Lack of time and resources often causes HR and payroll compliance professionals to cut corners—exposing their organization to unnecessary risk, according to “The Risky Business survey” by The Workforce Institute at Kronos Inc. and Future Workplace.

The survey of 812 HR and payroll professionals found that more than half (55 percent) have witnessed compliance activities by their colleagues that created unnecessary risk. A majority (66 percent) of payroll professionals and 51 percent of HR practitioners say their organization occasionally cuts corners that may jeopardize compliance, including more than two-thirds (69 percent) of all respondents whose systems are more than five years old.

Large organizations (2,500 to 9,999 employees) are the biggest offenders, as more than two-thirds (68 percent) of respondents say they have seen colleagues cut corners when it comes to compliance. More than half (58 percent) of organizations with 1,000 to 2,499 employees, 56 percent of organizations with 500 to 999 employees, and half of organizations with fewer than 500 employees report taking shortcuts that may jeopardize compliance.

“HR and payroll professionals are among the most thoughtful, passionate, and meticulous professionals within any organization,” says the institute's executive director Joyce Maroney. “They don't cut corners because they're careless: Usually it's because they're overburdened, understaffed, or lack the proper resources required to handle anything above and beyond the day-to-day activities required to run the department.”

The survey finds that, on average, HR and payroll departments spend roughly 36 hours per week on compliance-related activities ranging from tracking regulatory proposals to creating and communicating new policies—enough work for a dedicated full-time employee, according to the institute.

Organizations with fewer than 500 employees average 23 hours per week on compliance duties, while those with 500 to 999 employees average 31 hours per week. It increases to 36 hours per week for organizations with 1,000 to 2,499 employees.

“Many HR practitioners and payroll professionals feel like regulations are changing at the speed of light,” says Malysa O'Connor, Kronos' senior director, HR and payroll practice group. “They're working hard to keep pace but the technology that they're surrounded with is often outdated or doesn't provide the agility and efficiency needed to adapt to changing laws.”

Organizations utilizing newer solutions spend nearly 10 fewer hours per week on compliance (34 hours per week with a solution one to five years old versus 43 hours per week with solutions more than years old). And that time could be better spent: With a single major regulatory change often costing businesses between $40,000 and $100,000, HR and payroll professionals have a long list of priorities they would tackle if they could spend less time and money on compliance.

Nearly half (47 percent) of the respondents say maintaining multiple, duplicate employee records leads to increased compliance risk. The survey found that organizations maintain an average of five separate records per employee and dedicate 32 hours per week on manual, duplicate data entry. About three-quarters of survey participants (74 percent) agree that cloud solutions are best suited to support today's continually changing compliance landscape.

“New policy changes can be a significant burden for companies of all sizes,” says Dan Schawbel, partner and research director, Future Workplace. “They can create stress, consume productivity, and force HR to take shortcuts that end up costing organizations even more money in the future.”

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Katie Kuehner-Hebert

Katie Kuehner-Hebert is a freelance writer based in Running Springs, Calif. She has more than three decades of journalism experience, with particular expertise in employee benefits and other human resource topics.

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