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A value proposition is an innovation, service, or feature intended to make a company or product attractive to customers. Payroll is, first and foremost, a value proposition to your staff, but it also plays a role in the value proposition that you offer to your customers.

For most people, getting paid is the whole point of working. Any job can be satisfying, but the pay off is generally, well, the pay off. Pay is compensation — employees work to get paid, no matter how much they value their role. This makes payroll one of the most crucial functions in any organisation.

If the payroll team does its job well, it will mostly stay invisible, which is generally how those who work in this field like it. Only when the software breaks or the payslips arrive late, do staff realise the value of a functional payroll system.

For most companies, pay constitutes a large portion of the costs of doing business, and the payroll process also has a foundational role to play in a company’s culture.

It’s important to highlight how valuable a good payroll system can be to a company.

Employee morale

If payroll is delayed or inconsistent — arriving on time one week but then too early or too late in other weeks — this can play on employees’ minds. Instead of focusing on their work, worries about pay distract them, often making them feel devalued, even when that’s the last thing the business intended.

Equally, if payroll is inconsistent, rightly or wrongly staff may get the impression that the firm could be struggling financially. They might think that because payroll managers are so close to the company’s financials, they would know the reality, right?

Wrong impressions can lead to staff thinking about moving to a company that appears more stable, simply because they pay their employees correctly and on time.

Reputational risk

No matter how great a company’s product or service, who wants to work for a business that can’t pay its staff consistently and reliably?

That sort of reputational rumour spreads through a sector like wild fire and is difficult to come back from — even with the best PR.

Maintaining compliance and following regulations closely is also a vital part of a robust payroll system, along with maintaining a healthy relationship with that other, often unspoken about business partner: the government.

If a problem arises with payroll compliance and following the rules, the risk to a company isn’t simply that skilled employees may choose not to join the firm or that skilled staff may decide to leave. The greater risk is that the company could go out of business entirely.

Dissolving a company because an inefficient payroll system turned out to be non-compliant is a great way to do severe reputational damage to a brand.

A dependable, respectable and knowledgeable payroll team helps prevents fraud and produces crucial data on time. Robust payroll software not only provides a complete view of who is getting paid what, it can reveal trends and outliers that may indicate fraud.

Staying competitive with pay

No company that wants to stay in business will hand out pay rises to staff without first tying them to some observable and verifiable metric for testing employee performance.

A healthy payroll system can wrap an employee’s key performance indicators (KPIs) and other agreed-upon metrics into that person’s salary information so they and their managers can keep track of performance. With the data in front of them, it will be an easy step for a manager or CEO to approve a pay rise or suggest how an employee can improve their performance.

Benefits tend to reflect an employee’s worth within both small and larger businesses. Employees who receive health, life, and other benefits also feel they have a higher worth.

Organisations can now take advantage of a range of software that integrates performance management, business intelligence, and other analytical tools with payroll to benchmark industry salaries and hourly wages. More than ever, staying competitive with pay is a crucial way to reward employee performance and prevent them from getting itchy feet.

Use of resources

Admin is the last thing managers and CEOs want to do at the end of each month. Their time is better spent building the value of the company. So, aside from the basics of ensuring staff are paid on time, setting up a robust payroll system can add value to the entire company simply by freeing up important people to perform essential tasks.

A great payroll system can save a company thousands of dollars by calibrating the proper tax percentage in each pay cycle, avoiding costly fines and penalties.

The problem isn’t hypothetical. In 2019, Inland Revenue New Zealand estimated that 950,000 New Zealanders overpaid their taxes by $42 million in that tax year alone.[1]

What is true for individuals will also be true for companies. Whether taxes are overpaid or underpaid, those resources could be better spent growing the company. If a payroll system can avoid this problem by deploying sophisticated software and a smart team, then it will immediately add value to a company.

The human side of payroll

All of this makes the point that payroll should be a key focus for HR and finance departments.

Consider that the HR department manages each employee’s attendance and working hours. And it is only through this data that payroll can be processed accurately. The HR department is also primarily responsible for deciding an employee’s gross pay, remuneration, overtime pay, benefits, raises, incentives, and bonus pay.

But treating payroll as solely a part of the HR department might introduce its own problems. For example, HR professionals who suddenly need to perform payroll functions will be dealing with systems they may not understand. It will also mean non-accountants could be digging around in an accounting system, making error-prone decisions and changes.

Without the HR and finance teams equally playing their part, payroll will struggle to produce useful results. Indeed, the ability of these two critical parts of a company to play well together can generate a positive team-building culture that will boost the whole business.

[1] Reported by Radio New Zealand, 19 June 2019



For over thirty years, Affinity has been a trusted partner for mid-market and enterprise businesses in Australia and New Zealand, empowering them to transform their payroll operations. With a focus on turning payroll from a cost into an asset, we have established ourselves as industry leaders in delivering innovative cloud-based payroll software and exceptional payroll services.