The global pandemic had a significant impact on the payroll landscape. Payroll professionals proved they could decipher new legislation and keep the world paid while the rest focused on containing the virus. A global shift to remote working coupled with unprecedented increases in staff absences due to illness, quarantine requirements or caregiving responsibilities presented challenges for payroll to navigate – but navigate them they successfully did.
In the UK alone, the Coronavirus Job Retention Scheme (CJRS) supported over 11.7 million jobs, providing grants to employers to retain and pay staff during the pandemic at the cost of £70 billion. Suddenly, payroll found itself in the spotlight. As payroll professionals worked tirelessly to keep the world paid, global leaders, such as the Australian Prime Minister, Scott Morrison, publicly acknowledged the industry “for playing your part in what has been an extraordinary effort.”
So, almost two years on, what has changed and what has been the lasting impact?
The Remote Working Experiment
The most prominent, visible impact is the sudden shift to remote work. The pandemic created the most significant payroll home-working experiment of all time, providing payroll professionals with the opportunity to prove they can deliver accurate and compliant payrolls remotely. The shift, coupled with the rise in prominence of the profession, led to technology companies waking up to the size, scale and transformative possibilities available within the industry – estimated to be valued at over £25 billion in Europe alone. Advancements in technologies swiftly followed, infiltrating all aspects of the payroll cycle. These solutions relate to automation, artificial intelligence and machine learning that aim to improve payroll efficiency, deliverability, transparency, and accuracy. Such changes have also resulted in an explosion of new payroll career pathways that transcend traditional process-orientated tasks in favour of responsibilities concerning analytics, software development, sales, strategy, data science, process improvement, quality assurance and customer success.
The Gig Economy
The pandemic led to widespread job losses, which resulted in many people turning to gig work to make ends meet. The increased number of independent contractors, freelancers, and other gig workers presented new challenges for payroll professionals. More pertinently, it caused businesses to reassess how they pay such workers. Hence, since the pandemic, we have seen increased global adoption of pay-on-demand, direct deposit and other digital payment methods penetrating payroll infrastructures. These payment processes cause new challenges for payroll professionals concerning compliance; however, their global adoption rates show no signs of slowing down. Here in the UK, there is considerable talk about the potential dissolution of the monthly pay cycle. It is hard to make a case against it if it is what employees want. The costs associated with employee attraction and retention are simply too significant to ignore.
The pandemic highlighted the importance of employee wellbeing, specifically concerning financial health and mental health. The unanticipated shift to remote work and the fear and uncertainty caused by the pandemic led to unprecedented levels of employee stress and anxiety. Meanwhile, furlough schemes encouraged people to think about and plan for their financial health more carefully. The result is that post-pandemic, employees are now requesting more access to information about their pay than ever before, which has resulted in payroll departments implementing innovations such as interactive payslips to help employees plan their financial savings and expenses more effectively.
The fundamental role of payroll will always be about ensuring people are paid accurately, compliantly and on time. Therefore, it is easy to see why there is no margin for error when it comes to employee financial wellness. Get payroll wrong, and the impact can be profound. Public trust wanes, and employee financial health suffers, further affecting employee mental health. Such factors significantly influence the ability of an organisation to attract and retain talent. The great resignation, which followed the pandemic, turned the dial-up even further on the importance of employee engagement in this equation. Subsequently, businesses began to recognise and appreciate payroll’s critical and central role in supporting employee attraction and retention strategies. Suddenly, investing in payroll is a business priority.
When businesses were forced to navigate the economic challenges caused by the pandemic, many turned to data to better understand their operations and to help them make informed decisions about their workforces. Payroll handles more data than most other functions combined, and this realisation led to an increased demand for solutions that can provide improved data and reporting. As a result, payroll professionals with data analysis skills begun to support companies with insights, identifying process improvements or trends that can benefit strategic decision-making. For example, data concerning regional pay gaps, employee retention, overtime, absence, sickness, turnover, or compensation are all reports that can help support strategic business objectives.
The increased focus on strategic data has strengthened the case for payroll to have a seat at the table. As a result, payroll executives now find themselves at the heart of businesses, sitting in the intersection between HR and Finance, providing critical insights that may help a business to scale, achieve organisational change, address attrition, improve benefits utilisation or advance the employee experience.
Global Payroll & Cloud Technologies
Since the pandemic, the widespread adoption of remote working has increased opportunities for businesses to recruit talent from across the globe. Talent pools can now be accessed and onboarded from anywhere, resulting in organisations becoming international overnight. This evolution has impacted and challenged practically every part of the global payroll process. The pandemic put colossal pressure on global payroll processes, highlighting how important it is to keep up to date with changing international legislation. Payroll laws continue to change regularly, and payroll operations have had to evolve to overcome these challenges while keeping payroll data secure. Subsequently, post-pandemic, we have witnessed many organisations investing in cloud-based payroll solutions to help them navigate ever-changing compliance, accommodate remote-based payroll teams, and provide enhanced levels of cybersecurity. Cloud technology allows organisations to use and analyse data to make faster decisions. The benefits are extensive, and the global payroll landscape has changed forever, especially with the barriers to international recruitment removed.
Evolution from Back-Office to Strategic
Since the pandemic, all the elements explored have contributed to helping payroll evolve. No longer is payroll just a transactional, reactive function. In our new world of work, payroll is expected to contribute strategic advisory support to help companies identify trends, improve talent engagement, and support the futureproofing of broader operations.
Businesses are waking up to the power of payroll data and how it can be utilised to inform strategic decisions. This wake-up call will also encourage more and more organisations to reassess their payroll strategies. Expect more investment in automation, AI, data analysis, customer engagement, and other technologies that boost strategic insights and improve the employee experience. Expect transformation.
Since the pandemic, the payroll industry has placed itself at the heart of the employee experience. Payroll has evolved from an invisible back-office, transactional operation to a visible, data-driven strategic powerhouse. In addition, new payroll career pathways continue to emerge to overcome the challenges that new technologies, cybersecurity, big data, global compliance, and employee wellness will present.
Payroll professionals will need to keep many plates spinning concurrently. Organisations appear to remain committed to investing and improving payroll infrastructures that enhance the employee experience. The pandemic has shown businesses that now is the time to prioritise their people, and that means prioritising payroll. The payroll landscape has shifted. Gone are the pre-pandemic days of transactional, reactive payroll. We now welcome a new innovative, solutions-driven, strategic dawn. Payroll has been reborn.
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