Human Capital Management Blog

Strategies for HCM Professionals

Payroll 2.0: A New Era for the First HR Technology Application

The HR function has been transformed by technology. It began long ago with the first application to impact the department – payroll software. As anyone who has been in the industry for a while already knows, the modern era of payroll is a far cry from the manual entry, paper-based filing systems that seldom involved any non-HR employee. 

Today, digitization, automation, and consumerization have combined to force companies into a much different position. Employees expect seamless access to their payroll information and businesses must be able to offer it in a controlled, accurate, and efficient fashion. 

Recently at the 19th annual HR Technology Conference, I was invited to speak on a panel that looked at how Payroll 2.0 impacts the various individuals in a given organization. Here are just a few of the ways I shared with the audience.

Employees driving the change
Consumerization is more than just a buzzword – it is the foundation of change that has taken place across organizations throughout the past few years. From employees bringing mobile devices into the office to staff demanding self-service resources and applications, consumerization has had a lasting, powerful influence on management and oversight – a trend that has certainly impacted human resources. 

Arguably the biggest difference in Payroll 2.0 compared to older iterations is the non-HR employee’s role in the processes. Traditionally, employees used to have very few interactions with payroll other than simply receiving a check at the end of the week. But, thanks to the demands of modern employees, paychecks have largely been digitized and brought online. And that was just the first step. 

Next, employees began to demand all other types of information be made available through online portals for their viewing pleasure. They wanted access to their schedules, ability to request time off, punch in for work and see how their gross-to-net pay is calculated, and other data at their fingertips, first through personal computers then via their smartphones. This is what truly drove the changes that now define Payroll 2.0.

Managers tasked with making it happen
When cloud technology was yet to be invented and digital technologies were in their infancy, managers were forced to write out schedules on paper, manually track hours on spreadsheets, and disseminate information on an as-needed basis. This was neither efficient nor satisfying for anyone involved. 

Payroll 2.0, on the other hand, simplifies work life by accomplishing the tactical processes that had once bogged down managers, such as those listed above. For example, with modern payroll technology, managers can take the guesswork out of labor planning and time tracking through software that automates such tasks. This frees up managers to focus on their true responsibilities – leadership and strategy.

Payroll managers revel in simplicity
I have had countless conversations with payroll managers over the years, and one theme remains consistent even today: simplicity. These professionals do not just want simplicity – they need it. Rather than the traditional disruptive situations such as emergencies, red flags, and late nights that would accompany payroll commit days, payroll managers need them to be non-events.

Solutions that allow accurate payroll processing with ease, speed and alignment with compliance requirements is now a reality, especially thanks to cloud-based innovations that generate results in real-time. 

A look at the future
During the HR Tech Conference’s Payroll 2.0 panel session, the moderator, Holger Mueller, asked me a very interesting and provocative question: Will payroll managers still exist 20 years from now? My answer: Definitely, but that position will continue to evolve and be far different at that stage than it is now. Today, a wider range and rising volume of businesses are using their HR and payroll departments to improve organizational value both in the eyes of employees and prospective talent. 

As a result, I believe the role of payroll managers will go far beyond just payroll processing, transcending into more strategic consultant and advisory work for the HR and finance departments within the organization. However, companies need to learn to walk before they can run, and embracing Payroll 2.0 and the technologies it entails comes first. 

With the right commitment to transformation of the payroll department, organizations will have a lot of opportunities to improve their operations across departments in the coming years. 

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