As we look back on this year, there’s no doubt that COVID-19 has accelerated business transformation. Retail and hospitality businesses have moved online at record pace, and even the most traditional businesses have adapted to working from home. We also saw back office operations designed for the ‘old normal’ come under the spotlight. Some of these were not deemed worthy of transformation in the past, but were found wanting in the current environment. One of those most high risk was payroll.
The threat to morale, bad press, and the regulatory impact of not paying people, was suddenly a real risk and some payroll teams were left onsite to keep legacy systems operational. Some businesses had to entirely circumvent their on-premise systems and panic-run payroll directly through their banks, reconciling discrepancies at a later date.
What’s become clear is that payroll transformation can’t continue to sit on the back burner. It is too expensive and inefficient to run. For those still reliant on manual processes, payroll is also incredibly prone to error.
In addition to all of this, payroll continues to get more complicated. In just 30 days, COVID-19 drove a 4x increase in new regulations impacting payroll around the world. A report released earlier this year by ADP and The Economist Intelligence Unit, showed that 75% of those surveyed found the regulatory challenges of hiring, paying, and managing employees internationally increasing in complexity. Within Australia, there have also been complications around JobKeeper and staying on top of workplace entitlements.
It’s no longer a question of whether to transform payroll, but a question of how.
In the wake of COVID-19, businesses need to challenge old assumptions about payroll and stop treating it as a tactical silo. This approach overlooks the simple, but strategic advantages that payroll transformation can bring. For example, by transforming and connecting pay with HR and finance, businesses can reduce system complexity and increase efficiency. They can also reduce workforce management costs, including non-compliance fines, pay disbursement and distribution expenses.
Deeply digitised organisations also enjoy real cost efficiency and productivity advantages which can be useful when navigating unchartered waters. Deloitte sums up the need for cost efficiency in their paper ‘Cost resilience amid and after COVID-19, stating that “To be prepared facing a new crisis such as the COVID-19 pandemic, companies have to swiftly adjust their cost models relying upon a truly agile and scalable business.”
The Deloitte report also highlights that organisations “...need open, accurate payroll data to run and analyse current operating models, run scenarios and also know exactly what is going on, to look at how you allocate work, where, at what cost and with how many resources.”
This leads to another overlooked aspect of payroll transformation; by moving away from manual processes, businesses can get a real-time view of their payroll data. This can unlock new insights not only for finance, but also for HR teams who will be able to make smarter decisions related to areas such as talent acquisition and retention.
With all of these benefits, it’s time to take a new look at pay and see it not as a cost-centre, but a source of competitive advantage. Download our eBook Fear or Confidence: Take a New Look at Pay for a vision of what’s possible. You’ll see how payroll is a key element of digital transformation, and how a structured program will increase efficiencies, and enhance visibility and agility company-wide. You can also learn how ADP can support your transformation by contacting us today.