Payroll automation takes everyday payroll processes and makes them faster, more accurate, and predictable.
For years, payroll has been seen as a cost center, not a vital internal support process, which is critical for keeping employees loyal and engaged. As a result, investment in digital payroll processes has tended to fall behind customer-facing functions.
This lack of investment was highlighted during the first lockdown when there was a need for remote access to payroll processes. In some organisations, the legal, moral, and employee obligations were challenging to maintain. Immediate, interim solutions had to be implemented to keep essential workers working.
Many of these fixes have since been converted into payroll modernisation projects. As it stands, 61% of respondents to the 2021 Global Payroll Complexity Index, published in October 2021, have outsourced some or all their payroll operations. Key drivers for this were:
corporate strategy for outsourcing
support M&A activities
Technology investment and adoption have risen in the past two years, recognised as essential by many to meet the demands put upon all business functions to increase efficiencies, lower risks, and create an employee user experience that enables optimum productivity. For the first time, the use of agile Cloud payroll technologies exceeds that of on-premises (62%), a rise from 34.8% in 2019.
Employees are driving the need for payroll process agility.
While business strategies and headlines remain focused on attracting, training, and retaining employees. If you do pay them on time, accurately, and in line with local, regional, and national regulations and taxes, this doesn’t matter. People will leave.
Further complexities are on the horizon for payroll. New working models potentially change how, what, and when employees are compensated. The increase in gig workers, and the rise in elastic hiring continues, so do those advocating on-demand pay. Traditional payroll systems are not set up to manage instances such as these.
The payroll function is becoming increasingly complex as companies struggle to keep pace with shifting workforce demographics brought on by the pandemic. It was a major achievement for companies to keep payroll running when business continuity was challenged, but it was far from ideal. HR and payroll leaders are eager to realize the benefits of digital payroll.
There is a definite trend as more businesses invest in HR transformation initiatives, so payroll modernisation is starting to be pulled along.
The thinking behind this is the need to streamline and simplify manual processes across all of workforce management, by using technology to reduce costs, increase efficiencies, and improve the user experience. To this end, 40% of companies say they will modernise payroll systems by 2023.
Payroll transformation for business sakes
As is usually the case with any business transformation project, there is no one-size-fits-all when it comes to digitising payroll. Before all else, it’s essential to understand the stakeholder needs for payroll investment. This will enable you to:
Formulise the global payroll strategy
Update payroll operating models
Make payroll intrinsic to strategic business planning
address the lack of investment in digital payroll processes and additional integration
It’s not a straightforward re-evaluation. There are multiple stakeholders invested in payroll processes. These range from those being paid to people who manage the operations and require it to be an efficient, low-risk, low-cost invisible process. In addition, authorities expect it to be fully compliant and reported. All must be equally satisfied.
Payroll modernisation projects need to flex to the needs of the business. Therefore, the technology chosen must be agile. The two obvious options here are outsourcing or investing in a scalable cloud HCM and payroll system that can be added to and integrated with other process systems. This approach is also future-proofed due to the nature of the purchasing model.
Boost the effectiveness of your payroll operations
Payroll automation technologies will transform your payroll function and eliminate many of the risks and challenges associated with manual processes. The right technology choices and integration partners can integrate your payroll with HR and workforce management software.
Other functions, including finance and procurement, can also be integrated to provide a powerful platform for managing your total workforce's careers, development, cost, and efficiency. This standardised data source can then offer business intelligence based on strategic business intelligence.