Unleashing the Future of Payroll – Carpe Diem!
Advancing Five Years in Twelve Short Months
Wow, what a time it has been for the payroll industry over the past eleven months, huh? On March 4th 2020, cases of Covid-19 surged in the UK, as officials announced the most significant one-day increase as 34 new cases brought the total to 87. On March 10th, Chancellor Rishi Sunak announced a £12bn package of emergency support to help the UK cope with coronavirus’s expected onslaught.
Then, on March 20th, the chancellor made a further announcement, confirming that the government would pay up to 80% of wages for workers at risk of being laid off; this was new legislation in the UK, now known as furlough leave. Its impact on boththe UK economy, workforce and the payroll profession would be monumental. By March 23rd, we were in Lockdown.
To add to the chaos and confusion, Covid-19 hit the world just as payroll professionals in the UK were preparing for the busiest month in the calendar, financial year-end. As I write this, in March 2021, UK cases have grown exponentially to 4.18+ million cases, and one in three adults have now received the first dose of a Covid-19 vaccine. Meanwhile, the payroll community once again finds itself preparing for its busy, end of Financial year cycle.
However, what I have witnessed within the payroll community over the past 11 months will live long in my memory. Why? Because I have seen firsthand, payroll practitioners across the world hunker down and work tirelessly to keep the world paid. It didn’t matter that they had to wrestle with new legislation, remote access to data, constant changes to furlough calculations, and enquiries from all angles. The added impact of isolation, anxiety, and stress were put aside, too, because when you process payroll, despite all of the above, you have to keep the employees on your watch, paid.
It is a dedication and commitment that I believe merits applause. I also think that now is also the time to push further. If we collectively raise our payroll voices and embracing the changes ahead of us, we can improve the profile of payroll even further.
By writing this whitepaper, I hope to bring some of my thoughts on how the payroll community can achieve this. I am not a payroll practitioner myself, but I have worked within the payroll industry as a specialist payroll recruiter, all of my working life (18+ years). I see things from a different perspective. With this in mind, I hope this whitepaper will help you on your payroll journey, whatever that may be.
Carpe Diem!
Finally Getting Recognition.
Believe it or not, from July 2019 to March 2020, I had been working with Joe Ziska, Payroll & Compensation Manager for BMW in South Carolina, on a new podcast, which we planned to release in May 2020. It was called “The Payroll Apocalypse”. It was a story about a fictional pandemic virus (unbelievable right) that only affected payroll professionals, rendering the global payroll community unable to process payroll!
We had guest appearances from the CIPP (Jason Davenport), the APA (Dan Maddox), and many more global payroll leaders. We were one episode from completing the final recording – then Covid-19 hit. We felt it was no longer appropriate to release our apocalyptic podcast about a fictional virus for apparent reasons. The reality of Covid-19 was worrying enough. However, as the world was thrust into uncertainty, panic, and concern, the payroll community began to rally out of sight of the headlines.
Payroll professionals were pivoting quickly. Reacting to new legislation concerning furlough and CJRS claims, new calculation processes and systems not configured to handle such requirements were critical. The payroll community ensured that despite significant economic uncertainty, businesses could still operate because employees would still get paid. Over the next 12 months, the world would witness and discover the unbelievable commitment, determination, and grit the payroll profession has to offer.
World leaders, such as the Australian Prime Minister, Scott Morrison, would later publicly thank the efforts of payroll practitioners “for playing your part in what has been an extraordinary effort.” The Payroll Industry, finally, was being recognised.
As a result, as payroll practitioners prepare once again to enter the new financial year 2021-22, I believe that together, we can make this the payroll professional’s year
Payroll Skills Will Evolve Further in 2021
As a recruiter, something I have observed during these past months is the rapidpace that the world of work has changed. Organisations are adopting remotetechnologies; working from home has become the norm rather than theexception. C-suites are streamlining operations and identifying areas ripe fortechnological advancement and improvement.
These changes will undoubtedly continue to accelerate as companies seek to bemore efficient, more employee-centric and more profitable. I think that determination and grit may be called upon again as the payroll world adapts tothe changes yet to come.
In the world of payroll recruitment, we have seen payroll positions become more analytical and less process-driven as automated business processes continue to reduce transactional responsibilities at an administrative level. As businesses identify areas rip for digital improvement, we are also seeing a stark rise in the number of clients asking us to support them with locating payroll transition leadsand project managers to help achieve improvements in payroll efficiency, globalcompliance, systems, employee wellness and data analytics.
Meanwhile, organisations are demanding more from payroll operations as boardrooms seek further improvements in speed, profitability, security, and transparency. Inevitably, as payroll departments (and the expectations put upon them) change, the role of the modern payroll manager will also need to evolve
So What is the “Modern Payroll Manager”?
The modern Payroll Manager will be someone who can successfully manage both machines and people. Businesses will become increasingly dependent on data to drive their strategic directions. Payroll departments collect more data than most functions within an organisation, which means payroll has the potential to become the heartbeat organisations rely on to supply the data for strategic decision-making.
In response, analytical expertise and high-level reporting skills will be essential capabilities found within the modern payroll manager’s toolkit. After all, data has become one of the most valuable resources in the world. If harnessed effectively, payroll leaders can become the heart that pumps this data; helping C-Suites to make crucial judgements that drive successful outcomes.
How the Modern Payroll Manager can Impact Profit and Loss.
We know analytical skills will be of paramount importance as businesses become more reliant on data to drive decisions. However, I believe the modern Payroll Manager will also have an opportunity (and responsibility) to boost organisational P&L performance in other ways.
Let’s not forget that one of the most uncomplicated measures a business can take to increase its profits, is to reduce its costs. Payroll employee expenditure is typically the highest cost for a company, which is why, if the payroll process can be made more efficient, the modern Payroll Manager can play a fundamental role in improving organisational P&L.
The modern Payroll Manager can impact P&L in 4 critical ways:
- Reduce errors and payroll re-runs.
- Automate manually expensive and time-consuming tasks.
- Improving compliance to reduce potential fines or penalties.
- Improving data security to mitigate costs associated with cyberattacks.
The last point, improving data security is a critical concern for the modern Payroll Manager. Not only do payroll departments manage significant amounts of employee sensitive data (including bank details), but it is also responsible for distributing large sums of money to multiple accounts. Subsequently, phishing
and social engineering scams are increasing and payroll databases have found themselves vulnerable and subject to attacks.
In defence, SaaS technology is starting to disrupt how payroll is handled and stored to make it more robust to cyberattacks. The modern Payroll Manager will, therefore, play an influential role in ensuring better data security practices are adopted to mitigate against cyber-related risks. Implementing cloud-based solutions, double encryption, and other safeguards will help protect businesses against the high financial (and reputational) costs associated with managing data breaches or ransomware attacks. The modern Payroll Manager will need to remember that payroll will always be an appealing target for hackers.
Elevating Payroll Management to Director Level
Overall, as we enter the new age of automation and AI, payroll responsibilities will need to elevate and augment to keep up. Skills such as change management, project management, data management, data security, systems efficiency, leadership capability and stakeholder engagement will become essential. In response, I believe we will see businesses progressing Payroll Managers into board-level advisory directors as companies seek to improve their strategic capability.
Payroll Directorships will require individuals with analytical expertise to contextualise data and advise boards with an incisive understanding of how data can support organisational goals. Knowing how the technology works (and how to leverage it for maximum value) will be critical. As this pace of change intensifies, skills gaps will inevitably appear, elevating the demand for niche system skills and global compliance knowledge even further. When skills are in short supply, salaries increase as companies pay more to maintain competitive advantages. Good news for the payroll profession, but it comes at a cost.
Payroll Managers will need to embark on journeys to develop existing skills. Board-level reporting, leadership capability, performance management, global payroll compliance and data analysis skills will need to evolve to keep up with C-Suite expectations. As salaries increase and role titles elevate, so will accountabilities. Payroll directors will need to be responsible for supporting strategic objectives, including measuring progress and producing boardlevel reports for senior stakeholders.
Employees as Consumers
Following Covid-19, businesses have begun changing strategies. Here at JGA Recruitment, I have seen this first-hand. Employees have become consumers, demanding more from employers than ever before. Organisations are focusing on employee wellbeing, satisfaction, and retention instead of attraction.
Similarly, to elite footballers who have shifted power away from managers by refusing to play until transfer requests are granted; employees are now prepared to walk away if employers fail to meet their expectations. How employees receive their pay plays a central role in this equation as employees demand more transparency regarding their income. Businesses respond with employee-centric payroll services such as self-service platforms, mobile apps, chatbots, pay-on-demand services and even interactive payslips.
Organisations now need to anchor every marginal gain available to improve the employee experience, because better engagement results in better performance, less attrition and therefore, greater profits.
Developing Hybrid Skills
In response, payroll professionals who develop hybrid skills across payroll, reward, compensation, benefits, wellness, human resources, accounting practices, analytics and performance may be advantageous.
Payroll is becoming more holistic. Individuals with the skills to bridge the interrelated complexity gaps between positions will be more in demand by organisations that plan to drive efficiency improvements with integrated workforces.
As global complexity increases and technology advances, there is no doubt that payroll skills will follow suit. I believe that it is the highly skilled payroll community who should take on the responsibility for interpreting and contextualising the data that robots and AI provide for strategic purposes.
After all, the COVID-19 pandemic demonstrated that when systems failed, it was the payroll community stepped in to keep the world paid.
Embracing Changes with Open Minds
Payroll professionals will need to embrace the changes we see coming on the horizon with an open mind. Do not be afraid to embrace technology and automation, because the payroll leaders who successfully combine robotics with human contextualisation, (the data derived and analysed can deliver meaningful results), will become extremely valuable.
- Has the work been done?
- What did we discover?
- Do we need to provide reassurance?
- What trends can we identify to help improve efficiency?
- Can we use this data to make payroll more profitable?
These are, of course, simplified versions of questions the payroll community will need to consider. That’s because the future will not be about rejecting one approach to favour another. Robotics, automation, and AI are all coming, whether we like it or not. Therefore, it is a matter of when, not if, hence the payroll industry must be both united and committed to evolving, changing and adapting. Only then can the industry truly drive the importance of payroll into this new, exciting era of strategic recognition.
Leadership and Change
The future will require strong leadership too. Leadership skills will be fundamental as workforces become more global, remote, and wellness-focused. The future will also involve managing both machines and people. At every stage of evolution, compliance management will be critical as changes will force new payroll protocols to be established.
Therefore, expect the future to include the dissolution of the monthly pay cycle as pay-on-demand solutions become the payroll norm. Also, with UK debt now standing at over £2.1tn (December 2020), or about 99.4% of gross domestic product (GDP), do not be surprised if cryptocurrency pay options, blockchain solutions and other technologies start to infiltrate and disrupt the payroll process sooner than anticipated.
Payroll Professionals Always Evolve
“According to Darwin’s Origin of Species, it is not the most intellectual of the species that survives; it is not the strongest that survives, but the species that survives is the one that is able best to adapt and adjust to the changing environment in which it finds itself.” (Megginson: 1963)
Like Chameleons, the payroll community has always adapted. Organisations across the world did not believe payroll operations could operate from home. The pandemic dispelled that myth. Studies claimed payroll professionals would become obsolete once systems automated payroll processes. Once more, the introduction of furlough legislation disproved this theory. Instead, payrollers showed the world that no big red magic button exists as they worked tirelessly to manually calculate payments to kePayroll Professionals Always Evolveep workforces engaged. Meanwhile, software providers (through no fault of their own) were left scrambling to update and configure systems to accommodate the changes. Payroll Superheroes across the UK took responsibility for keeping the UK paid.
Changing and Evolving the Payroll Lens
The future will require payroll professionals to view technology and data through the same lens as legislation and compliance. The payroll mindset will also need to adapt. Payroll will no longer be focused solely on mitigating risks and delivering pay accurately and on time. Instead, the perspective will shift and the aperture will increase as it also begins to consider how payroll data can make businesses more profitable.
Payroll handles significant information and data about employees. Now is the time to harness this data and deliver it back to stakeholders in a process that highlights the pivotal, unsung role payroll professionals play in achieving organisational success. Let us be honest, payroll has been a thankless task for decades and yet time, and time again, the payroll community has kept the world paid.
The Payroll Community has always embraced change. It will do so again.
Viewing the employee as a consumer, identifying trends, implementing new technologies, developing payroll governance, and delivering a more holistic payroll service are all considerations the payroll industry should start to contemplate now. To wait will leave you further behind the inevitable curve that is to come. Disruption brings opportunity!
Rear Admiral Grace Murray Hopper once said,
“The most damaging phrase in the language is ‘We’ve always done it this way” (https://www.audienceview.com/).
I agree with Grace. She made this statement to reflect the need to think forward, rather than looking backwards. As the founder of JGA Recruitment Group, and with almost 20 years of payroll recruitment expertise behind me, I know the payroll community will adapt once again to the demands that lay ahead. We are moving into times of disruption and change, but in my opinion, the technology benefits to come will far outweigh the threats. As a recruiter, I need to adapt too, and I am fully committed to doing so alongside you.
“I Love Payroll and Payroll Loves Me” – check out the payroll song here
The future provides the payroll profession with a unique and exciting opportunity to raise its profile strategically higher than ever before. We know how passionate payroll professionals are about raising the profile of the industry. It is a love that few others understand. However, there is a belief that during this pandemic, the face of payroll has never been more visible.
That’s why the Payroll Profession must speak to C-suite now.
Start building relationships with your HR and Financial peers. Emphasise the critical role payroll must play in the future success of the business. Welcome disruption, digital transformation, and change. I hope you have found my thoughts in this whitepaper helpful. I truly believe that 2021-22 can be the year that payroll practitioners can gain the recognition they deserve. Demonstrate how your payroll can be profitable and let’s see what we can achieve!
Written by Nick Day, Managing Director at JGA Recruitment Group – the UK’s leading Payroll & HR Recruitment Consultancy and Executive Search Firm.
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