Payroll has always been an extremely time-consuming task, no matter the size of your workforce. Studies estimate that small business owners spend over ten hours every month simply processing their employee payroll. Now, payroll automation could unlock significant efficiencies for small-to-mid-sized business.
At this scale, organizations are primarily focused on growth, product quality, and new business areas. Routine tasks like payroll could place immense pressures (especially at month end) distracting from the actual work at hand. With most tasks around payroll essentially iterative and formulaic, there is no reason why SMBs should hesitate to adopt payroll automation.
Yet, recent reports prove that automation in HR is still lagging. A survey by CareerBuilder found that only 37% of HR services are automated.
Here is a quick glance at the top three reasons why payroll automation for SMBs is yet to take off.
Three Obstacles you’re probably Facing when Automating Payroll
- Dedicating the staff and budgets required
Small businesses often lack a full-scale HR team and there might not be a stakeholder available to take complete ownership of the automated system. On top of that, finding the requisite funds for payroll automation, in addition to other initiatives that probably stand higher on your priority list can be a challenge.
The answer to this is the emerging crop of standalone, ready-to-deploy payroll tools, delivered via pay-as-you-go SaaS models. A number of these come with extensive support, and Managed Services requiring minimal intervention at your end. “The most advanced technology many small businesses use to run payroll is often a calculator. Full-service payroll services like Gusto can help small business owners avoid fines and save time,” says Rick. - Overcoming initial employee resistance
In an SMB scenario, even a small group of employees resisting transformation can be a major hurdle. It is important to note that as your business grows, doing payroll completely manually will no longer remain an option. By having intimate discussions with your employees and explaining the criticality of payroll automation, you could ease adoption and boost acceptance rates. - Addressing fears around job security
fast-growing, mid-sized businesses could choose to automate payroll and redirect those efforts elsewhere. While this is perfectly reasonable, your HR team could be concerned about their refreshed role in an automation-first workplace.
In reality, executives spend around 16 hours every week on manual tasks like updating spreadsheets or filling out forms. It is vital that HR teams understand that payroll automation is a time-saving aid and not a job replacement.
These are the three elements to be first addressed, before implementing payroll automation for SMBs. Once these basic change management measures are in place, you can look at available options to introduce automation.
