Payroll Management
Three payroll technology trends
Payroll management is amid a paradigm shift thanks to the technology and data increasingly underpinning it having a knock-on effect on the role it now plays in the wider business. Steven Watson, Payroll Specialist, Sage describes payroll technology trends.
Previously, payroll may have been perceived as purely a back-end process driver, relied on simply to pay employees on time and implement any new compliance changes that impacts wages. However, thanks to technology, the department has evolved into a more multifaceted discipline; now it not only ensures accurate compensation for employees, but also influences finance and HR teams with sharper insight into things like absenteeism and turnover.
Here, we are going to explore three payroll trends and how the department can best adapt and evolve to operate as efficiently and effectively as possible:
Steven Watson, Payroll Specialist, Sage
The role of payroll in financial wellbeing
Companies now recognise the critical connection between payroll data management and employee retention and wellbeing, helping to place more importance on the financial wellbeing of employees. The cost-of-living crisis has seen many payroll and HR teams bring in additional benefits to alleviate the burden placed on employees, such as allowing more hybrid/remote working, offering salary sacrifice schemes and providing spot bonuses.
Improving employee retention and enhancing financial well-being within businesses involves examining the links between payroll data and how they can provide these additional benefits digitally. This might be providing earned wage access, whereby employees can access their wages as they earn them, or technologies that can automate processes, such as employment verification, which is a process that allows employees to efficiently validate their employment and earnings to speed up a mortgage or personal finance application. This can offer two advantages; the first is that it lowers fraud and mistakes from a financial perspective, and the second is that it’s a more efficient process that cuts out unnecessary steps, saving colleagues time and stress, which may have hindered them from progressing through an application. It’s thanks to software that payroll’s role and focus has therefore extended beyond remuneration and is more about enhancing the whole employee experience package helping to benefit the company’s overall culture.
Flexing to the modern workforce needs
Employee costs can often be one of the largest outlays to a business, and so being able to gain detailed, accurate and usable financial information from your payroll software is crucial, especially in today’s economy where costs are tight and financial resilience is being tested. With many organisations offering flexible working options, and the likes of Gen Z having second jobs, this also has an impact on payroll when it comes to predicting the costs. Being able to have a system that’s much more flexible and scalable when it comes to employee working models can help to navigate the modern way of working.
The way in which businesses handle payroll and sensitive employee data can also damage employees’ trust and put the organisation at risk if not done carefully – research by Marlin PR on behalf of Sage shows that 35% of UK workers would find another job if their employer paid them incorrectly.
Boosting the payroll data pay-off
We are seeing more payroll professionals, especially those within larger businesses, being involved in more strategic business conversations than before, with payroll data and insights being used frequently to predict the impact of business changes. Some examples of the strategic questions that payroll is being asked include: What changes and benefits would we see if we take on more staff to turnover, costs and sustainability? What impact does a piece of new legislation have on costs, such as pensions, NIC or other associated overheads, and what would we need to change as a business to accommodate this? Other areas include seasonality such as information that can help better manage a given holiday period to keep costs controlled where working patterns are fluctuating from the norm.
And it’s not just internal planning and forecasting that payroll data can provide insight on. Global trends that have a direct effect on payroll, such as the gig economy and compliance, can also have reverberations on the wider business too, even if the company itself isn’t part of that trend. This means that analysis data provided by payroll systems needs to be not just transparently clear and reliable but also able to predict 12 to 18 months ahead to provide meaningful insights to the business both in real-time and for future planning. Gone are the days of payroll being purely a calculation output tool, rather it’s a strategic business planning system that enables better business decisions.
Even though the role of payroll is changing and becoming more involved with HR and business-critical decisions, having one piece of tech or siloed systems for everything isn’t necessarily the right solution. What is important is to have an infrastructure within payroll where systems communicate freely, and data can be moved around easily. That way, payroll is able to stay ahead of the changing data and business landscape, keep employees happy and provide valuable insights to the business; quickly, digitally and accurately.
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