It’s easy: You bought your HR and payroll system — or systems, plural — to boost efficiency, keep more people, protect your bottom line and, ultimately, allow your business to grow with confidence.
And significant savings don’t come from making a preexisting process a little faster. Every manual task has an implicit cost if someone’s paid to do it. You may have even had to hire someone just to connect all that data. Regardless, without outright eliminating manual tasks, the ceiling on your ROI is painfully low. That doesn’t even consider how any form of data reentry — no matter how quickly it’s executed — is a compliance vulnerability.
Here’s the hard truth: If your system providers’ software isn’t built with a strategy to engage, bolster, measure and prove the value of employees’ usage, that tech is actually costing you.
Here are three hidden areas where your HCM is wasting your resources and profits — and inviting risk and exposure.
How does compliance exposure waste revenue?
Every change HR makes that employees could’ve made themselves risks compliance-breaking mistakes. Payroll is no exception, as EY discovered companies that faced lawsuits due to payroll errors were fined an average of 30 times per year.
The average cost of a fine spurred by a payroll error was $5,200, and one company told EY it lost $100,000 annually in fines. And that doesn’t consider regulations not explicitly tied to payroll, like COBRA. Even if a compliance issue doesn’t result in a major fine, it still wastes days — and potentially weeks — of HR time trying to resolve it.
How do payroll errors hurt your bottom line?
Payroll is likely your biggest expense, and every mistake compounds the cost. Unfortunately for most companies, errors never subside. According to Ernst & Young (EY), 20% of the average company’s payrolls contain errors. EY also found the average mistake costs $291 to fix.
A company with 1,000 employees would spend nearly $1 million correcting the most common payroll errors, which include issues related to:
- time and attendance
- PTO
- benefits
- taxes
- and more
What do these mistakes have in common? They only drain revenue when they’re not caught before payroll runs.
How does benefits reconciliation harm profits?
Benefits don’t magically shut off when an employee quits. In fact, the former employer foots the bill for any lingering, final deductions — unless they’re addressed early.
If that weren’t enough, manual benefits enrollment by itself costs companies over $80 per employee, according to a separate EY study. This is largely due to HR’s labor, which only multiplies with higher head counts. For example, a 200-employee company would lose over $16,000 to benefits enrollment each year.
How do companies prevent these hidden costs?
With so many costly issues tied to payroll, businesses can’t afford to accept the process as it’s been. Luckily, Paycom transforms it with Beti®, our employee-guided payroll experience.
Beti works by automatically flagging payroll errors. Then, it leads workers to resolve those issues before submission. This gets ahead of retroactive changes that chip away at the bottom line and leave organizations exposed.
But payroll isn’t the only area businesses should optimize. Paycom’s Direct Data Exchange® tool automatically measures the savings gained from employees using their HR tech in real time. Plus, it identifies opportunities for even greater efficiency.