Burnout in Payroll: How to Spot the Signs and Prevent It

Last year the mass exodus of employees was known as The Great Resignation, and now another significant workplace phenomenon has emerged - burnout.

An estimated 11 per cent of Australian employees experience high levels of burnout, according to a McKinsey survey. 

As a result of the pandemic, Australians reassessed their career and lifestyle options; many worked from home and experienced a work-life balance with less commuting and more time with family and self - even though there was no opportunity to travel or do the things we love, it was still a time for reflection for many and a chance to reset.  

Occupational Burnout is Real

Occupational burnout is a genuine issue affecting people in various professions. It can lead to physical, emotional, and mental exhaustion, decreased productivity, and feelings of detachment from work. It is imperative that employers recognise the signs of burnout and take proactive measures to prevent it in the workplace. Similarly, individuals should use effective stress management techniques to cope with the demands of their job and avoid burnout.

The World Health Organisation (WHO) defined burnout as an "occupational phenomenon resulting from chronic workplace stress that has not been successfully managed". Typically, it is defined by three dimensions: 

1. Feelings of energy depletion or exhaustion. 
2. Increased mental distance from one's job, feelings of negativism or cynicism related to one's position; and 
3. Reduced professional efficacy. 
   
   

In the 11th Revision of the WHO's International Classification of Diseases (ICD-11), burnout has been officially recognised as a common phenomenon in the workplace (ICD-11). 

Burnout often causes employees to lose interest in their work, lose motivation, and feel overwhelmed. It is easy for these feelings to lead to disengagement and withdrawal from their duties, which can lead to quiet quitting.  

The Cost of Burnout

Burnout costs Australian and New Zealand businesses more than US$10 billion annually

Burnout rates have increased across Australia and New Zealand. Work-related stressors are attributed to 92% of serious mental health issues in the Australian workplace. According to the Australia and New Zealand Autonomy of Work Index 2021 report, burnout costs Australia US$10 billion annually.

According to the Anatomy of Work survey, 77% of Australian and New Zealand employees have experienced burnout at least once in the past year. This is higher than the global average (71%). Half of the respondents indicated being overworked as a major contributor to burnout, while a third cited being unable to disconnect from work. In Australia, digital advances have accelerated, helping employees better connect in the hybrid working world. However, this has blurred the lines between work and home.

A Gallup study of 112,312 companies across 96 countries found a strong correlation between engagement and performance. Engagement, retention, productivity, and profitability were all considered.

Performance, Productivity and Profitability

The Gallup report highlights poor employee well-being costs businesses:

• $20 million (USD) of additional lost opportunity for every 10,000 workers due to struggling or suffering employees. In addition to the direct costs of lost productivity, there are indirect costs such as turnover, absenteeism, and diminished customer service quality.
  
  
• $322 billion in turnover and lost productivity globally due to employee burnout. Employers can reduce burnout costs by investing in employees' well-being and mental health to prevent burnout.

Engagement and Retention

• According to Human Resources Director Magazine, the average hiring cost has risen from $10,000 to $23,000, with some companies paying $40,000. Finding the right person for the job can be a long process with labour shortages. Retaining employees is better. To retain employees, a company should offer competitive wages and benefits, provide career development, and create a collaborative and creative work environment.

Australian Payroll Survey Highlights Burnout

The 2023 Australian Payroll Association Survey found that 46% of payroll professionals in large companies feel overworked, and 28% expect to quit within a year.

Two out of five payroll professionals are suffering from burnout, and 48.5% of those identified lack of leadership and understanding of payroll to be the key contributor to this.'

The survey results also highlighted that many employers need help understanding the payroll structure needed to maintain a well-governed, compliant, and efficient payroll.

The respondents classified the factors that contributed to burnout as follows:

• 5% Lack of leadership support and understanding of payroll.
• 8% Lack of payroll resources.
• 7% Lack of investment in the payroll function.
• 2% Unrealistic deadlines and expectations.
• 2% The hours required to work to do the job are too long (including weekend work).

“Perhaps the most alarming thing we see is the trend of senior management not understanding the payroll structure required to ensure a well-governed, compliant and efficient payroll,” said Tracy Angwin, Chief Executive of the Australian Payroll Association.

The Impact of Labour Shortages and Burnout

Labour shortages significantly impact employee burnout. Not having enough employees to handle the workload means existing employees are forced to take on more responsibilities and work longer hours, ultimately leading to exhaustion and burnout.

31.2% of payroll professionals expect to change jobs in the next 12 months.

The shortage of payroll talent makes it hard to replace resources, so many companies do not replace employees, which strains the department and increases workloads.

According to the Australian Payroll Association, investing in the payroll team and reviewing the payroll function for inefficiencies is the most effective strategy.

What are the Common Signs of Burnout in Payroll jobs?

• Working long hours: During busy periods - payroll deadlines, the end of the financial year, quarterly reporting, keeping up to date with compliance etc. Payroll staff often see increased workloads and long hours, resulting in depletion or mental exhaustion. 
  
  
• Tight deadlines: Payroll processing involves meeting tight deadlines, providing accurate reports, and ensuring all employees are paid correctly and on time. This creates pressure and anxiety and can be stressful. 
  
  
• Performing repetitive tasks: Payroll processing tasks are repetitive and routine and, with little automation, can be mentally exhausting, causing a lack of motivation. 
  
  
• Lack of recognition: Payroll staff often feel their hard work is unrecognised or valued by their colleagues or employers, leading to demotivation and burnout. 
  
  
• Limited resources: Payroll needs adequate resourcing to be efficient, and often this is not the case. Staff shortages and poor technology stacks affect efficiency and effectiveness, causing backlogs, fatigue, and frustration.
  
  
• Compliance fatigue: Australian payroll laws are complex, requiring payroll staff to understand the Fair Work Act and Regulations, the Superannuation Guarantee, the Taxation Administration, the Modern Awards, and Payroll Tax, to name a few - and because legislation changes constantly, it is difficult to stay informed. 

How Poor Processes and Technology Contribute to Burnout

While many factors contribute to burnout, two of the most overlooked culprits in the payroll industry are poor technology and inefficient processes.

In an interview with The Financial Review, Tracy Angwin said payroll teams are overworked because they use poor processes and technology and "just don't have the skills and technical knowledge they need".

"They rely on technology that often hasn’t been checked in years, and this technology reliance is the main cause of most of the underpayments published in the news over the past few years."

"There is very little time, if any, spent checking that the payroll is compliant. How many times do we hear CEOs blame ‘the system’?"

Payroll staff are looking for new jobs because their current employer has 'poor payroll systems and processes', Resulting in stress and burnout.

• Poor technology leads to burnout in other ways; for instance, a company using outdated or inefficient payroll software makes it challenging to process payroll and ensure accuracy and compliance. 
  
  
• Poor, inefficient processes also lead to burnout. Employees using outdated or inefficient processes become frustrated and exhausted, especially if processes need to be documented or explained.

Ultimately, poor technology and processes contribute to burnout, but with the right measures in place, employers can retain payroll staff and help their employees stay productive and engaged.

5 Effective Strategies for Employers to Reduce Burnout

Despite their importance, payroll staff are often overlooked and often face overwhelming demands, leading to burnout. Payroll staff ensure employees are paid on time and accurately and maintain compliance. They also take the brunt of employee questions and pay issues.

Employers must take proactive steps to ensure employees can handle workloads to ensure they do not burn out and leave. The following are five key strategies employers can use to manage payroll burnout:

1. Offer Flexible Working Hours: Help payroll staff manage their workload by offering flexible working hours. This includes allowing employees to set their own hours, work from home, or use flex days. Stress can be reduced by giving employees more control over their work schedules.
   
   
2. Provide Opportunities for Professional Development: Professional development can motivate and engage payroll staff. Updating skills improves efficiency and increases job satisfaction.
   
   
3. Implement the right software solution: Intuitive cloud-based payroll software saves time and reduces workload and stress. Workforce management software with flexible and intuitive cloud payroll, time tracking, onboarding and employee self-service improves accuracy and reduces the time spent on tedious and administrative tasks.
   
   
4. Encourage Breaks: Encouraging payroll staff to take regular breaks helps them focus and reduce stress. This includes taking a few minutes to step away from their desks, go for a walk, or have time off to reset.
   
   
5. Foster a Positive Work Environment: Employers should strive to create a positive work environment. Employees will be encouraged to bond and build relationships by regularly providing positive feedback and recognition

Making the Workplace a Healthier Place 

Overall, the steps outlined in this article can significantly protect employees' mental health and prevent burnout, enhancing their confidence and positive attitude. 

The Access Group specialises in payroll and workforce management solutions and outsourcing services to help your business. Contact us today to learn more about how we can help you streamline your business operations and get the most out of your employees. We can provide the tools and support you need to make your business successful.