Paychex Survey Finds One in Five Small Business Owners Lack Confidence in their HR Function

During National Payroll Week, Paychex data indicates payroll is just the beginning of the employer-employee relationship

As payroll professionals around the country join the American Payroll Association in recognizing National Payroll Week, Paychex, Inc., a leading provider of integrated human capital management solutions for payroll, HR, retirement, and insurance services, is taking the opportunity to acknowledge the key role payroll plays in any organization, but also highlight the evolution of the overall HR function beyond payroll.

“Having been a trusted payroll partner for nearly a half century, Paychex is again proud to join our industry in applauding the many contributions payroll professionals make every day – after all, paying employees accurately and on time is one of the most important HR functions for any business,” said Martin Mucci, Paychex president and CEO. “However, the HR needs of today’s small business have evolved beyond payroll. While payroll will always remain critical, other HR functions have emerged as vitally important to businesses looking to increase employee engagement and be in compliance with the latest federal, state, and local regulations.”

According to the latest Paychex Small Business Survey, 21% of today’s owners lack confidence in their organization’s ability to keep current with HR compliance. Of the core functions that make up HR, they’re the least confident when it comes to onboarding (38%), employee handbooks (36%), and background checks (26%).

“New hire onboarding is one of the first and most important HR processes for an employer and employee,” said Jackie Hoyt, HR consultant at Paychex. “From Form I-9 to the W-4 withholding form to state withholding form(s) to direct deposit, think about all of the documents a new hire needs to complete before even getting their first paycheck. An electronic, paperless new hire onboarding process can be a big time saver, increase efficiency, and provide an electronic paper trail for both the owner and employee to reference down the road.”

Lack of automation could be one indicator for low confidence when it comes to key HR functions. Paychex’s study revealed only 30% of small businesses rely on technology to automate the onboarding process. Additionally, 38% percent of those surveyed report tracking time and attendance manually rather than via an automated system. Embracing automation to accomplish such critical tasks not only saves time, but can also reduce the risk of human error.

Confidence is one thing, but awareness and compliance is another – especially since a lack of compliance, many times, can lead to costly fines and penalties. According to those business owners surveyed, the top three employer regulations they’re either not complying with or not aware of are: youth employment standards (42%), employee classification laws (37%), and overtime laws (36%).

“In my experience, many small businesses don’t know what they don’t know,” said Dorene Crimi Lerner, Paychex HR consultant. “They think that because they have less than 10 employees, they don’t need to comply with things like proper employee classification and overtime rules. The truth is, HR becomes a reality when you add your first employee.”

On the more positive side of the equation, the majority of small business owners report being aware of and complying with the following laws: minimum wage (76%), OSHA and workplace safety (75%), non-discrimination (74%) and retaining employee time and pay records (72%).

“Small business owners open their doors because they’re passionate about their products, services, and communities in which they operate – not because they are HR experts,” Mucci added. “HR today is complex and always changing, so it’s difficult to keep up. The good news is that business owners are not alone; Paychex has plenty of resources to help guide them through their various HR needs.”

Hoyt and Crimi Lerner represent two of the nearly 500 HR consultants and HR generalists at Paychex. Learn more about Paychex HR services, which serves one million work-site employees across the nation.

About the Paychex Small Business Survey
Data included in the Paychex Small Business Snapshot was taken from the results of the Paychex Small Business Survey, administered by Bredin, a third-party research firm specializing in small business The survey was conducted online between August 18, 2017 and August 24, 2017 and polled 250 principals of U.S. companies with 2-500 employees. The group surveyed was not exclusively Paychex clients, but included other small business owners to provide a full view of the small business landscape.

Disclaimer: The data cited in this news release represents the opinions of the survey respondents and not those of Paychex or its employees.