Payroll is one of an employer’s most important activities, and for some companies one of their largest costs. However, years of complex system integrations and incremental technologies have led to payroll processes that are often inefficient and hugely labour-intensive.
Globalisation and the geographical spread of the workforce—alongside a compliance landscape that’s constantly evolving and employees’ expectations for consumer-like experiences at work—have made manual input of payroll data into multiple systems an obsolete process. So, what’s next?
At Workday Elevate London, I sat down with Jason Davenport, chair, Chartered Institute of Payroll Professionals and founder, Calendar Consulting Ltd. Davenport was there to give payroll professionals insight into the road ahead, as well as discuss new developments that can help them play a more strategic role within their organisations. Citing a new study, ”The Future of Payroll 2019,” Davenport spoke to me about how payroll is becoming increasingly dynamic and the role of technology in shaping that.
Given the recent media spotlight on General Data Privacy Regulation (GDPR), it wasn’t too much of a surprise that GDPR was the number one key issue facing payroll teams in the study. How are businesses thinking about this and how can organisations deliver a GRPR-compliant payroll?
It’s important to remember that the payroll team is, by definition, used to managing and controlling data. The new requirements and controls demanded by GDPR have helped to strengthen the way businesses approach payroll, and GDPR serves as a stern reminder as to why it’s important to put the importance of the data itself at the forefront of peoples’ minds.
This isn’t an empty promise; fines have already been imposed for improper use of data and holding data that is not required. The importance for the payroll team is that they use the principles of GDPR to ensure they are compliant and do not put data at risk needlessly.
Getting deeper into the research, 26.5 percent of respondents reported an increase in the volume of payroll enquiries. Are organisations doing enough from an employee self-service perspective, and do you think this is a technology problem or a cultural issue for payroll departments?
Increasing queries are as a result of multiple factors. Employers should look to embrace the capability of technology to ensure the answers to frequently asked questions are more readily available. Payroll departments should promote the payroll calendar, and an understanding of payslips and the inner workings of pay, to help all employees across the workforce.
Financial health and well-being are frequently discussed, yet research still shows that lots of employees do not look at their payslip—so whilst many may query how pay is made up, many more may still be financially unaware of how their pay is structured and have questions that they are not asking. It’s in the payroll team’s interest to better educate the workforce using all channels of communication available to promote useful information.
One of the trends that emerged in the report was pay-on-demand. Is that something businesses are getting to grips with?
The digital age is impacting user expectations particularly around payroll. In an age of instant gratification, payroll services also need to be instant. On-demand pay is a key example of how this element of consumerism is coming to life in the market.
Personalising payroll—creating relevant, individualised interactions based on each employee’s situation and needs—will further enhance their experience. Tools and processes that allow for employees’ opinions and feedback to be submitted, received, and acted upon will gain popularity—particularly if they can be used from mobile devices.
Having separate systems for key business functions has traditionally led to inefficiency and errors, yet only 21 percent of respondents had HR and payroll tools integrated seamlessly. Even fewer (11 percent) had delivered finance and payroll integrated seamlessly. Why do you think businesses continue to choose this piecemeal approach and is that attitude changing?
I still see the decision between ERP and best-of-breed applications as a boardroom decision, and the past experiences of those making the decision ultimately define which tool is bought and deployed. It is important for the providers of full systems to ensure individual modules are not poorly bolted on to primary applications. Everything should work in harmony as a complete system, so that data is better managed.
A challenge for those deploying ERP applications is to ask businesses how well they harness data and which function performs which tasks—it may well be that through this process, the richness of data from tasks, such as workforce management and compensation reviews, can be truly brought together in one single system for maximum benefit.
Artificial intelligence and robotic process automation (RPA) are emerging as key business technologies. As these tools automate manual processes and simulate human behaviour, how do you see the evolution of the payroll professional, and how should businesses be thinking about the skills needed to run the payroll of the future?
The payroll professional is a very different role to a data processor and that is what payroll professionals should be thinking about. RPA will eradicate many manual processes, just as when bulk uploads emerged to replace manual data entry many moons ago.
I think that the advent in technology will allow payroll professionals to be more strategic. It will give them the time and space to really examine the data and to identify patterns around cost, spend, absence, and other critical lines within payroll that can shape other business decision-making. I think any technology that frees payroll resources up to spend more time on the more strategic elements of payroll is a positive thing, and that includes the assurance of compliance and legislation, such as GDPR.
As we look towards the future, blockchain is one of the technologies that could be game-changing, particularly from a payroll perspective. What are some of the potential uses and how do you see blockchain adoption progressing in the next year?
There’s a lot of talk about how blockchain can improve payroll. The Bankers’ Automated Clearing Services (BACS) process and other similar payment processes across the world take a number of days to complete the cycle, and this needs to be challenged to reduce that time and be more effective for employers and employees alike, especially as pay-on-demand becomes a consideration. Whilst there was an expectation of a faster adoption rate, I think the take up from a payroll perspective will only be increased as the technology is proven.