Compensation Administration

Infographic: How Do SMBs Evaluate their Current Payroll Systems?

Even though most payroll administrators at small and medium businesses (SMBs) indicate they are satisfied with their current provider, nearly 40% of those same managers say they are likely to switch payroll solutions within the next 12 months, according to a recent survey by Clutch, a leading B2B ratings and reviews site.

Although 85% of payroll managers say they are satisfied with their company’s payroll solution, another 85% also say they have encountered problems with it in the past year.

The two main issues they have are the amount of time it takes to use their company’s payroll solution (37%) and their inability to integrate the solution with other human resources (HR) systems (26%), such as employee benefits, time-tracking, or expense management.

Despite these challenges 35% of payroll managers do not plan to change providers within the next year. This is likely due to the frustrating nature of switching to a new solution.

“We can become entrenched in one system, so we need to look at conversion times,” said John Mauck, Human Resource director at WLR Automotive Group, Inc, in a press release. “People would like to switch, but they don’t want to spend the time in order to do it.”

Additionally, while time-consumption is the most frequently identified problem, it is unclear whether changing solutions can reduce time spent on payroll. Payroll managers reported similar hours-per-month spent on payroll, regardless of whether they were using Intuit, ADP, Paychex, or a smaller payroll solution.

Clutch recommends that companies evaluate their internal initiatives before switching payroll solutions. The amount of time spent on payroll may be more due to the company’s approach and less to the solution itself.

The study also addresses payroll security concerns. Surprisingly, 86% of payroll managers say their solution is ‘somewhat’ or ‘very’ secure. However, this perceived security does not necessarily match industry standards. Experts argue that the majority of payroll users consider security an afterthought.

Clutch’s survey was conducted in April 2016 and included 301 payroll administrators at SMBs with 2 to 500 employees. Ninety-eight percent of respondents hold a manager position or higher.

The infographic below highlights key findings from this survey, click on the image to for a larger view.

Clutch results