Payroll Challenges Faced by Small and Medium Organizations!

The Covid-19 pandemic has highlighted the inefficiencies and challenges that many organizations were not prepared to address.

 In these hard times, businesses must evolve rapidly and put the practices and systems properly in place to cope with the changes in the business environment. It was true even before the pandemic and has become more important to combat existing challenges that have only been exacerbated.

A business often keeps two important aspects in mind while coming into inception: paying right and earning right. Both of them are interlinked to each other, and it is imperative to maintain balance. When one builds their own business, competitive products, good customer service and customer satisfaction come to mind but what often escapes one’s mind is why payroll processing is an important and taxing prospect of being an entrepreneur. Payroll management is critical for running any business or organization that employs people, which comes with its own set of challenges that must be overcome for the smooth functioning of the organization.

Here are a few challenges of a complex payroll landscape.

Challenge #1: Manual payroll processing

Manual processing with spreadsheet software might seem like a cheap option, and it may as well be sufficient for small businesses. However, it’s quite time-consuming and prone to errors, and the risks increase as your business expands and you employ more people. There’s often no mechanism to avoid mistakes and stay updated with regulations or protect confidential information. That’s why it is generally advisable for growing businesses to use automated process technology from software or a payroll service provider.

Challenge #2: Changing payroll legislation

Laws and regulations often keep changing, and with manual software, it gets difficult to stay in the loop with this employment law and regulatory changes. If you fail to notice these regulatory changes, you could incorrectly calculate employee pay or tax liabilities, which could lead to significant fines and penalties. Good payroll solution providers automatically stay up to date with changing regulations. Also, regular staff training is important.

Challenge #3: Payroll talent constraints

In these times, Businesses need to achieve more with less. As economic downturns occur and disruption puts more strain on the workforce, payroll teams will have an even heavier workload and more pressure to deliver payroll timely and accurately.

Absenteeism is another area of concern where there is an increased risk as these essential employees may be affected due to a crisis such as COVID-19 or a need to take care of sick or vulnerable family members. Businesses must determine whether they have enough staff to address legislation in multiple regions, deliver pay accurately and on time to remote employees and take care of the attrition rate.

Challenge #4: Increasing financial stress on employees

Financial wellness is of great virtue in these times of change and uncertainty, as employees need better financial flexibility. They are already experiencing acute levels of financial stress due to the ongoing pandemic. Employee financial stress can harm the business’s overall performance, from disengagement and increased healthcare costs to an increase in sick days and turnover.


Payroll is important for every organization, and it is challenging. They need to dispatch employee salaries, take care of their benefits, and file taxes. However, while doing all these tasks, the HR team loses control over other activities, such as employee motivation, encouragement, and engagement. Therefore to help your HR team focus more on people and lesser on calculations, make sure to utilize the best payroll management services.

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