Payroll Complexity Is Costing £Thousands

New research has revealed that payroll complexity is costing huge sums of money each year, creating a measurable ‘complexity tax’ across payroll and HR budgets.

The findings come from Strada’s Workforce Possibility Report 2026 which shows that firms are losing an average of 2.6% of their total annual payroll spend due to errors, rework and inefficiencies.

For a business with a £3.7 million payroll, this equates to almost £100,000 in avoidable costs each year, highlighting the significant financial impact of fragmented systems and manual processes.

Multiple systems

According to Strada, despite sustained investment in HR and payroll technology, complexity continues to erode value. The research found that 25% of all Human Capital Management (HCM) and payroll technology spend is now dedicated to managing system complexity rather than delivering transformation or improvement. This reflects the growing burden placed on teams to maintain, reconcile and connect multiple platforms, rather than benefiting from streamlined operations.

The number of systems in use is a key driver of this inefficiency. Companies operating six or more payroll and HR systems are nearly three times as likely to lose over 3% of their payroll spend to errors and inefficiencies, compared to those with more simplified technology environments. This reinforces the link between fragmented infrastructure and rising operational costs.

These findings build on broader trends identified in the report, which show that many firms are yet to fully realise the value of their HR and payroll investments. Manual workarounds, legacy processes and parallel systems remain widespread, limiting efficiency and increasing operational risk.

Commenting on the findings, Jenni Flaherty, a director of Payroll Product Strategy at Strada, said:

“Payroll professionals have a lot of expertise. Those responsible for ensuring people are paid correctly and on time shouldn't have to contend with fragmented systems, manual checks and inefficient processes simply to get the job done.

“It is clear that simplification and optimisation need to be a priority. Reducing fragmentation and improving how systems work together is key to unlocking significant efficiencies, cost savings and long-term value.

“Payroll is one of the largest and most sensitive areas of business operations, so this complexity has implications far beyond any individual function. Giving teams better connected systems and greater visibility can help payroll become more efficient while enabling HR and finance leaders to make better-informed decisions.”

Picture: The launch of Strada’s Workforce Possibility Report 2026.