How to build a blockchain-based payroll system. Article 7 of 10

This is article 7 of 10 forming the seventh part of a series of articles dedicated to my attempt at helping Payroll & HR professionals understand the potential impact that both Blockchain and Cryptocurrencies could have on the future of Payroll & HR.

To view the earlier article in the series – click here:

  1. Article 1: How will Blockchain, Cryptocurrency and DLT technologies affect the future of Payroll & HR
  2. Article 2: Will companies start to payroll its employees in cryptocurrency?
  3. Article 3: How will blockchain affect HR Recruitment Processes?
  4. Article 4: What are smart contracts and how will they affect payroll and HR?
  5. Article 5: What benefits could blockchain bring to the payroll industry
  6. Article 6: Are Blockchain Payroll Companies the Payroll Future?

Also, check out The Payroll Podcast with Anita Lettink, SVP of Global Alliances at NGA HR which discusses ‘Blockchain and the Future of Payroll & HR’ in considerable detail if you wish to fast-track your learning. You can subscribe to the Payroll Podcast here: Apple Podcasts

How to build a blockchain-based payroll system

One company produced an interesting blog about creating a blockchain payroll system back in January 2017, before the explosion in the price of Bitcoin accelerated the level of interest from the media, government regulators, and from business service companies. It was this article that inspired these series of articles too, so it is worth a read.

Teemu Turunen of Finnish mobile software company Futurice tasked his team to experiment with using the Ethereum blockchain to recreate the company’s payroll system [https://futurice.com/blog/payroll-system-in-blockchain].

Turunen allows his team of programmers to experiment with open-source software problems in their own time.

When they do this, they report back to the company the number of hours they’ve spent and receive a paid bonus for these hours on top of their normal monthly paycheck.

Calculating these hours, and the relevant payment that should go to each member of staff, is tricky and time-consuming, because not every programmer takes advantage and so there is no “one-size-fits-all” payment that can be made to every employee.

“Some people report contributions every month, some once a year, some never,” says Turunen

“The popularity has been on the rise though and we haven’t had any automation in handling these reports. It’s been slowly becoming a time-consuming chore to collect all the data at the end of the month and report them to payroll.”

Instead of reporting their bonus hours to a central person, who then passes them on to the payroll department, the idea was for each employee to enter their bonus hours onto an Ethereum-based blockchain, where the payroll calculation would be done automatically.

Here’s how it would have worked.

  1. The employee logs on to an internal company webpage where she enters the time in hours and minutes of her free time she has spent on bonus work. She also adds a title of a publicly-accessible URL which helps the company identify the contribution. Along with the time spent, and the URL, is a short description of the contribution made, for example:

“Investigating how to speed up development between teams when we use open source code”.

  1. The above information, along with a unique ID for the employee, gets stored in the Ethereum blockchain.
  2. The same information is also sent to a company instant messaging channel.
  3. At the end of every month, an application is run on the blockchain to automatically calculate the bonus for every employee who has reported doing extra hours in their free time.
  4. This information is auto-forwarded to the Payroll Department and the monthly salary is paid with the bonus intact, if relevant.

 

In creating this experiment, Futurice ask an important question that is not often answered:

  • Why do we specifically need to use a blockchain to make this automatic calculation?
  • Why can this calculation not be made by an equation held in a centralised database?

At the most basic level this could look like an Excel spreadsheet. This spreadsheet is kept in-house and only the Payroll Department has administrator access to confirm that the correct calculation has been made.

  • The Ethereum blockchain is public, but is this level of privacy acceptable?
  • Would you want every one of your employees to be able to see what bonus payments have been made to every other of your employees?

The other fundamental challenge with public blockchains is scalability. As the size of a public blockchain grows (that is, as more information is entered into it), the speed at which transactions can be verified slows down. The storage, bandwidth and computing power required to maintain it also increases.

This is because every ‘node’ that verifies that the information is correct must run through every transaction that came before, as well as all the new ones, to make sure the master copy of the blockchain looks correct.

When we look critically at companies who are trying to sell you the idea of a blockchain-based payroll system, we find the same kinds of issues.

It all comes down to these two linked questions.

  1. Do you as a business owner need to understand every function of a payroll database system? Probably not.
  2. Do you as a business owner need to have an understanding of why using blockchain-based payroll will save you money, over any other compatible programme or system currently available? Probably yes.

Futurice’s conclusion?

“There’s no reason why this couldn’t have been done without using blockchain.

“Deciding on what to use blockchain for is a difficult question, and also a question most companies investing in blockchain implementation are currently asking themselves.

“One thing that is quite certain though is blockchain is mainly suitable for creating data storage systems that work using predefined rules but are not controlled by any single entity.

“In cases where giving away control is not acceptable, it is also possible to create private blockchains with no third-party involvement whatsoever.

This, however….

“would reduce the blockchain to a simple fault-tolerant distributed database…which is quite unlikely the most suitable technology for the job.”

Which basically suggests that we don’t need blockchain at all!

What do you think?

Please share and comment – I will try to interact with as many as possible!

Future articles in the series will include:

  • When should businesses start planning for blockchain?
  • Risks and costs
  • Conclusion – is blockchain and crypto the future?

Thanks 🙂

As always, whether you love payroll or love HR, love what you do, work smart and work hard – just be careful not to overdo it.

Visit our website to access more blogswhitepapersThe Payroll Podcast and more content about all things “Payroll and HR”.

If you are looking for expert talent in the fields of Payroll, HR or Reward, then please contact me and I would be delighted to discuss how we can help.

Nick Day | Managing Director

JGA Recruitment | JGA Payroll & HR Recruitment

Email: nick@jgarecruitment.com | Tel: 01727 800 377

Sources:

  1. https://futurice.com/blog/payroll-system-in-blockchain

Images:

What benefits could blockchain bring to the payroll industry? Article 5 of 10

This is article 5 of 10 forming the fifth part of a series of articles dedicated to my attempt at helping Payroll & HR professionals understand the potential impact that both Blockchain and Cryptocurrencies could have on the future of Payroll & HR.

To view the earlier article in the series – click here:

  1. Article 1: How will Blockchain, Cryptocurrency and DLT technologies affect the future of Payroll & HR
  2. Article 2: Will companies start to payroll its employees in cryptocurrency?
  3. Article 3: How will blockchain affect HR Recruitment Processes?
  4. Article 4: What are smart contracts and how will they affect payroll and HR?

Also, check out episode 09 of The Payroll Podcast with Anita Lettink, SVP of Global Alliances at NGA HR which discusses ‘Blockchain and the Future of Payroll & HR’ in considerable detail if you wish to fast-track your learning. You can subscribe to the Payroll Podcast here: Apple Podcasts


Today, I would like to help you understand what benefits blockchain could bring to the payroll industry. 

So, lets start with the (in theory) obvious benefits that blockchain technology could bring to the payroll industry:

  1. Blockchain-based payroll systems should be more secure, and cheaper, than non-blockchain-based systems.
  2. The distributed ledgers are practically impossible to change once information has been entered and the data confirmed by all participants on the network.
  3.  Transaction fees between parties should be much lower, because blockchain-based payroll cuts out the need for a middleman (usually a bank) to process payments.
  4.  Any technology which can both speed up and simplify payroll will be of huge benefit to the millions of businesses worldwide.

Of course, blockchain enthusiasts will know all of the above which is why they are busy trying to apply their technology to this system.

Clearly, then the field is ripe for innovation. What’s not yet clear is whether blockchain is the right innovation.

So let’s examine the practicalities a little closer to see if we can get to grips with the reality.

Firstly, any company that has in excess of probably 500 employees, will likely require a dedicated payroll function that is responsible for processing payroll and potentially also for invoice management too if they are running large contractor payrolls.

As the payroll employee volumes increase, so do the risks and chances of errors occurring which can result in disputes, problems and payment delays.

Removing the possibility of human input error by using a tamper-proof blockchain like Ethereum would appear to be a step in the right direction.

In addition, it appears that the companies who will really benefit from blockchain-based payroll are those with international workforces, at least part of which are based remotely.


Why?

Because blockchain promises faster cross-border payments, less expensive cross-border payments and less error-prone payments, thus solving one of the biggest costs associated with international payroll.

Fewer errors and faster payments means fewer disputes between a company and its employees.

For companies with many international employees applying themselves to projects all across the globe, it would seem that blockchain-based payroll systems would work well.

But few serious developments have been made for companies like yours to easily integrate blockchain-based payrolls into your current systems, or to move your entire payroll away from user-controlled databases and into a blockchain system.

ADP is one of the world’s best known payroll software companies. In a report from May 2018 to the Global Payroll Association, ADP noted that it is currently investigating how blockchains could be used

ADP’s vice president of corporate strategy Tashina Charagi told the GPA:

“As far as blockchain applications and payroll [go], one of the first things that comes out is…not only faster cross-border payments but less expensive and less error-prone cross-border payments.”

Put that statement alongside this rather critical one, published by newswire Reuters on 13 June 2018.

“Banks are unlikely to use distributed ledgers [another word for blockchains] to process cross-border payments for now because of scalability and privacy issues, according to Ripple, one of the most prominent startups developing the technology.”

Remittances and payments

The main issue that blockchain is thought to be able to solve in payroll is remittances – sending money across international borders more quickly and without the hefty transaction fees that workers face when converting salary or contract payments back to the local currency.

International businesses with many overseas employees feel the pain of payroll more than smaller, domestic, companies.

There are the costs of currency volatility – Deloitte’s 2017 report on blockchain notes that:

“Hourly changes in exchange rates are routinely taken advantage of by intermediaries”. However, it continues: “So, time is money and an international payroll blockchain solution simply offers a faster solution than existing models.”

Is this strictly true? Are blockchain payroll systems “simply faster” than existing models?

Not necessarily, given our earlier focus on how the size of blockchains increase as more data is inputted.

The longer your company’s blockchain-based payroll is running, the harder it becomes – and therefore the more time it takes – to verify transactions.

The calculation of the hash function that every block requires to be added to the chain scales up in difficulty along with the size of the blockchain. Does this sound “simply faster”?

Essentially, it is clear that blockchain could bring a number of benefits to improving a payroll processing operation. However, at present, it is unlikely we will see the technology become widespread until concerns regarding privacy, scalability and integration are tested and improved.

What do you think?

Please share and comment – I will try to interact with as many as possible!

Future articles in the series will include:

  • Blockchain payroll companies
  • How to build a blockchain-based payroll system
  • When should businesses start planning for blockchain?
  • Risks and costs
  • Conclusion – is blockchain and crypto the future?

Thanks 🙂

As always, whether you love payroll or love HR, love what you do, work smart and work hard – just be careful not to overdo it.

Visit our website to access more blogswhitepapersThe Payroll Podcast and more content about all things “Payroll and HR”.

If you are looking for expert talent in the fields of Payroll, HR or Reward, then please contact me and I would be delighted to discuss how we can help.

Nick Day | Managing Director

JGA Recruitment | JGA Payroll & HR Recruitment

Email: nick@jgarecruitment.com | Tel: 01727 800 377

What are smart contracts and how will they affect payroll and HR? Blockchain Article 4/10

This is article 4 of 10 forming the fourth part of a series of articles dedicated to my attempt at helping Payroll & HR professionals understand the potential impact that Blockchain and Cryptocurrency could have on the future of Payroll & HR.

To view the earlier article in the series – click here:

1. Article 1: How will Blockchain, Cryptocurrency and DLT technologies affect the future of Payroll & HR

2. Article 2: Will companies start to payroll its employees in cryptocurrency?

3. Article 3: How will blockchain affect HR Recruitment Processes?

Also, check out episode 09 of The Payroll Podcast with Anita Lettink, SVP of Global Alliances at NGA HR which discusses ‘Blockchain and the Future of Payroll & HR’ in considerable detail if you wish to fast-track your learning. You can subscribe to the Payroll Podcast here: Apple Podcasts

Today, I would like to help you understand what a “Smart Contract” is in relation to blockchain technology and how these are likely to affect payroll and HR processes.

4. What are smart contracts and how will they affect payroll and HR?

Before I explain what a smart contact is, the reason we are likely to encounter them in the future is because they could be used to payroll employees in a way that is near-instant. Smart contracts could streamline existing payroll and HR functions significantly, thereby saving businesses considerable money on its back-office function expenditure.

Smart contracts, in theory, could be used by payroll departments to pay contractors and freelancers who only interact with companies on an infrequent basis to complete specific portions of work.

More pertinently, is the fact that they are already being used on the Ethereum blockchain, which is the second-largest public blockchain in the world.

So what are they, how do they work and why are the relevant to payroll and HR?

A smart contract is a set of promises written out in code which works by using statements like: ‘If This, Then That’ (IFTTT). Once set in motion, it is designed to be entirely dependent on its code and irreversible.

Let’s imagine then, a smart contract between our company and a contractor.

When a certain number of hours of work have been completed (If This), our smart contract automatically pays our contractor (Then That) by deploying this piece of remotely executable code, which is linked to an instruction from our company bank account to the contractor’s bank account.

We wouldn’t need to contact our bank on a monthly payment run, along with all the payroll processing time that entails; instead, we just deal direct with one another, with the smart contract as a guarantee that work is completed.

While banks are investigating the use of smart contracts, they’re not so keen just yet to use public blockchains like Ethereum to link accounts together because of both privacy and security concerns.

Not many companies would be happy for all their transactions to be publicly available to anyone who wanted to view them, but this is possible on Ethereum.

Still, there are some up-and-coming pilot programs in development.

Because Ethereum is a public, open source blockchain, any person or company can view the source code and copy it to develop their own blockchain system.

JP Morgan has done this with their Quorum application, which itself is open source [https://uk.reuters.com/article/us-blockchain-jpmorgan/jpmorgan-mulls-spin-off-of-blockchain-project-quorum-sources] and could be built upon or modified by other parties.

We know that freelancers and contractors face horrendous difficulties getting swift payments for their work, and delayed payments can put fledgling businesses in serious difficulties.

JP Morgan’s Quorum platform is an upgraded version of Ethereum and is being trialled to offer faster royalty payments to the thousands of independent game developers working on Microsoft’s Xbox games.

Currently, payments are slow and laborious, taking up to 45 days to be agreed and arrive. Quorum promises daily payments triggered by smart contracts.

Smart Contract Risks

As we mention above, smart contracts are in theory a sound application of blockchain technology. But there are risks to consider.

In order to function as it was intended, the code behind a smart contract must be perfect.

All software, including professional, enterprise-grade software, contains bugs. Only a very tiny proportion of code is technically perfect.

Developer Steven McConnell writes in his seminal book Code Complete [https://www.amazon.com/Code-Complete-Practical-Handbook-Construction/dp/0735619670] that the industry average is around 15 to 50 errors per 1000 lines of code.

In its code released to the general public, Microsoft manages errors at the lower level, at about 10-20 bugs per 1000 lines.

The only people producing code with no errors at all are software developers at NASA working on the space shuttle, writes McConnell, “who achieved a level of zero defects (bugs) in 500,000 lines of code.”

Smart contract payments are irreversible, so there is no way that a company could get its money back if a bug like this were exploited.

In 2017, nearly $55 million-worth of Ethereum’s cryptocurrency Ether was stolen because a still-unknown hacker exploited that bug in the source code.

The bug allowed a payment receiver to request payment multiple times, getting away with repeat payments before the blockchain system had a chance to update itself.

Covering this story, Bloomberg’s Matthew Leising reported [https://www.bloomberg.com/features/2017-the-ether-thief/] how unforgiving tiny errors really are.

He writes: “The order of commands [in this piece of code] allowed cryptotoken holders to withdraw any profits made on their investments….Instead, it became one of the biggest backdoors in hacking history…If the capital T inline 666 had been a small t, that would have prevented the hack.”

For security’s sake, hosting smart contracts on our in-house private blockchains, instead of in the public Ethereum blockchain, could be the future for smart contracts in business.

But private blockchains ultimately have one major flaw.

If only a handful of people are allowed to update transactions on a private blockchain, they become single points of failure and an easy target for hackers, who could gain control of an entire blockchain by attacking only a small number of computers.

If your payroll department looks after the blockchain, any hardware failure or file corruption would be extremely serious – because there is not a backup network of computers also updating the correct copy of the blockchain.

Conclusion

Ethereum, which launched in 2015, can process transactions at a much speedier rate than its older cousin Bitcoin.

Scalability is a significant issue for Bitcoin, as the more blocks of transactions are added to the chain, the longer it takes to verify transactions. It takes around 10 minutes to update the Bitcoin blockchain. With Ethereum, it takes approximately 12 seconds.

Still, 12 seconds is a very long time compared to modern databases, which store and process information in milliseconds.

Smart contracts may well be the future of contract payments for payroll operations of the future, and these early forms of private blockchain could be used to streamline payments and processes. But there are few tangible products for businesses to adopt as of yet.

It is likely that private companies will continue to develop private blockchains for smart contract development.

However, pilot projects are still at an early stage and will not reach smaller businesses or mainstream adoption for some years.

What do you think?

Please share and comment – I will try to interact with as many as possible!

Future articles in the series will include:

  • What benefits could blockchain bring to the payroll industry?
  • Blockchain payroll companies
  • How to build a blockchain-based payroll system
  • When should businesses start planning for blockchain?
  • Risks and costs
  • Conclusion – is blockchain and crypto the future?

Thanks 🙂

As always, whether you love payroll or love HR, love what you do, work smart and work hard – just be careful not to overdo it.

Look around our website to access more blogswhitepapersThe Payroll Podcast and more content about all things “Payroll and HR”.

SME’s are the New Tech Innovators. Be Prepared…The Robots are coming…

SME companies are no longer playing catch up. Today, just about every single mid-market company is using some form of augmented or virtual reality while at least half of them are using interactive tools and demos to improve both employee and customer interactions. Within payroll and HR we see a huge rise in the implementation of Robotic Process Automation (RPA) too, and it seems this is a trend that is set to stay. Attitudes have shifted greatly, and SME companies are now embracing technology. Especially new technologies. They can see that these technologies can significantly impact on efficiency leading to considerable savings integral to business growth strategies.

 

 

New technologies and Robotic Process Automation (RPA) is automating management and people requests; reducing process delays; cleansing data to ensure consistency and accuracy; streamlining information across platforms; handling notifications and more. These technologies can be attributed to delivering significant ROI (return on investment) by improving cost savings and increased productivity.

Where before most mid-market companies viewed IT as more of an administrative function, they now view it as something that can drive strategy, technology adoption, and integration. Payroll and HR Managers are also at the heart of this, realising that a new HRIS or Payroll system can dramatically impact overall efficiency. This change began with companies moving to the cloud which has allowed businesses to adopt emerging technologies. By embracing new technologies and Robotic Process Automation (RPA), they can maximise growth quicker than ever before. Subsequently, we see more and more IT, Payroll & HR leaders taking control and setting the technology agenda within businesses. By harnessing the latest innovations, SME’s are no longer forced to play catch up with their larger competitors.

Companies are always looking for the next innovation, and we are now seeing a rise in the implementation of IoT (Internet of Things) into business / IT programs. The building of IoT capabilities will do nothing but increase forward momentum. Cloud computing evolution has laid the groundwork for an acceleration in emerging technology adoption. This is helping SME’s to grow faster as they anticipate and track business processes and performance more accurately and in real-time allowing them to develop a corporate strategy quickly and proactively in response.

In addition to new tech, RMA and IoT is the increased usage and reliance on cognitive and predictive analytics to allow SME’s to gain valuable insights into employee and customer behaviours. These analytics help firms to become leaders in their sectors – leading to both economic growth and new employment opportunities.

HR and Payroll software is now more affordable than ever due to the increased competitiveness of the industry. This new-found affordability is allowing businesses to obtain and access complex tools and systems that can significantly contribute to corporate growth. Implementing excellent human capital solutions allow fast-growing companies to expand much more quickly without the dilution of their corporate culture and it is evident recent HRIS and Payroll technology trends are already driving changes in the workplace.

Not so long ago, a lot of HR departments thought that they could lure Millennials in with free snacks, massage chairs, and ping-pong tables. Millennials don’t want bean bag chairs anymore. They want effective monitoring and appraisal from senior management and more efficient collaboration in the workplace. With this in mind, the companies that embrace these new technologies are now able to attract the top talent that they’re looking for more quickly. This stronger corporate culture and the new outlook on the values in the workplace is what employees in their twenties and thirties are seeking. They want a work environment that reflects their core values and embraces current technologies.

Though the idea of people analytics isn’t new, HR and payroll professionals will be applying them in a variety of new ways over the next few months and years. Attracting top talent remains and developing employee branding remain key HR priorities, and this often hinges on the implementation of smarter / better HR technology.

The bottom line is that Payroll and HR managers have started to recognise and accept these changes. However, they need support from the company the directors who hold the purse strings to enable them to implement technical change. The ever broadening advancements in HRIS and Payroll Technologies are often behind current corporate surges in growth. I suspect that as these purse strings loosen, we may see a few more growth surges yet too from unexpected players.

Be prepared. The robots are coming!

I would welcome your views on how your business is embracing new technologies and how you see the future HR and Payroll technologic landscape shaping up for the future?

 Thanks for reading.

 

Please share and comment – I will try to interact with as many as possible!

—————————————————————————————————-

This article was written by Nick Day, Managing Director at JGA Recruitment – the leading Global Payroll and HR Recruitment Specialist Employment Agency.

If you are looking for expert talent or advice on anything Payroll or HR related, then please contact me for a 15-minute call and I would be delighted to help.

Nick Day | Managing Director

JGA Payroll & HR Recruitment | Email: nick@jgarecruitment.com | T: 01727 800 377

Image: https://www.123rf.com/profile_niserin

Links:

JGA: https://www.youtube.com/watch?v=karSfuXYfh4

Payroll: https://www.youtube.com/watch?v=7ICEI1qpeBY

HR: https://www.youtube.com/watch?v=BBIZznZogW8

How will blockchain affect HR Recruitment Processes? Article 3 of 10

This is article 3 of 10 forming the third part of a series of articles dedicated to my attempt at helping Payroll & HR professionals understand the potential impact that Blockchain and Cryptocurrency could have on the future of Payroll & HR.

To view the earlier article in the series – click here:

  1. Article 1: How will Blockchain, Cryptocurrency and DLT technologies affect the future of Payroll & HR
  2. Article 2: Will companies start to payroll its employees in cryptocurrency?

Also, check out the latest episode of The Payroll Podcast with Anita Lettink, SVP of Global Alliances at NGA HR which discusses Blockchain and the Future of Payroll & HR

 

Today, I would like to discuss how I think Blockchain may affect Human Resources in relation to recruitment-related administration and storing personal data…

Article 3: How will blockchain affect HR Recruitment Processes?

A large proportion of time in the life of an HR professional is spent repeating the same actions over and over again. This is especially true with recruitment, vetting and onboarding.

Now, if I was to say that we could automate some of these repeated actions: chasing down references, checking work histories, verifying credentials etc., etc., I am sure you would be very interested in understanding how. Not only would this save time, but it would also save money, and it would allow HR professionals to spend more time on strategy and less time on repetitive HR administrative tasks!

You will soon begin to hear many firms peddling their technological wares claiming

“Blockchain is the answer”.

You will discover how blockchain technology could speed up the hiring and recruitment process, by removing the need to contact third parties to confirm information.

Right now, there are even pilot programs automating such repetitive tasks already. For example, in this group of Greek universities [link], they are experimenting with ways to add student diplomas to a blockchain database.

However, the truth is that despite these pilot projects existing, industry-wide adoption remains a problem for blockchain-based technologies.

There are various reasons for this.

Let’s explore…

 

Using Blockchain in Recruitment

There are two major strands of how blockchain systems could affect recruitment. Each relates to a different kind of blockchain: the first is private and permissioned, and the second is public and permissionless. We go into more detail about this in the latest episode of The Payroll Podcast.

However, for now, let’s consider the analogy IBM use of the internet (public) vs intranet (private) to help describe the differences between these two types of blockchains.

  1. Public blockchains: publicly available, decentralised blockchains – where anyone can view the information on a blockchain without first having to ask for permission, login credentials or a password – also known as permissionless blockchains
  2. Private Blockchain: private, in-house, centralised blockchain-based databases where only a select few people can gain access – also known as permissioned blockchains

So how does this affect recruitment for Employers?

Firstly, companies who want to be seen as being ‘ahead of the curve’ and ‘technologically advanced’ they may consider employing some form of blockchain solution to help with their recruitment and HR systems.

Why? Because right now it is likely that those who do decide to implement these new types of systems will use it in their marketing in an attempt to attract forward-thinking, technologically-curious applicants to the business. It could also appeal to companies desperate to attract ‘millennials’ to their brands.

However, one of the main issues with recruiting great employees is the fact that we know the references, job successes and credentials can easily be faked or exaggerated.  CV ‘padding’ is a significant issue and candidates will often overstate levels of responsibility, inflate or even invent credentials, or use fake or inflated job titles to fill gaps on a CV.

This is a genuine problem for HR departments and recruiters alike, and it takes a lot of time (and sometimes poor hiring decisions) to establish the wheat from the chaff. Sadly, at present blockchain doesn’t really offer a solution to this problem either.

Blockchain would only really work as a solution if candidate information was all available in one place. It would be a dream if there were one place that all credentials, qualifications and career histories were stored that HR professionals could access. If this did exist then this would be the hook for blockchain-based databases. However, this reality rarely matches the dream.

One possibility for blockchain, however, can be found within educational establishments (if indeed they all decide to adopt the technology). If they started to store results on a blockchain database then these would be great, uneditable databases HR professionals could access to easily look-up a candidate’s educational qualifications to see if the results listed on a CV matched those on the block-chain database. As blockchains are uneditable, they would even exist even if the educational institution dissolved.

Interestingly, some educational institutions are already beginning to record qualifications on the blockchain. However, at present, this is far from being universally adopted. Subsequently, until this becomes the process for all educational institutions, it is hard to see how blockchain, at least in the immediate future, will improve recruitment from an HR process perspective

The reality is that vetting candidates correctly remains an extremely time-consuming task for HR professionals and recruiters and there is no “quick-fix” solution. Until an all-in-one place solution exists which keeps accurate records of all aspects of an applicant’s profile, this is unlikely to change either.

While blockchain could, in theory, allow us to check qualifications quickly and reliably, it only really works as a process if all businesses and educational establishments adopt the technology. Even if this part of the vetting process becomes a universal norm, it still won’t change the fact that HR departments and recruiters still would not have one central place to check for CV inaccuracies.

Okay, but what about blockchain databases for storing personal data on employees?

Personal Data and Blockchain

Personal data and blockchains is a tricky subject. While blockchain evangelists may see it as a natural fit, in reality, there is a rather devastating argument against their use.

Personal data on a blockchain cannot be removed. This is in the permanent nature of a blockchain and exactly how it is designed. Blockchains are uneditable.

As a result, blockchain databases containing personal data cannot comply with the UK’s Data Protection Act, nor with the EU’s General Data Protection Regulation (better known as GDPR). This is because the legislation explicitly states the individual’s right to require organisations – including universities and private companies – to delete the data about herself or himself unless it must be kept on record for legal reasons. This is also known as ‘Right to Erasure’ (Art. 17 of the GDPR)

Securing Personal Data

The above applies to public blockchains. Private, permissioned blockchains, however, could be used in their place.

In private blockchains, you need to depend on an individual person to manage access to the blockchain, and this person needs to be a trusted third-party who has the confidence of everyone concerned. Here, inherently lies the problem because this one person also becomes the potential point of failure.

Why would anyone want to use a blockchain-based database instead of a traditional database which already works perfectly well? It is a bit like paying your employees in bitcoin or any other cryptocurrency – why bother when we already have a perfectly useful currency (the British Pound) we can pay people with, that is both more financially stable and more universally accepted.

I love Einstein quotes (for those of you who have previously visited our website you will know this already), and here a good one comes to mind…

“We can’t solve problems using the same kind of thinking we used when we created them” – Einstein.

Also, when we talk about viewing personal data on a blockchain, we are really talking about hashes (the shortened, cryptography-secured representation of that data). To access the personal data in full – in this case, presumably, degree or course certificates, a person’s full name and attendance record, or list of publications – another application outside the blockchain are needed to decode the hashes and provide this information.

I appreciate that following this can be difficult so perhaps Bart Jacobs, Professor of Software Security at Radboud University in The Netherlands who has researched this issue can put it more directly. He writes [Dutch translation: https://ibestuur.nl/weblog/reason-yourself-out-of-blockchains]

“The blockchain only plays a very limited, subordinate role in [decoding personal data]. Besides, the energy consumption of blockchains borders on madness.”

Because a blockchain is an ever-growing list of all the data entered into the database – and the cryptographic proof-of-work required to verify the information on it – the energy and electricity consumption required to maintain them become impractical for most businesses.

Jacobs adds:

“The next time a blockchain guru approaches you with promises, ask ‘Where is the really sensitive data, and how is it protected? How do you regulate how parties are authenticated? And therefore, why is the blockchain really needed?’”

However secure a blockchain-based database – and there is no question that the cryptographic standards used are pretty secure – where that technology is forced to touch down and interact with the rest of the world, there are significant security compromises to be made.

Conclusion

Organisations looking to cut back-office costs may see blockchain-based databases as a cure-all panacea for slow and costly recruitment processes and HR verifications.

In reality, I don’t believe public blockchains are really suitable for hosting personal data. Besides, while using private blockchains may address some legislative concerns, they are redundant because of the need for a trusted third party to maintain them and regulate access.

In this way, they overlap with existing, non-experimental database technologies.

Subsequently, while it is inevitable that we will see blockchain technology begin to infiltrate many business processes, I personally think that when it comes to HR and Payroll, companies should take time to understand if and how products that promise blockchain as a solution really work before jumping in to implement it.

What do you think?

Please share and comment – I will try to interact with as many as possible!

Future articles in the series will include:

  • What is a smart contracts and how will they affect payroll and HR?
  • What benefits could blockchain bring to the payroll industry?
  • Blockchain payroll companies
  • How to build a blockchain-based payroll system
  • When should businesses start planning for blockchain?
  • Risks and costs
  • Conclusion – is blockchain and crypto the future?

Look out for article 4 in the series: What is a smart contracts and how will they affect payroll and HR?

Thanks 🙂

As always, whether you love payroll or love HR, love what you do, work smart and work hard – just be careful not to overdo it. 

Visit our website to access more blogswhitepapersThe Payroll Podcast and social content about all things “Payroll and HR”.

If you are looking for expert talent in the fields of Payroll, HR or Reward, then please call me or email me and I would be delighted to discuss how we can help.

Nick Day | Managing Director

JGA Recruitment | JGA Payroll & HR Recruitment

Email: ck@jgarecruitment.com | Tel: 01727 800 377

Will companies start to payroll its employees in cryptocurrency? Article 2 of 10

This is article 2 of 10 forming the second part of a series of articles dedicated to my attempt at helping Payroll & HR professionals understand the potential impact both Blockchain and Cryptocurrency may have on the Payroll & HR industries in the future.

If you missed the first article in the series – click here: Article 1: How will Blockchain, Cryptocurrency and DLT technologies affect the future of Payroll & HR

Also, look out for the next Payroll Podcast, which is with Anita Lettink, SVP of Global Alliances at @NGAHR which discusses ‘Blockchain and the Future of Payroll & HR‘, due for release on Sunday 12th AugustSubscribe here to ensure you do not miss it!

Today, I would like to explore Cryptocurrency and whether or not companies will soon begin to start paying its employees in this new, exciting form of tender…

The blockchain is the most popular technology jargon of 2018 and Bitcoin; the most famous of all cryptocurrencies has become something of an investor’s buzzword too. I am sure everyone reading this have experienced being bombarded by one of the many emails and advertisements that remind us of the potential gains possible by investing in crypto.

Subsequently, among the social noise, it has become hard to separate the hype from reality, but I hope these articles may do just that.


Will companies start to payroll its employees in cryptocurrency?

It would seem a natural evolution of the workplace that businesses should start paying their employees in cryptocurrencies right?

Believe it or not, some companies already are! However, the companies who currently pay their employees in cryptocurrencies tend to be in the industry themselves. Japan’s GMO Internet announced in February 2018 that it would allow workers to take home up to $890 a month in Bitcoin [https://www.newsbtc.com/2018/04/12/gmo-internet-group-prepares-to-launch-its-bitcoin-payroll-option/]. But for many employers, the rapid fluctuations in the price of cryptocurrencies are a considerable barrier to early adoption.

There are also tax implications for being paid in Bitcoin or other cryptocurrencies, especially if you are converting your Bitcoin back to a fiat currency (fiat money is currency that a government has declared to be legal tender, but it is not backed by a physical commodity – https://www.investopedia.com/terms/f/fiatmoney.asp) like the British pound.

HMRC has warned that traders, investors and holders may have to pay Capital Gains Tax on any profits made [https://blocktax.uk/guide/]

For some companies that do pay employees in crypto, the cryptotokens are considered a fair exchange for perceived company value, in much the same way as stock options would be for tech workers in startups or in large firms based in Silicon Valley.

It requires a certain implicit level of trust from the employee in the viability of a cryptocurrency to accept payment in that cryptocurrency. It also follows, logically, that those who already work in the blockchain field are more likely to implicitly trust the value of those cryptocurrencies.


Ecosystems

As of 2018, the trend is that companies are attempting to create proprietary ‘ecosystems’ of cryptocurrencies.

These ecosystems force workers and employers into a narrow field whereby the cryptotokens that makeup salary or contract payments are the same ones they can spend on goods and services.

No one cryptocurrency has achieved mainstream market acceptance and so there is a ongoing struggle for supremacy.

Consider the iOS and Android operating systems for mobile phones. Apple (for iOS) and Google’s parent company Alphabet (for Android) have total market dominance. In the UK, iOS has 49.48% market share, while Android has 47.11% market share [https://www.statista.com/statistics/487373/market-share-mobile-operating-systems-uk/] Blackberry, once a supreme force, now has just 0.81%, and Symbian, once the world’s most widely-used smartphone operating system, is at 0.02%.

The point being, no cryptocurrency wants to be Blackberry or Symbian. At this time, it’s not clear which cryptocurrency will take prominence to the exclusion of all others.


For employers

The main issue that employers face is the wild volatility in the prices of cryptocurrencies as compared to fiat currencies.

It’s not unknown for the price of Bitcoin, Ethereum or any of the better-known cryptocoins to increase or decrease by 10% to 20% in a single day.

“Say, for example, you are a P ayroll Manager who is required to pay a freelancer or contractor for a single piece of work. The agreed payroll payment is £1,000. You work out how much that is in Bitcoin (BTC). As of 7th August, that equals 0.183 BTC. While the payment is going through, the price of Bitcoin rises by 20%. Your company has just paid the freelancer not 0.183 BTC, but 0.2196 BTC, equalling £1219.60″

Such volatility would make it very difficult for your company to budget appropriately, especially if this payment is repeated for multiple workers, or across multiple cryptocurrencies, each with their inbuilt variability.


For employees

The problem that employees face is that there are limited places to spend cryptocurrencies. In the UK, there are now fewer high-street shops than there were in 2017 that will accept payment in the form of cryptocurrency. This is because Bitcoin is increasingly seen as a store of value, like oil or gold, as opposed to a viable currency.

Why would it make sense to pay your employee in a cryptocurrency when there are already mainstream currencies that do the job well enough? You can already spend your British pound to buy food, flights, or any other product on the open market.


Conclusion

So, do I think there will ever be a wide-scale company adoption of the idea of payrolling its employees in cryptocurrency?

Despite the hype, it’s unlikely that this trend will spread into mainstream company life in the next three to five years, given the uncertainty over tax, price volatility, and country-by-country regulation of cryptocurrencies.

However, what we do know is that HMRC is already preparing for it following their warning to traders, investors and holders, so it is feasible to believe that they are also preparing for broader revenue tax implications as well, particularly if employers do start to payroll its staff in crypto.

It appears that while in theory paying employees in cryptocurrency may seem like an attractive option for employees, the benefits for employers are also not so clear-cut.

“Why would employers want to pay employees in cryptocurrency when there is already a mainstream currency that works – the good ol’ English Pound!” – Nick Day

For me, this currency already does the job well enough and can be spent much easier on the open market too.

What do you think?

Future articles in the series will include:

  • How will blockchain affect HR and Payroll data?
  • What is a smart contracts and how will they affect payroll and HR?
  • What benefits could blockchain bring to the payroll industry?
  • Blockchain payroll companies
  • How to build a blockchain-based payroll system
  • When should businesses start planning for blockchain?
  • Risks and costs
  • Conclusion – is blockchain and crypto the future?

Look out for article 3 in the series: How will blockchain affect HR and Payroll Data?

Thanks 🙂

As always, whether you love payroll or love HR, love what you do, work smart and work hard – just be careful not to overdo it.

Please share and comment – I will try to interact with as many as possible!

Visit our website to access more blogswhitepapersThe Payroll Podcast and social content about all things “Payroll and HR”.

If you are looking for expert talent in the fields of Payroll, HR or Reward, then please call me or email me and I would be delighted to discuss how we can help.

Nick Day | Managing Director

JGA Recruitment | JGA Payroll & HR Recruitment

Email: ck@jgarecruitment.com | Tel: 01727 800 377

Sources:

  1. https://www.newsbtc.com/2018/04/12/gmo-internet-group-prepares-to-launch-its-bitcoin-payroll-option/
  2. https://www.investopedia.com/terms/f/fiatmoney.asp
  3. https://blocktax.uk/guide/
  4. https://www.statista.com/statistics/487373/market-share-mobile-operating-systems-uk/
  5. https://www.statista.com/statistics/487373/market-share-mobile-operating-systems-uk/

Image Credits:

Copyright: https://www.123rf.com/profile_vitacop / 123RF Stock Photo</a>

Copyright: https://www.123rf.com/profile_artmagination / 123RF Stock Photo

How will Blockchain, Cryptocurrency and DLT technologies affect the future of Payroll & HR. Article 1 of 10

This is article 1 of 10 forming the first part of a series of articles dedicated to my attempt at helping payroll & HR professionals understand what Blockchain, Cryptocurrency and DLT technology are, and perhaps more importantly, how it may affect Payroll & HR processes in the future.

Please also look out for the next Payroll Podcast, which is with Anita Lettink, SVP of Global Alliances at NGAHR which also goes into significant detail about this subject, which is due for release next week.

Why do I think it is essential that payroll and HR professionals understand these complicated and much-hyped technologies? Well, wild volatility in the trading price of Bitcoin has been the main entry point raising up cryptocurrencies, Distributed Ledger Technology and blockchain from a technological oddity to the front pages of the Wall Street Journal, Bloomberg, Forbes, The Guardian and The New York Times.

The payroll industry today contributes some £418m to the UK economy every year and ranks as one of the most expensive back-office functions for the vast majority of small businesses.

These series of articles seek to explore the intersection between the payroll and HR industries, and the most popular technology of 2018: blockchain. Rampant speculation on the price of Bitcoin has forced blockchain and cryptocurrency into the mainstream but it appears that the majority of us are still not quite familiar with what the technologies are.

Blockchain itself has become something of an investor’s buzzword, and it has become hard to separate the hype from reality, but I hope these articles may do just that.

Take the example of Long Island Ice Tea Company. On 21 December 2017 this New York drinks brand announced a startling pivot: it was to change its name to Long Blockchain Company. Company stock rose as much as 289% on the back of the announcement, even though it had no blockchain-based products to sell and had no concrete plans to develop any blockchain technology. The change of direction failed. By 10 April 2018 Long Blockchain Co learned their stock was to be de-listed by the NASDAQ exchange for misleading investors and the company formally abandoned plans to purchase Bitcoin mining equipment.

So easy was it to convince investors that they were worth investing in, all with a simple name change.

It would be foolish to ignore blockchain technology and the impact it could have on both payroll and HR industries. However, this should come with the caveat that blockchain will also not solve all of your payroll problems, nor is it a magic bullet to, overnight, cut your HR or back-office costs in half.

It is still highly experimental technology, so to set the scene of understanding, in thie article , I would like to focus on what Blockchain, Cryptocurrency and DLT Technologies are, an introduction if you will…

Article 1: An introduction to Blockchain, Cryptocurrency and DLT Technology.

What is blockchain?

A blockchain is a type of distributed online accounting ledger which is essentially, an ever-growing list of records. Blockchains are stored across multiple computers and need agreement from each computer to update the entries on the ledger.

Blockchains collect blocks of transactions together in groups, which are then added to the chain of previous blocks and linked together using a form of encryption called ‘cryptographic hashes’ or ‘hash functions’.

These hash functions assign a fixed-length string of letters and numbers to each entry on the ledger. It would take more computer power than there is in existence in the world to randomly guess these hash functions, which is what makes a blockchain so secure.

Blockchains are also tamper-proof because their structure only allows new blocks of transactions to be added, and previously agreed blocks cannot be edited or changed.

While interest in blockchain technology has been growing in the wake of the rocketing (and plunging) price of Bitcoin, driven by speculative mass trading, there are still few enterprise-level blockchain-based products for businesses to use.

The blockchain employs a method of verification for each transaction called ‘proof-of-work’.

Specific computers called mining nodes (miners) each hold a copy of the blockchain and compete in a race to solve a mathematical puzzle to prove that each block of transactions is correct. The winning miner receives a cryptocurrency reward for doing so.

Because of this proof of work, no-one can fraudulently forge new Bitcoin without the agreement of the rest of the blockchain network.

However, proof of work takes a long time and uses up significant electricity as each computer runs through millions of calculations to update the blockchain.

It’ is estimated that Bitcoin mining ‘farms’ using thousands of high-powered computers now use up more electricity each year than the population of Ireland

This is quick overview of what blockchain is. Of course, my future articles will explore the technology in much more detail over the coming weeks, but I hope this gives you a platform of understanding. So, next up, cryptocurrency…

What is cryptocurrency?

A cryptocurrency is a digital, virtual currency. Transactions are secured not with the agreement of banks, but by doing it person-to-person, relying on a kind of encryption called cryptography.

Cryptocurrency transactions are recorded on a blockchain and are linked to a database which is shared (distributed) across multiple computers. This creates a permanent and irreversible online ledger of every transaction made using the currency.

Bitcoin is the first and most widely used cryptocurrency, and it is, in fact, possible to view every Bitcoin transaction that has taken place since it was created.

It’s no coincidence that the idea for Bitcoin, a payments system that deliberately does away with the need for banks and financial institutions, came in the wake of the 2008 global financial crisis. Developers wanted a way to bypass the banks – seen as greedy and corrupt – and still, make financial transactions safely and securely.

The idea behind Bitcoin was to create an online store of value that would work without a central point of control.

It is deflationary because it is different from bank-controlled money: no-one can create their own Bitcoin out of thin air, unlike central banks who print millions in the form of quantitative easing.

Cryptocurrencies like Bitcoin and Ethereum are built using public, open, ‘permissionless’ blockchains that anyone can view, use and contribute to without asking first.

These contrast with private blockchains, which we’ll discuss later in a future article. Hopefully, you are still following me up to this point right? Okay – so finally we have distributed ledger technology, also known as “DLT”…

What is Distributed Ledger Technology?

Distributed Ledger Technology or DLT is an umbrella term which describes a type of online database which is copied across multiple computers and needs the agreement of each machine to make changes to the entries in that database.

The blockchain is one form of DLT.

Not all DLTs employ a chain of linked blocks as blockchain does, but all DLTs are databases which are spread out across different computers in a network. So, every blockchain is a DLT, but not every DLT is a blockchain.

The agreement on the one correct copy of the ledger is called ‘consensus’, and each computer which stores the ledger contributes to updating it.

In theory, this technology should be able to increase the speed of payments and reduce costs for financial institutions.

This is because recording payments in fiat (national) currencies like the US dollar or the British pound requires a network of participants including banks, governments, regulators, lawyers and compliance officers, which slows down the whole process. DLTs could work autonomously, agreeing to payments automatically and cutting out back-office waste.

So hopefully, now that we have an understanding of what blockchain, cryptocurrency and distributed ledger technology (DLT) are, we can explore how and indeed if, we should expect companies to start to pay their employees in cryptocurrency in the future.

I hope you have found this very quick introduction into very complex technologies useful. This article will form the foundation for the future articles I will be releasing on the subject so please save it to your favourites and refer back to it if you need too!

Future articles in the series will include:

  • Will companies start to pay their employees in cryptocurrency?
  • How will blockchain affect HR?
  • How could smart contracts affect payroll and HR?
  • What benefits could blockchain bring to the payroll industry?
  • Blockchain payroll companies
  • How to build a blockchain-based payroll system
  • When should businesses start planning for blockchain?
  • Risks and costs
  • Conclusion – is Blockchain and Crypto the future?

Look out for article 2 in the series: Will companies start to pay their employees in cryptocurrency?

Thanks,

As always, whether you love payroll or love HR, love what you do, work smart and work hard – just be careful not to overdo it.

Please share and comment – I will try to interact with as many as possible!

Why not visit our website where you can access more blogs, FREE whitepapersThe Payroll Podcast and social content about all things “Payroll and HR”.

If you are looking for expert talent in the fields of Payroll, HR or Reward, then please call me or email me and I would be delighted to discuss how we can help.

Nick Day | Managing Director

JGA Recruitment | JGA Payroll & HR Recruitment

Email: nick@jgarecruitment.com | Tel: 01727 800 377

The Challenges & Complexities of Implementing new Global Payrolls


Challenging Considerations:

Global payroll can be extremely challenging and incredibly complex. Understanding these challenges and complexities is both essential and necessary.  This is because different countries have varied, unique legislation on matters that impact payroll, such as tax which differs entirely from country to country.  There are also factors such as multiple currencies to consider, as well as complexities such as different languages and cultures which are thrown in for extra measure – as if the process wasn’t confusing enough already!


Avoid Costly Mistakes

 

All things considered, it makes selecting the right vendor, project path or solution extremely challenging. Many businesses make the mistake of deciding on a project direction without first investigating in detail what the best fit-for-purpose solution is, or without researching what is available in the market. Subsequently, the final global payroll solution selected will not always be fit for purpose. This can be an extremely costly mistake!


Set yourself up for success

The best solution should only be decided after considerable research and due diligence, which is why it is highly advisable to follow a detailed planning process to set up your global payroll project for success. Doing it this way will ensure that when you do begin your implementation, you will already know what the objectives are, and you can ensure that they remain aligned with the requirements of your global payroll.

As a minimum, you need to document your current processes and the requirements of your new global payroll process at a high level. This will make it much easier for you to understand what your new global payroll solution or provider will need to be able to deliver. Once you have this, you can then consider inviting in global payroll vendors or software solution providers for early engagement discussions and demonstrations. You may think you know what it is you need, but it is always worth discovering what specialist global payroll providers can recommend. Comprehensive global payroll services can vary from software purchases to Software as a Service (SaaS), full outsourcing or fully managed services (and everything in-between). It is, therefore, a good idea at this stage to talk to the vendors about their strategies for the future so that you can ensure your selection is futureproofed and culturally compatible with the complex global payrolls you need to deliver.


Challenges to overcome: Multiple Currencies

There are many problems payroll departments are faced with when it comes to implementing new global payroll solutions. However, dealing with multiple currencies is one of the most significant challenges to consider. The main problem with working across different currencies is that currency exchange rates are not static. They are a moveable beast, and they can be highly volatile. A sudden fluctuation in exchange rates could result in either your overseas employees suddenly costing the business significantly more than budgeted or your employees end up with a much lower income than they anticipated. The good news is that there are global payroll solutions that work to avoid these risks and reduce exposure, so it is worthwhile researching and locating a provider that offers the technology that can manage or at least mitigate the risk of these challenges for you. Once a system is implemented, it becomes much easier to manage local changes in different countries, allowing you to be compliant, cost-effective while also ensuring that you can pay your employees accurately and promptly too.

Immedis is just one example of such a provider that offers this technology. I mention Immedis because Adrian Morrissey recently discussed global payroll and jurisdictional compliance on The Payroll Podcast with me.  It is well worth a listen too! Whether it is Immedis or one of the many other global payroll providers out there, I would strongly recommend that you take your time to consider which one can deliver the solution that best suits your requirements. Different providers may have different regional strengths too so if, for example, 90% of your global payroll workforce is based in APAC, it would make sense that you selected a provider with particular strengths delivering solutions across APAC regions. This may seem obvious, but with many providers promising to be all things to all payroll departments, it can pay to investigate areas of expertise like this before selecting your provider.


Challenges to overcome: Existing Technology

One of the most critical considerations is then establishing the capabilities of your existing technology. Unless you want to start again from scratch, and most companies do not, it will be vital to find a global payroll system or solution that can integrate well with the systems you already have in place, such as your payroll, reporting, time and attendance, HR and financial systems. Make life significantly easier by analysing the degree of automation that the system offers, so you can make sure that your payroll operations are as efficient as possible. Making sure the user interface is simple to use and provides self-service options for employees is helpful, as it will save the amount of time that your payroll department has to spend answering questions. Finally, make sure that reporting from the system will be straightforward and consistent so you can have a good understanding of global payroll issues at a glance.

Challenges to overcome: Compliance

Another of the significant headaches associated with global payroll systems and associated payroll processing is compliance. If you are working across different countries, you will need to be compliant in many different jurisdictions, and this can be incredibly complicated. Complying with tax regulations can be particularly complicated. The Global Payroll Management Institute recommends bringing in specialists who understand compliance in different jurisdictions to avoid costly mistakes. Aside from tax, you will also need to comply with social security regulations in the country of operation. Bringing in experts can help you to set your system up correctly from the start, to avoid errors. Of course, locating payroll consulting or project experts is something we at JGA Recruitment can help you with too! If you need help, email me: nick@jgarecruitment.com


Challenges to overcome: People Management

 

 

Another challenge of implementing global payrolls is dealing with the people side of things. Leadership skills form an essential part of any payroll management remit, especially where large teams are involved.  However, going global will often lead to changes concerning responsibilities and job roles too. Managing change is therefore vital, especially if your team is afraid of automation. It is human nature to be fearful of the unknown but with evolution, brings opportunity. In reference to RPA (Robotic Process Automation) and artificial intelligence coming into payroll operations, focus on the opportunities it can bring (you can read one of my previous articles on the subject here). Responding to RPA positively will encourage your team to support the change. Automation (in my view) will require payroll departments to develop significant technical payroll expertise, which means that data inputting payroll roles could become a thing of the past. I believe that automation will raise the profile of the payroll profession because it will force businesses to recognise payroll as being a very technically capable function that contributes high-level reporting and analytics to support strategic decision-making at board-level. Evolution is always challenging, so it is imperative that you support your payroll team to ensure they are not confused or concerned during the implementation process.

Subsequently, I would advise adopting particular change management techniques to help avoid these difficult challenges, and I would recommend communicating openly with staff, so they understand why projects are taking place and how they can also get involved. This can help gain support and buy-in for the project so that it runs smoothly – which is a lot better than dealing with employee resistance or demoralisation.  In addition, when managing change, it is also crucial to consider organisational politics to get your stakeholders on-side. This is essential because if you can achieve stakeholder backing then they will not only support you, but they may also free up additional budget or resources that can help the project.

Conclusion:

Ultimately, implementing and then managing global payrolls is never going to be a straightforward task. Managing payrolls across different languages, cultures and time zones add layers of complexity to your payroll operation that can be difficult to surmount. Therefore, it is essential to be very diligent when putting in place a global payroll system or when selecting a suitable global payroll provider so that you do not get caught out. Detailed planning from the outset and then making sure you have the right people in place to deliver the project and manage it on an ongoing basis is as important as finding the right technology and maintaining compliance, as well as the change process. The devil is in the detail, and if you work hard to get it right first time, the chances are that your global payroll implementation will be a great success.

Good Luck!

As always, whether you love payroll or love HR, love what you do, work smart and work hard – just be careful not to overdo it.

Please share and comment – I will try to interact with as many as possible!

Why not visit our website where you can access more blogsFREE whitepapersThe Payroll Podcast and social content about all things “Payroll and HR”.

This article was written by Nick Day, Managing Director at JGA Recruitment – the UK’s Premier Payroll & HR Recruitment Consultancy

If you are looking for expert talent in the fields of Payroll, HR or Reward, then please call me or email me and I would be delighted to discuss how we can help.

Nick Day | Managing Director

JGA Recruitment | JGA Payroll & HR Recruitment

Email: nick@jgarecruitment.com | Tel: 01727 800 377

 

Image Credits:

Copyright: https://www.123rf.com/profile_Elnur / 123RF Stock Photo

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SaaS JGA

What is Software as a Service (SaaS) and why I need to know about it

What does SaaS stand for?”

It is a question I was recently asked by a payroll manager who called me for some advice about payroll software, and it got me thinking – perhaps people are not as aware of SaaS (which stands for Software as a Service) as I thought? Subsequently, I decided to write this short blog to help others out there get to grips with what SaaS is and perhaps more importantly, why I think everyone needs to know about it.

Software as a service (SaaS) primarily refers to cloud-based applications offered via a software distribution model whereby a third party hosts the applications and provides them to customers online. Logging in via a web interface, such as Internet Explorer, Google Chrome, Safari or Firefox or another similar internet browser makes them extremely accessible. Recently, these types of software have been made increasingly available through mobile devices too. Software as a service (SaaS) means that as well as accessing data in this way via software, the data itself is hosted elsewhere.  Ultimately, companies save money by renting software instead of purchasing it. Subsequently, instead of your company investing in a server where the information is stored, with SaaS, the data will usually be stored centrally by the third-party offering the cloud-based service. Software as a service provides many significant benefits for organisations, and much enterprise software is now in fact delivered in this way, leading to time and budget savings for companies that adopt these types of solutions.

“Why do I need to know this?”

Advantages and reducing Capital Expenditure

You need to know as the benefits that can be brought about through adopting software as a service (SaaS) solutions can be highly advantageous for businesses and payroll operations of all sizes. One significant benefit is cost and time savings. In the past, IT departments would manage the servers that host the applications that employees access and that store the data the employees save. With software as a service, this is unnecessary, as the third-party provider takes care of all of this. This means that less staff are needed to administer and manage servers and data – which in the past could have been very time-consuming. For example, each time a software update or IT maintenance is required, previously the provider would have had to coordinate with your IT team, and your team would have been involved in making the changes and upgrades. However, with SaaS, the provider will manage these changes on your behalf. It also means that fewer servers are required by the organisation making storage more secure and the cost of storing it, more efficient. Servers can be particularly costly, so utilising SaaS can be a great way of reducing IT capital expenditure. Also, SaaS applications are unlikely to require the upfront costs associated with traditional software implementations because all you need is a login and an internet connection to install them. These server, maintenance, upgrade, and implementation savings make SaaS applications a very attractive proposition.

Affordability and Flexibility

Software as a service also makes software much more affordable for companies allowing many businesses to access software that they just would not have had the financial resources to obtain in the past. Traditionally, the software has been sold by licences that are then associated with specific users or computers in an office. However, due to the way that the data is stored centrally, both hardware and software licence costs can now be much lower, making this a much more affordable option for business users. Another benefit from a cost perspective is that SaaS business models typically offer applications on a “pay as you go” model. Subsequently, companies pay for what they use, rather than paying for exclusively dedicated and expensive servers rarely utilised to their full capacity. This pay-as-you-go approach provides incredible flexibility and options for companies because it means they can scale up and down, depending on business needs at any given time.

Mobility and Accessibility

Software as a service is increasingly becoming more mobile as well (i.e. software of this type is now frequently accessed via smartphones). Many companies have developed their SaaS offerings into versions that are specifically designed to work on mobile devices, rather than merely making their website available on the mobile device. The result is it makes them significantly more user-friendly for mobile adopters. This mobile advantage means that SaaS solutions can be accessible via smartphones to access anytime and in any location, provided that there is internet availability. The result is that employees can access the systems they need remotely, such as when they are home, out in the field or with clients. It also provides opportunities for more flexible working for employees. Considering the number of hours payroll or HR professional work beyond 5:30 pm; it is easy to see why the prospect of implementing SaaS solutions can be exciting to payroll and HR managers alike.

Integration

Another critical benefit of software as a service (SaaS) applications is the fact that in many cases these can easily be integrated with existing or new SaaS applications. The net result is that SaaS solutions make it easier for businesses to link up one system with another, passing data between them without causing major headaches for your IT team or indeed between HR, Payroll and Financial functions.

Drawbacks

Like anything new, there are some drawbacks to SaaS applications. One is a potential loss of control (traditionally the responsibility of your IT department) is now managed by the third-party SaaS provider. Another is connectivity issues or requirements. Since SaaS software is web-hosted, applications will not work if there is a problem with your Internet connection. Similarly, applications may also be slower than in-house server applications if your internet is slow or if servers hosted by the third-party provider are located on the other side of the world. Some applications may also be limited regarding function and features, so it is essential that the SaaS solution you are considering does offer you the features you need to run your payroll or HR function efficiently.

Conclusion

Ultimately, you’re probably already using SaaS without even knowing it, but if not, as you can see, you probably should be. Software as a service has tremendous benefits for business and can save a lot of human resources, time and money, as well as a great deal of hassle. Let’s be honest; payroll departments are stretched enough already so if SaaS can help reduce stress within your payroll department, then looking into Software as a Service for your business today could prove extremely worthwhile.

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Written by Nick Day, Managing Director at JGA Recruitment – the UK’s Premier Payroll, HR and Marketing Recruitment Consultancy

Nick Day | Managing Director

Website: JGA Payroll & HR Recruitment | Email: nick@jgarecruitment.com  | Tel: 01727800377

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Copyright©: JGA Recruitment Group 2017 | Image: Copyright: www.123rf.com/profile_iqoncept / 123RF Stock Photo

Consumers Guide to Recruitment

Consumers Guide to Recruitment

Consumers Guide to Recruitment

Your recruitment campaign should be a comprehensive plan detailing everything from who you are looking to recruit, when, where and how. As Richard Branson says ‘The most important part of any organisation are the employees’, and finding employees that are qualified, motivated and skilled can be a challenge if you don’t have a recruitment campaign in place. This guide is intended to help you and your business develop an effective recruitment campaign to maximise time and efficiency and to ultimately find the best possible candidates for the job.

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Why not visit our website where you can access more blogsFREE whitepapers and social content about all things “Payroll and HR”.

If you are looking for expert talent in the fields of Payroll, HR or Reward, then please call me or email me and I would be delighted to discuss how we can help.

Nick Day | Managing Director

JGA Recruitment | JGA Payroll & HR Recruitment

Email: nick@jgarecruitment.com | Tel: 01727 800 377