Inflection Point: Enabling Strategy and Organizational Agility With Payroll

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.

For employees, the convergence of real-time payroll calculations, mobile-first design, APIs, artificial intelligence, and fintech will create a highly personalized, transparent, integrated, and always-on experience that will increasingly orbit them and be “everywhere” as they navigate their financial path.

Payroll’s Time to Shine

The digitalization of payroll is providing the much-needed relief the essential profession has needed for far too long. The “golden age” is the opportunity for payroll to lean in, embrace technology, and unlock its full value potential.  

Payroll leaders are ingrained with skills poised to stand out in the future of work. The World Economic Forum’s Future of Jobs Report 2023 cited skills such as analytic thinking, resilience, flexibility, agility, tech literacy, dependability, and attention to detail as the top skills needed in the future of work; these sound, unsurprisingly, a lot like a description for a payroll manager. 

This is genuinely payroll’s time to shine by leveraging its rich skills with the powerful insights it curates to tell stories that shape meaningful discussions, champion impactful change, and drive improved business outcomes.

Elevating Payroll Takes a Top-Down-Bottoms-Up Approach

Payroll stakeholders often ask me how to elevate payroll within their organization. How to influence executives to see payroll as more than a simple cost center, how to convince their organizations to look to payroll as a value driver and agility enabler, and how to fundamentally obtain that elusive “seat at the table” for payroll to have a voice.

Raising payroll’s position and value in the organization requires a “top-down and bottoms-up” approach. It requires senior leadership to recognize the value payroll can provide and enable its practitioners to unlock that value. It requires understanding that payroll is anything but simple and consists of equal parts employee experience and wellness driver, controllership and risk management, and a data-rich resource and advisor for supporting strategic plans.

Empowering payroll to achieve peak performance and unlock its full potential requires senior leaders to prioritize payroll and champion its success and importance within the organization. Payroll must be recognized as a key element in the employee experience and the broader HCM ecosystem and critical to executing strategy.  

Payroll must also be supported with adequate investments to enable a modern tech-enabled operating model. Positioning payroll for greater agility, resiliency, and scalability to support the organization’s path forward. Most importantly, unlocking and engaging its rich insights to support data-driven decision-making for improved business outcomes.

In parallel, it requires payroll to leverage modern infrastructure to ensure consistent, timely, accurate, and compliant payroll outcomes. Payroll must also shift its mindset and role from a simple back-office cost center and processor to more of an analytic strategic advisor and champion for impactful change. 

It must be a value enabler that supports the business as it navigates strategic imperatives—earning and leveraging its seat at the table to share its insights and perspectives in support of key initiatives.

The goal of HR transformation is only achievable with payroll at the heart. Payroll deserves far more support and respect than it’s been shown in the past; it deserves investment, empowerment, and engagement to unlock its agility-enabling value potential.