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Payroll Errors on the Rise, Study Finds

Alight, Inc., a leading cloud-based human capital technology and services provider, released the findings of its 2024 Company Payroll Complexity Report, which reveals that over half (53%) of companies have incurred payroll penalties in the last five years for non-compliance.  

Building on the data from the 2023 Alight Global Payroll Complexity Index, this new report surveyed nearly 300 payroll professionals and stakeholders to understand key aspects of payroll operations, including the number of countries that each company processes payroll in, as well as the types of processes and technology they use to execute payroll.  

In addition to penalties, the report finds 51% of those surveyed still use spreadsheets, and 19% use outdated manual or paper processes within their payroll departments. The survey also reveals that many companies are shifting towards more streamlined processes and migrating more of their payroll operations to the cloud.  

Currently, only 26% report employing full cloud-based strategies. Despite significant media attention around AI and a continued industry trend to migrate to digital solutions, only 8% of respondents express intentions to incorporate AI into their payroll processes within the next two years.  

Organizations surveyed also place integrating payroll and benefits into a unified platform as their number one priority, followed by employee data analysis and implementing automatic reporting mechanisms.   

Payroll challenges are magnified for companies operating in the top 10 most complex payroll processing countries where there is an increased likelihood of receiving a penalty for payroll non-compliance. The report underscores a direct correlation between the number of countries an organization operates in and the likelihood of receiving fines. Notably, 24% of organizations operating in a single country received fines. However, this percentage sharply rises to 67% for organizations expanding their operations into two-to-five countries, marking the highest prevalence of fines within this range.   

“Payroll is an integral part of any business and can damage an organization’s reputation if something goes wrong,” says Luca Saracino, executive vice president of payroll and professional services at Alight. “These mistakes can be mitigated with a well-integrated, single platform that combines all-important HR functions such as payroll and benefits into a one-stop shop. Streamlining such processes not only saves time and minimizes risks of human errors, but also goes a long way in safeguarding both the company and promoting employee wellbeing.” 

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