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Stuart Gentle Publisher at Onrec

Count the pennies and the pounds look after themselves

Liam Butler, VP of EMEA Sales at Sumtotal

After the National Living Wage for over 25s was raised from £7.20 to £7.50 per hour last month, a great deal of discussion has been taking place around the potential impact that the additional £0.30 an hour can have on both British workers and UK businesses.

Most are likely to agree that the social impact of the increase will predominantly be positive: with roughly 2.3 million people directly affected, this seemingly small change can bring hundreds of pounds more to low-income households every year and has the potential to reduce income inequality .

Businesses, however, are feeling the pressure. Industries most affected by the rise naturally include those with largest numbers of hourly paid workers – hospitality, recreation and healthcare serving as central examples. With drastically increased employee expenses, many organisations are finding it increasingly challenging to balance out the books. This is a very real issue within the public sector, where funding is limited and revenue streams barely exist. Take care-homes, for example. According to research by independent advice service Opus Group and BBC Radio 4’s consumer affairs programme You and Yours, more than one in four of UK’s care homes were at risk of closure in May last year. Six months later in November 2016, Opus stated that “every part of UK adult care system was in a crisis,” with the average care home earning little over £11,000 in pre-tax profits per year.

Because of these increased overheads, many organisations will want, and need, to improve their payroll efficiencies. Here, payroll software can lend a helping hand. The software allows for calculations to be carried out in a fraction of the time that they would take to complete manually, and enables more effective time management across the organisation. It also facilitates record-keeping and reporting, and giving up pen and paper will reduce the likelihood of human error in the process. All of this comes under the larger function of Human Capital Management software (HCM), an often overlooked technology when it comes to its more glamourous L&D bedfellow, but one that can make a real difference to an organisation.

It may seem that you are only saving the odd minute here and there when it comes to time management of employees, but these can add up into hundreds of saved hours over the year. These additional savings may be the difference between retaining a member of staff or letting them go.

There are also other less obvious, intangible benefits that come with the software. Taking the human element out of the process can help fight unconscious bias in the workplace, for instance, with the system allocating overtime to an available employee rather than a favoured individual. The incorporated timesheets system records employee attendance and exact time worked, and facilitates shift trading by basing it on availability and skill. The goal is not only to fix the payrolls, but to fix the underlying issues that cause payroll inefficiencies in the first place.

Better monitoring employees' working hours will allow businesses to pay their employees for only minutes worked, while still paying them a decent, and legal, salary. With the National Living Wage set to rise year-on-year to a projected £9 per hour in April 2020, now is a good time for organisations to look for ways to more effectively manage the different aspects of their payroll processes. The investment will start to pay for itself in approximately seven months – just in time for next year’s budgets.