Businesses across the globe are always searching for ways to take their payroll systems to the next level, but some still use good old fashioned spreadsheets in their payroll processing process.
Today’s unprecedented advances in technology provide them with a wealth of opportunities. From increased automation to cloud technology to AI, new solutions are readily and regularly available to companies looking to optimise their payroll.
It may come as a surprise that, according to our poll of 271 companies across 42 countries, 51% are still relying on spreadsheets to process their payroll.
Why do companies with the latest technology depend on ‘outdated’ spreadsheets?
It might be tempting to simply lay this at the doorstep of “resistance to change” or “old habits dying hard,”. However, there are more often practical reasons for this enduring reliance:
- Lack of system integration – Their current payroll system cannot smoothly import data from their HCM.
- Costs/Time – Concerns about the costs and time involved in upgrading their payroll system
- Lack of confidence in an automated systems to handle their payroll’s complexity – Doubts about an automated system’s ability to capably conduct audits and ensure data accuracy.
We’ll examine these reasons in more detail and explore possible solutions to address these concerns.
Lack of system compatibility
Having both a quality HCM and a modern payroll solution doesn’t necessarily add up to seamless integration.
Many companies operate on systems that don’t allow direct export of data between their HR and payroll systems. This means they must export spreadsheets from their HCM that can then be fed into their payroll engine
Terminations often pose an added complication. When employees are terminated, some payroll systems revoke their access to the system immediately. This makes it difficult for them to access final payment and tax information, making it necessary to keep spreadsheets on-hand.
Some companies keep spreadsheets on file with their accountants. They tend to retain them for the duration of the tax year, which offers a workable solution.
Integration costs/time
While many organisations readily acknowledge that upgrading their systems would eliminate the need for spreadsheets, they view integrations as being too costly and time-consuming to justify the investment.
Some see their businesses as moving too fast to accommodate the delays that an implementation might entail. Others worry that the ongoing maintenance of an integrated system will further slow them down.
While these organisations might not be entirely satisfied with the use of spreadsheets in their payroll processing, their apprehensions about the integration process, with its potential costs and long-term maintenance, lead them to the belief that they are simply stuck with what they have.
Lack of confidence in automated systems
Finally, many businesses simply don’t trust automated, integrated systems to handle the specific complexities of their particular company’s payroll processing. They doubt the ability of even the most sophisticated software to handle their various different data streams and believe that calculations performed using spreadsheets are more reliable.
In related cases, some companies who use integrated systems for payroll processing still use spreadsheets for audits, reconciliations and analyses, or post-integration data checks, feeling that they remain the most useful, reliable method and are essential to pre- and post-payroll review.
Alternative solutions to spreadsheets
While the reliance on spreadsheets in payroll processing is often rooted in practical reasoning, it’s important for companies to be made aware that there are alternative solutions available to them:
- While it is certainly true that, even among some market-leading systems, integrations between an organisation’s HCM and payroll solution can be limited. There are solutions that guarantee seamless integrations, eliminating the need for spreadsheets and manual data export
- Similarly, there are integrated systems that do not instantly shut down access to employee information in the event of termination. This allows for easy, automated processing of final payslips, etc.
- Implementing a new HR and payroll solution is not a trivial consideration. Naturally, any organisation will want to consider the time and money they will need to invest in their transformation.
- HR and payroll transformations don’t happen overnight. Time invested in transformation projects can be significantly reduced by working closely with expert implementation partners.
- Experienced implementation teams can help companies design comprehensive integration strategies to minimise delays and complications, while also remaining agile enough to quickly and efficiently deal with unforeseen circumstances.
- Similarly, companies struggling with concerns about the cost of an HR and payroll transformation project would do well to consider the long-term savings the project can offer. An investment in integration today can mean a significant ROI tomorrow.
- Data accuracy will always be a top priority in payroll processing, and trusting automated systems with sensitive company data can make some companies understandably wary. But are audits, analyses, and reconciliations performed on spreadsheets really more reliable than those performed by integrated systems?
- Where technological innovation is progressing at such a rapid pace, it can be difficult to keep up with the latest developments. The truth is that the best integrated systems can deliver 99.99% data accuracy.
Spreadsheets still the best option?
No organisation wants to rely on outdated and inefficient payroll systems. Companies that still use spreadsheets in their payroll processing do it because they believe it’s the best option.
This is why it’s essential that these companies are aware of the limitations of spreadsheets. But also the capabilities of automated HR and payroll systems.
With today’s technological innovations at their fingertips, no organisation should feel stuck with the system they have.
