New research reveals that nearly half of all public sector organisations across the UK and Ireland are wrangling with payroll and HR systems that are not fit for purpose. Forty-eight percent (48%) are having to use technical or manual workarounds to compensate for the limitations of their main payroll or HR system.

As many as 42% have invested in secondary software to plug functionality gaps, while 40% report employing additional staff or spending extra hours troubleshooting technology. These findings raise legitimate questions about the cost-efficiency of public spending, particularly pressing in the context of a new government keen on delivering growth and productivity.

The research, commissioned by payroll and HR software provider, Zellis, polled 500 managers working across payroll, HR, IT, and finance in the UK and Ireland, and sheds new light on the ongoing public sector productivity debate.

While respondents are most concerned (37%) about ensuring the right ‘workforce skills and capabilities’ to support their payroll and HR operations, ‘inefficient or out-of-date technology’ was revealed as the second biggest concern (31%), with ‘lack of scalability and adaptability’ being the greatest source of frustration.

On a more positive note, the research reveals that half (50%) of those polled cite ‘automation of payroll and HR workflows’ or ‘integration of new technologies such as AI’ as having the greatest potential to improve HR productivity, beating skills development (35%) and more effective leadership (31%).

Half (50%) of respondents also believe that more advanced payroll and HR software would improve the cost-efficiency of their payroll and HR operations – a finding backed up by 10% of respondents rating their main payroll and HR system a meagre one out of five for both ‘cost-effectiveness’ and ‘ease of use’.

Commenting on the findings, Rebecca Mullins, Director of HCM Solutions at Zellis, said: 'Public sector organisations are having to do more with less, which makes productivity and cost reduction ever more critical. The UK public sector employs six million people, which accounts for almost 20% of the entire working population. The sheer scale of that headcount drills home the importance of having highly effective payroll and HR systems.'

Mullins continued: 'Our research identifies AI and automation as the leading routes to improved productivity. By automating workflows and leveraging AI to reduce administrative burden, the public sector stands to reap substantial cost savings while creating more time for strategic HR initiatives that support engagement and retention. If the new government is keen to address productivity within the public sector, this is where the greatest opportunity now lies.'

Download the full research report here.