, and management style, to mention a few. However, one factor that is often forgotten is the company’s core culture – a critical department that ensures the company’s day-to-day operations- and that’s Payroll.

Payroll doesn’t appear to be an obvious contributor however it plays a vital role in employee engagement in the organization’s culture. Employees always look for the number of perks, programs, and benefits a company offers to help employees with work-life balance and their connection with a company’s culture and values. This means a good payroll system is necessary to cater to these concerns – benefits, perks, and correct compensation is a core responsibility of the payroll team

Here’s how payroll directly contributes to positive company culture.

  • Builds Reputation

The reputation of a corporation is based on its stability and security. A dependable, respectable, and knowledgeable payroll team prevents fraud, ensures compliance, and produces crucial data on time. This is critical for establishing a positive public image; unfavorable news or even negative word of mouth can be damaging. This is not something that current employees want to be a part of, and it will turn off potential recruits. There are fewer chances for errors or questionable activity if payroll operations are well-managed and security is treated seriously, resulting in a better company reputation.

  • Prevents Fraud

Payroll fraud, such as an employee faking a timecard by inputting excessive overtime or a higher-paying shift, is a severe threat to organizations. Standard solutions include timesheet signoffs and expenditure audits. Payroll systems that allow you to quickly run reports and analyze data for odd trends and outliers can help you discover fraud.

  • Maintains Compliance

There’s more to payroll than merely paying your employees. Hiring and firing, compensation, leave dates, benefits, bonuses, and other matters are all covered by payroll. It also has a direct relationship with taxes and tax accounting. That is to say, it is governed by law. So, if you don’t obey the law to the letter, you could face legal action.

It’s not simply about the law of the land. Every stage of the payroll process is governed by legislation, from filling out the correct documents to making the proper overtime payments. Thus, payroll ensures compliance with legislation and makes things easy for the organization and government.

  • Boosts Employee Engagement & Morale

It is critical to get paid accurately and on time. Employees who are paid erroneously or insufficiently on a regular basis will feel devalued and less likely to be engaged in their work. Late pay and missing payments might make them lose faith in their firm and make them wonder whether something more serious is going on financially behind the scenes. These are two excellent reasons for an employee to make a career change.

Teams may be certain that they will be repaid as expected if they have a dependable payroll staff that communicates properly and pays personnel correctly on a consistent basis. Employees will also benefit from knowing that any questions they have will be answered quickly.

Employees’ morale and engagement can be strengthened when they have faith in their employer.

  • Enhances Utilization of Resources

Keeping track of your employees’ salaries is a time-consuming chore. These time-consuming procedures can be assigned to a reliable payroll team, allowing for improved resource utilization. Companies can benefit from enhanced time savings, management, and reporting with the wide range of HR and payroll software available.

  • Provides Accessibility of Pay Information

Employees place a high emphasis on accessibility. Employees have easy access to their pay information by allowing them to access current and past payslips in one place via mobile apps. When employees require information, they don’t have to go to their payroll department and sift through mountains of documentation. We live in a digital era, so offering digital outlets for employees is critical. For example, providing mobile app access to HR services leads to improved payroll and employee experience.

Payroll is undeniably an important contributor to strong business culture. Businesses risk a terrible reputation, low employee engagement, and high staff turnover if they don’t have a solid payroll team on their side.

Key Challenges of Payroll Processing

Here are some of the most common payroll challenges encountered by businesses irrespective of their size.

  • Difficulties with Varying Enterprise Agreements

Enterprise bargaining is the process of negotiation generally between the employer, employees, and their bargaining representatives with the goal of making an enterprise agreement as per the guidelines mentioned under the act of  ‘The Fair Work Act 2009’. Minimum salary, attendance, working conditions, penalty, overtime, and a variety of other elements related to responsibilities are all covered by these agreements. A corporation must adhere to several EAs within its diversified staff. As a result, it is even more critical for firms to employ a payroll system that is flexible enough to support these EAs while also being nimble enough to incorporate them within the specified time limit.

  • Changing Payroll Legislation

It would be preferable if laws and regulations were constant. They do, though, and they must comply with federal, state, and local restrictions. You could risk hefty fines and penalties if you fail to notice regulatory changes and calculate employee pay or tax liabilities erroneously as a result. Changes in rules should be automatically updated by good payroll systems, however, its always a challenge for businesses.

  • Accurate Record keeping

It is critical to keep correct records not just for business but also for compliance. For example, the Fair Work Ombudsman Australia requires that employee earnings records be preserved for at least seven years.

  • Under or over payments

People dislike being underpaid—or being asked to refund money if they have been rewarded by mistake. If faults aren’t caught early enough, they might complicate year-end accounting and necessitate time-consuming adjustments the following year.

  • Data management and reporting

Payroll is generally a company’s largest cost, therefore being able to analyze payroll data and its influence on profitability is crucial. If your payroll isn’t up to par, this can be challenging. How long would it take you to answer the question, “How much more personnel would we need to lower our overtime costs by 80%?” As a result, many firms are in desperate need of systems that make reporting easier and can support tactical and even strategic decisions for the entire company.

These are some of the core challenges businesses have today in order to manage their payroll effectively. Some of these could be easily fixed by using your existing technology resources and systems however the everchanging demand and pace of technology can guide you to implement the right payroll solution. Indeed, there are numerous solutions and systems are present in the market today, hence the big question that arises is how to choose the best payroll partner for your business needs. Through the following section, we would like to provide you with the factors which can help you in choosing the right payroll partner for your business.

How to Choose the Right Payroll Partner

  • Expertise

The payroll partner you select for your company must be reliable and competent about payroll and local legislation that affect payroll. It also helps if you have a lot of expertise with the population that your company caters to. Payroll solutions in the health, hospitality, retail, and fast food industries, for example, must place a greater emphasis on managing rostering, timesheets, and pay conditions for a largely shift-based workforce – or, in the case of the not-for-profit sector, a deeper understanding of salary packaging arrangements is required.

To provide broader payroll services and deliver more proactive guidance to your business in the areas of PAYG taxation and payroll tax rules, superannuation, and fringe benefits, your payroll service provider should be registered as a BAS agent with the Tax Practitioners Board (TPB).

  • Proven track record

A proven track record of delivering value to other organizations over a long period of time, particularly those in your industry with similar needs and difficulties, supports the legitimacy of a payroll vendor’s expertise and cultural alignment with its customers. To back up your decision, look for relevant references or case studies.

  • Localized & Compliance focus

When looking for a payroll vendor, you’re bound to come across the names of several large, large multinationals. While dealing with a huge corporation may make you feel more at ease, you may be concerned that the relationship will become too impersonal and decide that one of the largest payroll providers is not the right fit for your organization. Instead, look for a local seller who can provide you with a more customized service if you need it. To avoid having too many possibilities to evaluate, make sure to target your search wisely.

One of the most difficult aspects of payroll management is correctly applying pay criteria from appropriate awards or enterprise agreements. As previously indicated, compliance and regulation are crucial, so look for payroll providers who are conversant with Australian labor laws and whose payroll software includes automated award interpretation. Such vendors also take their accessorial responsibility responsibilities seriously, as they might be held accountable if their client’s payroll isn’t up to par.

  • Technology & Available features

Examine the payroll software and features that support the services of the outsourced payroll provider. Advanced platforms will also offer employee self-service features, rostering, and time and attendance engines. Cloud-based payroll choices make it easy for you to access payroll data at any time. You should also pay close attention to how quickly and agilely the payroll software adjusts to external changes (such as ATO rules in regard to superannuation and reporting). Most payroll systems are now completely compliant with single-touch payroll (STP); if your payroll provider cannot ensure this, you should look elsewhere.

  • Reporting & Reconciliation capability

When switching payroll systems – as is frequently the case when outsourcing payroll for the first time – you want to know that the payroll reporting you need to monitor the business, report on legal responsibilities, and make crucial choices will be available.

  • Ease of Implementation and change management

Once you’ve chosen your new payroll provider, it’s critical to know what comes next. To minimize risk, a solid implementation strategy should include a dedicated point of contact for your company, a clear and concise implementation plan, steps to communicate changes to other key stakeholders (including employees and managers), training (if needed), payroll data management, and at least one end-to-end parallel pay run.

  • Ease of Integration with Other Systems

If you’re running your business with current software systems like time and attendance or accounting platforms, or even just Excel, you’ll want to find a payroll vendor whose system interfaces effortlessly. That way, you can rest assured that your data will flow freely between platforms, allowing you to maximize your productivity. While most payroll solutions today are plug-and-play, double-check that the systems will work together and how the provider will handle the transition to ensure your payroll runs smoothly.

  • Cost & Ongoing Support

While the cost of outsourcing payroll is determined by a variety of factors, each vendor will charge somewhat different rates and provide different services in their base prices, such as tax filing or other ancillary services. To make meaningful comparisons amongst firms, you’ll need to know exactly how much the overall cost will be, so get a firm quote when you’re looking into your options.

Every payroll provider offers customer service, but how and when they deliver it varies, so you’ll want to enquire about it with each vendor. Support options include everything from how-to videos and searchable knowledge bases to live chats and phone support. However, even with live assistance, there may be differences across vendors. Some providers, for example, offer phone support through a call center, while others provide you with a dedicated specialist who you may contact personally with any queries or issues. Consider what you require and seek out a vendor whose service approach matches your needs.

  • Scalability & Security

Depending on your company’s goals, you may have simpler payroll needs now, but you’ll need more help as you grow. If you plan to expand your business in the future, such as hiring staff in different states or offering health insurance to your employees, you’ll need to choose a payroll provider that can handle these complexities and scale with you to fulfill your goals as your company grows.

With some headline-making security breaches in recent years, you may worry about placing sensitive employee data in someone else’s hands. While this fear is natural, it’s also important to understand that security incidents are very rare. However, you should talk to all potential vendors about what policies and procedures they have in place to protect your data.

How to start and not stop at the end of this article piece?

We would recommend starting simply by just taking the outlined approach, which has negligible risk, simple and yet an amazingly effective positive step towards our goal of a proactive strategy

A) Take pen-paper or manual method (start now)

Start implementing the recommended strategy using your existing technology resources for your business to find out what works and what doesn’t. Indeed, this causes efforts, but this will pave the way for better clarity around unknown risks.

B) Take help from technology

Work towards making it unattended, assisted by using Super-fast digital solution such that it works autonomously without losing its efficacy by engaging a solid, affordable Business and Technology solution partner.

If you are a CEO/COO/CIO/Managing Director/General Manager who is spending more time in reactive/preventive mode than future-facing, please reach out for an exploratory conversation.

Our Contact details

Pankaj Mohanty (Mentor HR-Payroll Transformation and Project Assurance)

Pradeep Mishra (Director and Co-founder)

Ashok Mulchandani (Partner – Business Success and Strategic Transformation)

Amit Bhagat (Director – Business Strategy)

Please feel free to leave your suggestions and thoughts in the comment box below!

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