Executive summary
Background
Our aims
Methodology
Results overview
It's no secret that the public sector is under pressure to boost efficiency and productivity. But have we been overlooking a key area in this push? Payroll and HR operations often consume significant resources in public sector organisations. This underscores how important they are, but also highlights their potential as a source of efficiency gains.
The average annual spend on payroll solutions is £236,853, according to recent Zellis research data collected from 126 public sector organisations. The greatest spend was in central government, which has an average annual expenditure of £2,437,267, significantly higher than local government’s £188,733. Education was an outlier at just £3,231, but health and social care organisations spent on average £497,269 on payroll technology annually. Given the scale of investment, even modest improvements have the potential to yield major benefits.
Public IT spending is on the rise, more than doubling in five years. Worryingly, reports show that almost half of the government technology budget (£2.3 billion) goes into maintaining ‘outdated legacy systems’. Are payroll and HR systems part of this problem? And could bringing them up to speed unlock new efficiency and productivity gains for the public sector? What other issues are holding teams and organisations back?
To answer these questions, we engaged directly with relevant professionals in the public sector. We asked about current barriers and hurdles, and what changes they believe would make the biggest impact.
The following report presents and explores these insights, offering a practical perspective on how payroll and HR operations could be optimised. Such improvements would enhance the functions themselves while greatly benefitting the organisation. They would also contribute to the wider goal of raising public sector productivity and efficiency.
Our goal is to offer insights on how public sector organisations can improve productivity and efficiency in payroll and HR departments by asking managers about the key challenges they are experiencing and the solutions that would make a positive difference..
We asked 500 people working in middle management and above for their views via online survey. Our respondents all work in public sector organisations in the UK and Northern Ireland.
We targeted job roles with exposure to payroll and HR operations either through working directly in these departments or being involved with finance or IT decisions for the organisation.
38% worked in payroll or HR
36% work in finance functions
26% work in IT and other technology functions
40% of our respondents were female and 60% male
We found that workforce skills are a leading concern for public sector decision -makers and influencers that have a responsibility or input on HR and payroll departments and systems.
Nearly a quarter (23%) told us that workforce skills are their main worry. Our respondents were also particularly focussed on retaining the right people and handling out-of-date technology. Our respondents are also facing cost-efficiency and compliance challenges. Only a small number of people (5%) told us they had no current HR and payroll concerns.
Better technology is widely seen as the key solution, with 50% saying that more advanced payroll and HR software features would aid productivity.
Our respondents also flagged a need to increase the number of cloud-based solutions and decrease IT infrastructure needs. More than a third (35%) of respondents suggested more streamlined processes would boost HR and payroll efficiency and cost-effectiveness.
Current payroll systems are falling short of meeting needs, with most respondents rating their systems three or four out of five for markers including cost efficiency, accuracy, scalability and reporting.
Most payroll systems are adequate rather than outstanding, with departments employing workarounds to fill in gaps in capability: 46% are turning to technical workarounds within their main system, while 44% are still resorting to spreadsheets, paper forms, and manual data entry.
Zellis is the UK and Ireland’s leading payroll and HR solutions provider. We work with 110+ government bodies and local authorities, 70+ colleges and universities, supporting 1 million public sector employees. Our solutions support our customers with recruitment, onboarding, payroll, people management, learning and development, and retaining top talent. Our managed services help employers pay their teams £26.6 billion each year.
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