This article, written by Pete A. Tiliakos, a principal analyst, advisor, and managing partner at 3Sixty Insights, first appeared at 3Sixty Insights and is republished with permission.
The current state of payroll and the future of the critical process and profession is reaching its much-needed inflection point.
Prioritizing the critical process and profession as a central element in the broader human capital management (HCM) strategy is vital to enabling organizational agility and elevating the profession from its simple processor stigma to a strategic advisor and center of expertise.
So Close…Yet Still So Far
Payroll has come a long way from its stone tablet and paper journal roots. Tabulating machines must have seemed like the future in the late 1950s to the few organizations with access to them. Eventually, desktop computers and the internet paved the way for payroll software to change how payroll was “managed.”
But payroll largely limped along with inadequate technology to support the dynamic nature of a modern global workforce. Payroll has also historically been overlooked when it came to investment or transformation. If it wasn’t broken—why fix it? As a result, payroll practitioners limped along with manual operating environments, disparate systems, and a lack of tools for accessing data globally.
Fast forward to 2023, and cloud technology, mobile-first design, APIs and bidirectional integrations, analytic reporting, digital pay methods, and cognitive technologies are all part of the modern payroll experience and central to enabling strategic plans.
Yet, sadly, these game-changing capabilities still haven’t reached most of the profession.
A recent Payslip and PayrollOrg global payroll survey found that 79% of payroll practitioners feel stressed, frustrated, and underserved by technology. Half feel payroll is still largely perceived as a simple back-off function by their organizations, and 64% of payroll operations are unfit to support their firms’ strategic ambitions.
Organizations still largely overlook the strategy-impacting value and organizational agility payroll can enable when modernized.
Anything but Simple
The pandemic was a wake-up call for many organizations, exposing payroll operating models and putting business continuity plans to the test. Firms lacking a modern global payroll operating model and infrastructure struggled with fragmented systems, manual processing, compliance, data access, and money movement for a distributed workforce. Those lacking a modern cloud HCM solution and integrated global payroll platform lacked real-time, clear visibility into their global workforce, making it difficult to plan, strategize, predict, and navigate the volatility and relief-related compliance requirements.
It also was an awakening to the fact that payroll isn’t just a “simple processor” down in the basement, printing checks on demand. Payroll is anything but simple and immensely impactful and valuable when fully modernized and synergized with the broader human resources (HR) strategy. It can provide tremendous value when its data is accessible and engaged on demand and its expertise applied to decision-making.
It must support and facilitate strategy by being agile, resilient, and scalable.
Payroll holds some of the richest yet most underutilized data sets in most organizations. The lack of modern technology leaves many firms failing to tap into those rich insights to enable organizational agility and drive strategic outcomes for their businesses.
Organizations that treat payroll as a simple processor and fail to invest in its modernization are increasingly at a competitive disadvantage in many ways—particularly as the organization grows and scales.
Payroll in the “Golden Age”
The pairing of cloud platforms, digitally native technology, and cognitive capabilities will profoundly impact the payroll profession, process, and experience.
As automation continues to give way to augmentation, we are entering into what I’ve called the “golden age of payroll.” Where the manual “ticking and tying” days of payroll-processing past are no more; payroll data is fully activated, and the profession is transformed into a high-value, high-impact center of expertise, strategic advisor, and agility enabler.
The payroll experience will continue to evolve.
For the practitioner, this means an always-calculating, real-time, prescriptive, and augmented experience. One that provides a single control center for payroll operations globally, on-demand visibility into payroll-rich data and insights, and bidirectional integration with key HR and business systems for sharing and activating its data.