Predicting the future of payroll
Technological advancements are helping to turn a vision of digitally accessible, automated payroll processes into reality. Here’s five predictions for the future of payroll:
It’s time to integrate
Payroll is still too often perceived as separate to HR, despite being a key part of the HR function: this leads to the assumption that payroll requires less strategic effort as a process. Although this idea is beginning to change, many multinationals have not yet recognised the benefits of an integrated, comprehensive payroll system in reducing bottom line costs.
The difficulty with using disparate systems is that data must be entered two or three times at minimum, increasing admin costs. These systems also make compliance with country-specific legislation more challenging, while analysing people data for trends and gaining accurate, actionable information becomes almost impossible, impacting profitability.
For organisations operating on an international scale, integrating global payroll systems with other business applications is essential to saving time and money when it comes to managing multiple manual data updates and an array of supplier arrangements.
Organisations will embrace predictive analytics
Gartner defines predictive analytics as a form of advanced analytics which examines data to answer the question “What is going to happen?” or more accurately, “What is likely to happen?”, and is characterised by techniques such as predictive modelling and forecasting.
Organisations are constantly sourcing ways to gain deeper insight into global operations. Predictive analytics on accurate payroll data helps businesses to plan more effectively, particularly if combined with information relating to issues such as employee performance. As an example, the ability to identify employee attrition and absence patterns makes it easier to forecast recruitment requirements accurately, as well as saving costs.
Cloud migration is on the rise
The adoption of cloud-based payroll systems looks set to grow exponentially, encouraged by the increase of providers offering free-to-download applications in the market. Such applications are more likely to attract smaller firms (with lower budgets) and could help to automate any companies that still use manual processes to manage their payroll operations (5%).
Although the cloud software delivery model is widely considered to be the future of global payroll, it is important to consider the challenges that migration will present to some businesses. Businesses with on-premise systems will need to plan and execute their transition carefully to ensure the process is as smooth as possible. A robust IT change management strategy is crucial to minimising costs and driving business outcomes.
Payroll will become people-centric
Employers need to think seriously about how to meet the needs of Generation Z as its members begin to enter the workforce. Gen Z is made up of digital natives: their level of comfort with technology is even stronger than their Millennial co-workers. Consequently, businesses unable to cater to these needs will find it challenging to retain the cream of the crop talent-wise.
As a result, we can expect to see increasing employee engagement-related functionality included in global payroll systems. These functions use self-service and user-friendly mobile tools at the front end, and measurement and reporting tools to monitor workforce experiences at the back end. Payroll systems will also begin to support the management of reward and recognition benefits such as retail vouchers and free massages for employees.
What about GDPR?
If global companies operate or provide services to European customers, they will need to start preparing for the impending European Union’s General Data Protection Regulation (GDPR), due take effect from the 25th May next year. The regulation will implement a set of data protection standards that apply in a mostly uniform manner across all EU countries. Its requirements will be more constringent than previous regulations, meaning that many businesses will need to adjust policies and procedures to comply.
Significant technological transformation has already begun in the payroll sector. As the business case for more efficient payroll creeps up the boardroom agenda, this transformation looks set to grow exponentially: the next few years hold exciting times for payroll globally.