What is the future of payroll in a hyper-connected world?
In a hyper-connected world, everything is communicating.
More data, more devices, more interaction; with integrated platforms joining the dots and streamlining the sharing of information between people and devices.
Improved accuracy and efficiency, real-time pay and increased employee satisfaction is where payroll fits into the context of hyper-connectivity in the future.
It also addresses two of the biggest challenges payroll departments face: inflexible systems and lack of insight into employee data.
So, could hyper-connectivity be the holy grail of tomorrow’s payroll?
The next evolution of payroll
The pandemic forced many companies to look at their internal processes, and many found there were better ways of doing things. This is true for payroll management, too.
Job relief schemes and new legislation (often applied with very short notice), remote working and changing employee expectations put payroll management under significant pressure to streamline the process and be more agile in their approach.
Evidence of this advancement is found in the Global Payroll Complexity Index Report, citing 62% of organisations are now utilising cloud software as a means of processing their payroll, up from 34.8% in 2019.
The new payroll manager
With the industry facing continued digital transformation and the next evolution of payroll knocking at the door, some might be wondering if this is the end of the payroll manager: it's not.
The role of the payroll manager is going to evolve from data management to one of more strategic importance in the future as software continues to be integrated into everyday work life.
Automation will reduce the time and resources spent on static and manual processes, enabling payroll professionals to focus on adding value and improving employee satisfaction which can positively impact the whole business.
The possibilities of smart payroll
Traditionally, departments have operated in silos, often with the risk of work being repeated.
Integration with other departments such as HR or finance will allow for improved business performance and enable better decision making with deeper insight and predictive analytics; shifting payroll from back-office and operational to strategic.
According to the Global Payroll Management Institute, “The business intelligence that can be reported from standardised payroll data, factored with that from other departments, is potential strategic planning gold.”
But smart payroll doesn’t stop there; it can also redefine capabilities and provide tangible financial benefits.
Redefining payroll capabilities
By improving the accuracy and efficiency of payroll, where non-compliance is just not an option, teams will be able to focus on areas that need critical thinking.
Enhanced payroll could include reducing cybersecurity risks, improving employee benefits, optimising employee verification and exploring global payroll.
Moving forward, payroll professionals will also need to be upskilled to read, interpret and analyse workforce trends and patterns and automation will provide more time to facilitate this.
Equally, this could aid with retention efforts as career paths and progression opportunities are mapped out.
The benefits of real-time pay
With costs continuing to rise at the fastest rate in recent history, it's understandable that financial security is at the forefront of conversations.
Cashflow has always been one of the key challenges SMEs face and businesses are looking to improve cost management and efficiency. In work poverty is also a rising concern, with Google recently reporting a deluge of ‘payday loan’ searches, the highest since 2020.
Smart payroll can benefit employers and employees alike.
Changing the pay frequency from the standard once-a-month structure to real-time pay can improve the cashflow within a business.
Switching to real-time pay will allow employees have more control over their personal finances, improving the employee experience.
This allows for financial management to become more strategic, and you can expect to see more of this in the future.
Should you outsource your payroll?
I don’t think there is a straight-cut answer to this; there are also varying factors from business to business that need to be considered.
Increasingly, companies are outsourcing some or all their payroll operations and in a recent report, 61% of respondents did just this.
There are also numerous benefits to doing this including extensive experience, strong compliance frameworks, reduced headcount and improved efficiency.
Equally, there is the option to have the best of both worlds by flexing between in-house and outsourced work when balancing workloads.
So, it's certainly an option worth considering in the future.
As payroll continues to evolve in a hyper-connected world, it is increasingly impacting every aspect of business.
The future will see more changes for payroll professionals, but it also provides the opportunity for growth and to add value to your team and business; but to do this companies must be prepared to facilitate agile one-touch processes and embrace technology, not fear it.
As my colleague Jim Scott, Managing Director, Accountancy said in a recent article, “Payroll providers should empower you to work smarter, not harder.” I couldn’t agree more.
Find out how you can work smarter with our payroll software.