The future of payroll
The Future of Payroll
2020 will be the year of technological transformation for the payroll industry. Trends will centre on automation, pay-on-demand and transparency as businesses focus on the employee experience, efficiency and growth.
Advancements in technology, particularly those associated with robotic process automation, have left many payroll professionals worried about their futures. Will technology replace me? I always say the same thing; automation and technology will not replace the payroll professional, but the tasks within the traditional role as we know it, will be. The purpose of the payroll professional is evolving fast. Fortunately, history dictates that technology typically creates more jobs than it replaces, and I see no evidence to suggest this will change. However, we must concede that the payroll industry is changing at a pace faster than at any other time in memory. Robots are on the march and automation, machine learning technologies, mobile apps and sophisticated artificial intelligence (AI) are everywhere we look.
So, what will the future look like?
New technologies entering the market are transforming the world of payroll. Technology should solve problems, add value, reduce costs, save time and make our busy lives more manageable. For payroll professionals, products primarily aim to reduce manual efforts through automation or by improving the employee experience. Businesses are starting to appreciate the impact payroll operations can have on enhancing the employee experience to improve retention as well as providing analysis to support strategic board-level decision making.
Automation, cloud technology, self-service platforms, robotics and mobile apps are enabling payroll managers with real-time access to technology that automatically updates complex legislation, helping improve the deliverability of both domestic and global payroll compliance.
As a result, payroll administrative roles in the future will become more analytical and less process driven. Tasks will focus on analysing and interpreting information, manipulating data, creating complex reports, managing software operations and making decisions that are less rule-based and more lateral and complex. Eventually, robotic process automation will make manual payroll processes obsolete.
Businesses can already access cost-effective, easy to implement automation solutions that both improve accuracy and reduce payroll workloads. I see this trend growing significantly, and it will not be long until most businesses have some type of RPA solution in place. Meanwhile, I expect to see the utilisation of bots and other machine-learning-based tools increase significantly. Machine learning bots are already capable of handling basic employee payroll queries and even communicate across different functions. We are witnessing vast improvements in machine-learning solutions, so it won’t be long until businesses start to adopt these as capabilities improve.
As Managing Director of the payroll search firm, JGA recruitment, I believe it is worth considering how technology will influence the future of payroll recruitment too. In the longer term, it is likely we will see a reduction in the number of administrative payroll professionals recruited. We believe this will be offset by an increase in the volume of payroll analysts and payroll data experts employed who will specialise in analysing RPA efficiency and accuracy.
The requirement for employers to attract skilled payroll talent will become more challenging as the skills gap widens.
Employers will, therefore, need to go the extra mile to both attract and retain the best payroll employees. Meanwhile, payroll professionals need to recognise that the skills required by employers in the future will differ from those required today. In the future, payroll candidates will need to understand new technologies that do not yet exist. Meanwhile, payroll management skills in data analytics, digital transformation, global payments, reporting and data strategy will need to evolve.
With quick advancements in technology brings the requirements for new skills not yet acquired. Small talent pools will drive new demands for niche expertise. As automation takes over the more repetitive tasks, the work left for humans will be more creative, less predictable, and more consequential.
A considerable challenge for businesses is keeping up with rapidly changing hiring needs, which is why payroll professionals will need to pivot quickly to the new technologies flooding the market. Recruiters like myself must remain agile to ensure the payroll professionals we represent meet the needs of new hiring requirements. Data is the driving force behind both the futures of recruitment and payroll. New demands will bring new job opportunities for the payroll sector. We may not know what the new payroll job titles and requirements will be, but we know they are coming.
You may wonder, as a payroll professional, why this is relevant to you? Well, soon data will tell us when a business needs to recruit (rather than the other way around). Algorithms will influence candidate suitability for job roles. Locating payroll talent with the skills of tomorrow will become harder to find, which is why employers will start to see new recruitment solutions replace the traditional contingency search processes of the past.
These solutions will affect you both as a payroll candidate and as a payroll employer.
As a candidate, what skills will future employers be looking for? What processes will candidates need to undertake to secure future opportunities? For example, video interviewing is now an everyday process for recruiters, and yet for many, this will be a completely alien experience. For employers seeking payroll talent, what skills will they require future hires to possess? What strategic impact do employers want hires to have on their payroll departments?
Corporate boardroom strategy will always focus on improving speed, profitability, security, transparency and flexibility across all operations. In response, right now, we see antiquated, integrated all-in-one payroll systems replaced by best-in-class payroll solutions focused on solving niche problems within the payroll cycle. The data generated by these solutions provide payroll leaders with new compelling levels of information, which, when interpreted, are driving cost-savings and strategy. In the future, the demand for payroll reporting at board level will increase because the analytical insights payroll professionals can now provide is too valuable to ignore
Let’s remember that payroll departments handle significant amounts of data, offering substantial value as a primary corporate strategic resource. Data concerning salaries, compensation packages, deductions, earnings, commissions, bonuses, severances, absence, sickness, starters, leavers and more are all under the control of a payroll manager. With data now officially the most valuable resource in the world, businesses are using this data to drive strategic decisions at board level. It is an exciting evolution in the world of payroll.
In the future, data will play a significant role in raising the profile of the payroll industry. The payroll manager of tomorrow will need to be a manager of both machines and people. Those that harness the power of data most effectively will begin partnering with business leaders by providing reports and insights that drive change and support organisational objectives.
As the value of data increases, regulatory and employee requests for transparency increases. Employees will demand more access to payroll data, which is why we have seen a rise in self-service platforms, mobile apps, payroll-on-demand services and interactive payslips.
The Government’s Good Work Plan and its industrial strategy of moving towards single enforcement will increase transparency further.
The plan primarily concerns worker rights, national minimum wage enforcement, holiday pay rights, gender pay gap regulations and pay ratios. Meanwhile, expect to see the practice of naming and shaming employers who fail to abide by legislation that supports fairness become more commonplace. The government wants the future of the UK labour market to be a more transparent one, both for employers and employees, and this will impact payroll departments.
Fair salaries are an essential factor for individuals to consider when selecting an employer. Subsequently, organisations are becoming more transparent about the factors that go into determining pay. This data, collated by payroll departments, is analysed and then used to determine fair pay practices that drive remuneration decisions.
In the future, we will also see payroll-on-demand solutions continue to roll out across the UK. These offer instant payment options, so employees can access pay as quickly as they earn it. Pay-on-demand will be part of the future of payroll as employees seek more transparent and flexible payment solutions. They also form part of a broader recruitment, attraction and retention strategy as businesses seek to implement initiatives focused on keeping their employees happy.
Businesses are calculating success based on their ability to both attract and retain talent. The evolution of the payroll professional and the way employees receive their pay is central to this calculation. The payroll departments that evolve quickest are likely to be the ones that adapt to the new world of work the fastest. These processes will help businesses to attract the best candidates. And that could be the difference to overall corporate success or failure. Companies will want to offer pay-on-demand services if employees start to demand the freedom to determine how and when they get paid.
Despite technology flooding the payroll market with solutions that replace human effort, I still believe humans will remain a critical part of our payroll future.
We must accept that much of the manual payroll process will be automated, but businesses will still need a human payroll team at its core. We also need to remember that data requires human analysis and interpretation before it can is used to support direct human-led boardroom strategy.
Payroll is a niche and highly skilled industry which requires compassion as well as interpretation and analysis. It is the binary, mundane, time-consuming processes requiring little human thought that will be automated. Solutions will always struggle to solve problems that require compromise, and this is the crucial point. Remunerating for a job well done involves judgement. Has the work been done? What did we discover? Should we reward as agreed? Do we need to provide reassurance? Automation will provide more time for payroll professionals to add this human touch to the process.
Consequently, I believe payroll professionals need to remain mindful about introducing futuristic technology developed to solve human payroll problems. If payroll departments implement without caution, they risk solutions potentially backfiring dangerously. For example, email provided us with a platform to communicate with anybody in the world at any time, and yet it has not necessarily made us better at communicating. Technology can also encourage lazy habits. How many of us have said “I’ll send an email” when we all know a call or a face-to-face meeting would solve the human problem much more efficiently.
Conclusion
To conclude, for those still concerned, I want to reiterate that I do not believe technology will make human payroll professionals obsolete. On the contrary, the future of payroll will evolve to become a world less entrenched in process and more concerned with strategic thinking and data management. The future for payroll professionals is, therefore, an exciting prospect. Eventually, all payroll departments will possess platforms that incorporate AI, machine learning, robotic process automation and self-service functionality. The lines between other functions such as finance and human resources will blur as the profile of payroll increases. Dull, repetitive tasks will be automated, while interactive chatbots manage enquiries. Employees will be accessing pay-on-demand and processes that govern payroll will become more transparent and open to public scrutiny. Fair pay practices will improve, and discriminatory pay gaps will reduce. Meanwhile, payroll managers will be focused on strategic payroll activities improve employee engagement and wellbeing. Payroll will become more influential than ever, supporting businesses and their leaders to make critical decisions that promote growth and maximise profits to create new opportunities for the future.
Written by Nick Day, Managing Director at JGA Recruitment Group — the UK’s leading HR & Payroll Recruitment Consultancy and Search Firm.
JGA Recruitment | JGA Payroll & HR Recruitment
E-Mail: [email protected] | Tel: 01727 800 377
Copyright: © JGA Recruitment Group 2020
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