Payroll process transformation – what do HR directors need to know?

Again, controls, visibility, policies and governance, integration with data from other functions or parts of any business, process assurance and efficiency, and the visibility standardized, and centralized data provides to ensure efficiencies and process improvement and ultimately colleague experience.

HR directors are also keen to bring payroll in line with the transformation of other HR functions. In many larger firms, overall HR platforms, learning and development, recruitment, reward, and recognition, for example, are now largely self-service. Accessible via a mobile device these are great for anyone not in a desk-based role. For HR, this increases the likelihood of people engaging and taking advantage of L&D resources and career advancement opportunities.

The competitive advantage for both business and talent acquisition that come from the clarity, insights, and governance process standardization brings are manifold.

The operational benefits of single source, real-time, and highly accurate HR insights and data exciting the wider boardroom too. Nearly all decisions, current and future, loop back to people, may this be talent availability, costs planning, supply capabilities or performance, for example.

For those able HRDs able to provide these though the pandemic has raised the profile and status of all HR departments. There is a clear link to the performance of firms with digitized business processes and those without through the pandemic. This loops back to why there is such a leap in proposed spending for modernization of HR and payroll the world over,

Pre-pandemic, with payroll the thinking tended to, “it’s on premise and it works, let’s leave it.” Lockdowns proved that “it works” is not enough. The past few years proved too many legacy and on-premise payroll systems don’t have the dexterity needed for the modern world.

While some are fast reaching end of life for support, the major issue with older payroll set-ups is they’re near impossible to access remotely without significant IT support investment, which took time. This raised the risk of missed payroll, leading to potential loss of staff loyalty, and compliance failure. Both costs too great to carry off in an already crisis situation.

The GPCI also reveals some more hidden challenges including the very real possibility of unidentified payroll leakage. Year on year this can cost US businesses tens of millions of dollars until identified. For some this might never be.

For HR, this adds to the total cost of payroll and so reduces funds available for not just talent acquisition, but the training and development of much needed people. The business case for payroll modernization has never been stronger.

With the correct access policies in place, there can be no more secure and efficient way to process payroll than in a well-managed or outsourced digitised payroll process. Platinum level security and personal identifiable information (PII) is by default. Where processes are automated the risk of human error is eliminated.

Artificial intelligence also serves to alert administrator to any anomalies ahead of issue and robotic process automation and the rise of one-touch payroll will drive mean time to payroll process completion without effort to the maximum. The GPCI report looks further at the rise in these innovations, and the benefits thereof.

2022 is about driving efficiency. Not just in HR, but across the business. We need better colleague experience through better controls, leaner processes, greater efficiency, and optimal functionality.

Digital transformation is the only way to achieve this. The payroll system chosen, whether managed in-house, by a specialist service provider or fully outsourced, must support continuous modernization. It also needs to flex in the case we have another unprecedented event.

Payroll innovation is rapid, and your competitors are investing. For the first time the installed base of Cloud payroll exceeds all other processes. 63% of firms invested in the past two years, a rise from 34.8% as reported in the 2019 Global Payroll Complexity Index report.

HRDs have the opportunity to drive. To make payroll data the heart of the business. People matter more than ever. You can automate many aspects of a business, but without people, you can’t, at least for now, fully function.

Across the board we’re facing talent shortages, but especially so in payroll. The failure of firms to forward plan to ensure the supply their products and services can’t be repeated if they want to survive. It is vital that the digital transformation you lead is focused on efficiencies, better operating models, and controls.