Workforce Inefficiencies Drain Millions From UK Organisations’ Revenue Annually

UKG, a leading global AI platform unifying HR, pay, and workforce management, unveiled new research showing that inefficiencies in workforce systems are draining 2-4% of annual revenue from organisations worldwide. According to UKG’s new study, Optimising Workforce Operations, administrative burden alone costs an organisation with £1 billion in revenue about £6.1 million on average, while lost productivity, unplanned overtime, and employee burnout cost tens of millions more. These inefficiencies are most visible on the frontline, where disconnected systems hinder visibility and operational performance.

The survey of 1,400 global organisations with at least 1,000 employees and average revenue of £1.2 billion highlights issues driving losses and operational leakage from poor data accuracy, error-prone manual work, limited workforce visibility, and fragmented information flows across HR, payroll, and workforce management. Especially for frontline-heavy organisations, disconnected systems can limit seamless data sharing that impacts day-to-day operations and can contribute to higher turnover, payroll fragmentation, and rising employment agency costs.

Lost productivity represents the largest hidden impact, with organisations missing out on 2.7% of revenue, or £26.9 million for an organisation with £1 billion in revenue, because teams cannot operate efficiently when workflows are fragmented. This lost business value can put pressure on growth, competitiveness, and economic stability.

“While 2–4% cost leakage may seem small, it could equate to as much as £1.5 trillion [€1.7 trillion] across UK and European organisations,” said Russell Howe, GVP EMEA at UKG. “Organisations can help reduce these losses by adopting a workforce operating platform that connects data across people systems, cutting administrative burden and enabling frontline managers to focus on value-added work that supports customers, improves team productivity, and drives revenue.”

Additional Optimising Workforce Operations report findings for organisations of the same size include:

• The £6.1 million in administrative burden — which was calculated by multiplying time spent on administrative tasks by average hourly wages in respective industries and markets — represents the largest direct cost to businesses, driven by managers and staff spending hours on manual tasks, corrections, and approvals.
• Unplanned overtime with last-minute gaps filled at premium rates was the second-highest source of costs at £5.9 million.
• More than 6 hours per week of managers’ time (18%) on average is spent on administrative tasks which could be automated or handled by better systems.
• One-third (32%) of organisations say IT or system failures disrupt frontline staff at least weekly.

“Frontline inefficiencies are rarely a single, obvious problem,” said Avichal Kulshrestha, Principal Industry Insights Manager at UKG and author of the report. “Symptoms of operational friction — such as missed shifts, manual admin, payroll corrections, last-minute cover, burnout, turnover — create cost leakage and can limit teams’ ability to operate at full capacity. Workforce operating systems that share data seamlessly can reduce friction, surface real-time insights, and save money and drive productivity for frontline-heavy organisations.”

Leaders in HR, payroll, and operational roles and the systems they use play a pivotal role in solving these challenges, according to the report. The most effective organisations reduce administrative burden with integrated platform technology and process improvements that help provide executives with real-time operational visibility into what is likely their largest cost: people. The C-suite, where decisions are made and outcomes are determined, can turn everyday workforce data — including timekeeping, forecasting, scheduling, and payroll — into strategic advantage, operational resilience and predictability, and an improved employee experience with a consolidated view of workforce management, HR, and payroll.

“The findings highlight that the organisations best positioned for the future of work will be those that combine operational execution with optimised workforce decisions to ensure they have the right people with the right skills in the right place at the right time,” continued Kulshrestha. “This improves customer service, employee retention, productivity, and overall costs.”

Even the most well‑aligned workforce decisions can be undermined by operational inefficiencies. For example, according to a separate research report by UKG and KPMG, organisations lose 2-4% of total labour spend to “payroll leakage,” which refers to consistent, unintended financial losses due to inefficient payroll processes, system limitations, and even fraud, among other sources of waste.

Beyond operational leakage and lost productivity from poor workforce optimisation, organisations are under additional regulatory pressure to modernise workforce practises, including in the UK where most organisations are unprepared for the new Employee Rights Act.

“The reality is that compliance, engagement, and margin protection go hand in hand,” Kulshrestha said. “Regulation isn’t a burden to be managed. It’s an opportunity to empower employees through flexibility, transparency and choice. With the right workforce technology in place, employers can enhance compliance, enable modern scheduling and pay practices, and support their people through operational excellence that drives performance and flexibility, leading to business growth.”