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    Payroll

    The new payroll: Shifting your mindset and skillset to add strategic value

    Payroll pro adding strategic value with data
    • Share
    • Payroll's challenge: Overcoming history with tools and best practices
    • 1. Leverage technology
    • 2. Provide strategic reporting and analytics
    • 3. Focus on employee financial wellness
    • 4. Bolster soft skills
    • Conclusion: The new payroll is at the center of strategy
    October 27, 2020
    |
    Read Time
    7 min read

    Organizations everywhere know the critical role payroll practitioners play and the constant demands placed on them to keep up with compliance and ensure every paycheck is processed correctly, on time, every time. But what if payroll practitioners could be seen in a new way?

    At conferences, trade shows, and meetings we hear a lot about how payroll practitioners are expected to add value to the organization. But very rarely do we get to understand and hear about best practices on how payroll can shift their mindset and skillset as practitioners to get more strategic and meet these expectations.

    I’ve often been asked, “How can payroll measure how they contribute to the business?” To answer that requires asking some further questions. First, how do you tie what payroll is doing to the goals of the business? Second, how do you make sure payroll is doing all the right things and doing them well?

    Let's explore how you as a payroll professional can get to meaningful answers that will help you reach the full potential of your role.

    Payroll's challenge: Overcoming history with tools and best practices

    Historically, many organizations have viewed payroll as a tactical function – and that’s mostly due to its transactional nature, heavy administrative requirements, and because payroll teams have, quite honestly, often struggled to demonstrate how they deliver strategic value to the organization.

    Without the right tools and insight, it can be difficult for payroll to be seen as a strategic contributor. Here are four best practices that will be important for payroll teams to focus on in order to increase the value they add to the organization.

    1. Leverage technology

    In the digital world that we all live in, it is no surprise that technology is a key focus area for successful payroll operations. Payroll professionals everywhere are looking to technology to help streamline payroll administration and provide a better people experience.

    Employees' expectations related to their pay information has changed. They no longer want to wait for answers to pay-related information or delays in receiving their pay.

    Because employees now expect their employers to provide them with immediate access to their pay information, organizations are turning to technology that offers self-service that empowers employees to update their information, view their pay info, and submit other requests (without having to fill out or exchange paper).

    Our recent 2020 APA Payroll Trends Survey found that there is a new top priority for payroll professionals – improving the employee experience. In fact, 46 percent of payroll professionals said providing a better employee experience is a vital need.

    The study went on to say that employee self-service and a user-friendly interface are among the top three “must-haves” in a solution.

    For many organizations, COVID- 19 presented real challenges for payroll operations, especially if payroll was processed with on-premise solutions or required employees to turn in paperwork. In fact, the Workforce Institute’s 2020 COVID-19 Survey revealed 3 in 10 employees and business leaders wish their organization had the technology in place to better respond to COVID-19.

    Furthermore, prior to the pandemic many organizations did not include payroll as part of their business continuity plans. Now, payroll operations and technology advancements are top of mind when creating a comprehensive and robust business continuity plan to prevent payroll disruption. Organizations are leaning on cloud-based solutions that empower their payroll professionals to process payroll from anywhere. This is a huge advantage for organizations that have moved to a remote work environment.

    Technology also makes a huge difference in addressing the three biggest roadblocks that prevent payroll from being successful:

    • Missing timecard data and manager approvals
    • Late timecards
    • Incorrect employee data

    When payroll is equipped with modern solutions that unifies payroll with timekeeping and HR, payroll teams can improve the employee experience, process payroll in real time to eliminate roadblocks, and become a more strategic contributors in their organization through powerful reporting and analytics.

    2. Provide strategic reporting and analytics

    Everyone needs accurate information – from executives to tax agencies to part-time employees and leaders – and they rely on payroll professionals to provide them with analytics and actionable insight.

    This is because more organizations are investing in efforts to track KPIs and measure the business impact of internal processes, including payroll. And when you consider some of the significant changes to labor regulations like minimum wage increases and mandatory family and medical leave, as well as changes to the FLSA overtime threshold, you really start to see how payroll is moving to the forefront of organizations’ compliance strategies.

    The problem is that most payroll professionals struggle to provide these insights, preventing them from being seen as strategic contributors. The data from the 2020 APA Payroll Trends we mentioned earlier supports this, finding that only 2 percent of payroll professional offer strategic analytics and insights into their workforce. Furthermore, 52 percent of respondents still do not track or have defined KPIs, which is up 2 percent from 2019.

    This is largely due to inefficient or inaccurate processes and/or outdated or older systems that are not well integrated. As a result, payroll has a challenging time gathering the right data together or they must manually append data to get to the insights needed to better support the organization.

    Payroll professionals need to provide data to executives and leaders to make strategic business decisions. They need payroll data that includes information related to labor costs, total hours, current headcount, and overtime, so they can compare to the forecast. This type of insight is important so they can understand the overall health of their organization, see how different focus areas are trending, and identify opportunities for savings or areas of improvement.

    Minimizing risk is always a concern for organizations, especially when it comes to payroll. Because payroll data is heavily regulated, it needs to be fully accurate to quickly understand where there may be discrepancies in workforce data that could lead to a compliance issue, like whether certain employees are getting more hours for no apparent reason. Leveraging this data to generate reports and analytics for your organization can ensure you are providing transparency, consistency, and fairness across the organization, which can help mitigate risk.

    And lastly, payroll data can give executives and leaders insight into the organization's efficiency. If you have inaccurate data or processes, it will be more difficult to gain actionable insights from that information.

    For instance, your organization may be running too lean, so employees may be burning out and leading to lower productivity and efficiency. On the other hand, if you have several employees in a specific department who are less productive than their peers, it could be a sign of inefficient processes in that department.

    In addition, particularly when organizations are looking to return to their offices, payroll data can help them quickly identify employee locations, changes to employees permanently working remote and how many employees are needed when an office reopens.

    Ultimately, it is important to understand that payroll is the place where employee data and business data converge into one view, which can give you a single source of truth to get insights into your business. If your payroll processes and systems are limiting the visibility and accuracy of your workforce data, there is good news. A unified HR and payroll solution can provide you with data that can be leveraged to help your better understand your workforce and trends that are happening across the business.

    3. Focus on employee financial wellness

    As a result of COVID-19, more organizations are beginning to offer financial wellness programs as part of their broader employee wellness initiatives. One of the trends we are seeing is an increase in offering daily pay, earned wage access, and/or other financial wellness benefits.

    A recent study conducted by Branch showed some key trends in the hourly workforce. This year’s report found that the pandemic has taken a devastating toll on their finances, as 52 percent of hourly workers surveyed had $0 in emergency savings, a 12 percent increase from last year.

    This is an area of opportunity for payroll professionals to investigate – daily pay (access to wages without waiting for a paycheck), earned wage pay (access to wages as the employee earns their wages) or a financial wellness plan to help offset these trends and help your employees be financially sound.

    The study went on to say that even with stimulus checks, 76 percent had already delayed or missed a bill payment, and 94 percent of hourly employees said accessing their pay before pay day would be helpful, a 14 percent increase from last year.

    As payroll professionals, this is an opportunity for you to have a strategic conversation with your leadership around the benefits a financial wellness plan can bring to your employees during these difficult times. Technology can help automate those process and ensure you are compliant, staying in step with your policies and ensuring that you are offering daily pay and earned wages appropriately.

    4. Bolster soft skills

    With so much changing around COVID-19, it can be overwhelming and difficult to prepare for changing laws and regulations. This is when soft skills like effective communication and flexibility are paramount to the payroll practitioner, as you look to add value to organization.

    To manage this, payroll professionals needs access to the right data. For example, if you now have employees who work remotely, how are you tracking their hours? Can you quickly identify critical roles that may have a change in pay? How do you keep track of employees that may have reduced hours or employees that are reallocated to handle other jobs when employees are out sick?

    As a result, payroll professionals are considering their commitments to the employees they support and are taking a more streamlined, digital approach to their payroll operations. They are moving away from older and disparate systems and are turning to a unified, cloud-based solution that gives them the flexibility to respond to new regulations or dynamic situations that require process changes.

    Conclusion: The new payroll is at the center of strategy

    Payroll touches everything from business insights and compliance to employee happiness and retention. When payroll professionals have the right tools and the right insights into data, the organization starts viewing payroll as a strategic function.

    Get more insights into how the right technology solution can help you add more value to the organization by checking out our HR Buyer's Guide. In it, you’ll see all the ways you can make a difference for your people.

    Get your Buyer's Guide

    Written By

    Teresa smith headshot
    Teresa Smith
    Director, HCM Strategic Advisory

    Teresa leads our HCM Strategic Advisory team at UKG. As a veteran HCM business consultant and IT professional, she loves connecting with technology's human side.

    Compliance Human Capital Management

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