Your payroll system runs. Paychecks go out. Nobody's complaining too loudly.
But "running" and "working" aren't the same thing. According to the 2024 Alight Global Payroll Complexity Report, 51% of companies still rely on spreadsheets somewhere in their payroll process. Not because they want to. Because their "real" system can't do what the business actually needs.
The gap between what your payroll software promises and what it delivers shows up in predictable ways. Here are seven signs your system is failing, even if pay keeps going out on time.
1. You Need a Spreadsheet to Make It Work
This is the clearest sign. If Excel sits between your timekeeping system and your payroll system, something is broken.
A healthcare organization we spoke with manages three separate pay grids: union rates, provincial health authority rates, and internal rates. Each grid has different steps and different rules. Their payroll system handles none of it.
Every two weeks, their team exports data to Excel, reconciles hours across all three grids, makes manual adjustments, and re-enters totals into finance software. The process takes 5-10 minutes per timesheet. For 150 employees, that's 12-25 hours of manual work per pay period.
The spreadsheet isn't a convenience. It's a crutch. And it creates compliance gaps every time data moves between systems.
Ask yourself: Why does the spreadsheet exist? What gap is it filling? The answer tells you exactly what your system can't do.
2. Payroll Takes Days Instead of Hours
Cable Bahamas used to spend five days processing payroll. After consolidating their systems, that dropped to a day and a half. That's 70% faster.
If your payroll close stretches across multiple days, the problem isn't your team's speed. It's the number of manual steps required to get from time data to pay data.
Common symptoms:
- Overtime calculated outside the system
- Vacation accruals tracked in a separate file
- Stat pay figured in Excel and keyed back in
- Finance waiting on "the payroll file" before period close
According to ADP research, over 22% of payroll teams spend more than 30 hours weekly just reconciling payroll and HR data. That's nearly a full-time position doing nothing but bridging gaps between systems.
3. Your Team Fixes More Than They Process
An EY study found that a full-time payroll employee loses an average of 29 weeks per year to fixing mistakes. That's more than half the working year spent on error correction rather than value-added work.
When your payroll team spends more time correcting errors than validating results, the system isn't supporting them. It's creating work.
The math is straightforward. A 1.2% error rate per pay period (which is average according to Paycor and BLS data) costs a company with 100 employees earning $900 weekly roughly $56,000 annually in direct costs. Scale to 500 employees and the numbers get uncomfortable.
Research from Jobera indicates organizations may take up to 10 days to resolve a payroll error. That's 10 days of employee frustration, HR time diverted from other priorities, and potential compliance exposure.
4. Employees Have Lost Trust
This is where payroll problems become HR problems.
According to the Workforce Institute, two payroll errors are enough to make 50% of employees start looking for a new job.
Remote's 2024 Global Payroll Report goes deeper: 42% of employees who experienced a payroll mistake said it negatively impacted their relationship with their employer. Almost a third (32%) said the error made them more cautious or decreased their trust.
Younger employees are hit hardest. 71% of employees aged 16-24 experienced a negative change in their relationship with their employer following a payroll error.
When SHRM puts the average cost to hire a nonexecutive employee at $5,475, payroll-driven turnover adds up fast.
The question isn't whether errors happen. It's whether your system catches them before employees do.
5. You Can't Answer Simple Questions Without Exporting Data
How many overtime hours did we pay last quarter? What's our average time-to-fill for open shifts? How does actual headcount compare to budget?
If answering these questions requires exporting data to Excel and spending an hour formatting it into something presentable, your system isn't giving you visibility. It's giving you raw materials.
A Caribbean company using a legacy GP installation told us their system is "very limited in functionality, primarily used for data entry with minimal return." They use Excel as a benefits database. Excel to convert reports into usable formats. Excel to track employee certifications.
The "proper" system exists. It just doesn't work for how their business operates.
6. Scheduling Lives in Someone's Head
A university we spoke with manages 70 full-time staff, 240 sessional employees, and 400 part-timers across 30 locations.
Their current scheduling process: employees call a desk phone to report absences. Someone listens to voicemails and informs shift managers. Managers call around to find replacements from memory. There's no automation. Schedules are printed and posted on walls.
This isn't a technology budget problem. Their systems just don't handle the complexity of multi-location, multi-employee-type scheduling.
The symptoms:
- Shift managers maintain mental lists of who can cover
- Schedule changes communicated via text or email
- No visibility into who's actually available until day-of
- Absences create scrambling rather than automated fill
When scheduling doesn't connect to time tracking, and time tracking doesn't connect to payroll, errors multiply at every handoff.
7. You've Been Penalized in the Last Five Years
The Alight report found that 53% of companies have been penalized for payroll non-compliance in the last five years.
The risk increases with complexity: organizations operating in a single country face a 24% chance of fines, but that jumps to 67% for companies operating in two to five countries.
According to industry data compiled by ElectroIQ, payroll errors have cost U.S. companies $2.8 billion in IRS penalties. That's the aggregate cost of getting payroll wrong across American businesses.
If you've already been fined, your current processes have already failed the compliance test. The question is whether you fix the root cause or wait for the next penalty.
Why Companies Stay Stuck
If these problems are this clear, why don't organizations just migrate to better systems?
Fear of implementation cost. Traditional HR software implementations take 12-18 months and cost six figures in setup fees before anyone logs in. That's a real barrier for mid-sized organizations that aren't sure the new system will actually be better.
Fear of disruption. Payroll can't stop. Any migration has to happen while pay keeps going out on time. The risk of getting it wrong during transition feels higher than staying on the workaround.
Fear of the same outcome. Organizations burned by software that didn't work as promised are skeptical that new software will be different. When you've already invested in a system that requires spreadsheet workarounds, it's reasonable to wonder whether the next system will be any different.
These fears aren't irrational. They're based on real experience. But staying on spreadsheets isn't actually safer. It's just a more familiar kind of risk.
What Actually Fixes This
When timekeeping, payroll, scheduling, and HR operate as one connected system, several things become possible:
Time flows directly to pay. Employees clock in. Time rules apply automatically. Overtime calculates based on your actual policies. Data arrives in payroll ready to validate, not ready to rebuild.
Scheduling knows who's actually available. Leave requests automatically update schedules. The system identifies qualified replacements based on skills and certifications, not manager memory. Gaps surface before the shift starts.
Reports reflect reality. When data lives in one place, reports don't require reconciliation. Leadership gets accurate information without the formatting layer.
Errors surface before pay runs. Validation happens continuously, not during a frantic pre-payroll window. Issues get caught when they're cheap to fix.
The good news from the research: combining automated timekeeping and payroll reduces error rates by 67%. The bad news: that requires systems that actually talk to each other.
The Diagnostic Question
If you recognized your organization in any of these seven signs, start with one question:
Why does the spreadsheet exist?
Not "how can we eliminate it" or "what software should we buy instead." Just: why does it exist? What gap is it filling?
Common answers:
- "The system can't handle our pay grid complexity"
- "Time data doesn't flow automatically to payroll"
- "We need reports in formats the system doesn't produce"
- "The system wasn't built for multi-location operations"
- "We have employee types the system doesn't recognize"
Once you know what gap the spreadsheet fills, you can evaluate whether to keep patching around the problem or actually fix it.
About Workzoom
We help organizations with 50-5,000+ employees consolidate HR, payroll, and workforce management into one connected system. No implementation fees. No long-term contracts. $4 per employee per month per suite.
If your spreadsheet is doing the work your software should be doing, we should talk.