PAYROLL AS THE COMPOSER, ENCORE, ENCORE!
My second article in our “payroll as” series, aligns payroll to the composer of an orchestra, a comparison I believe is particularly relevant in our new world of work.
PAYROLL OF THE PAST
It could be argued that before automation infiltrated the payroll process, the art of payroll processing used to be a straightforward monthly cycle focused on transactional activities intermixed with legislation and manual payment calculations.
In payroll years gone by, payroll managers, in orchestral terms, were effectively required to conduct small payroll Chamber Orchestras to ensure everything ran smoothly. Payroll was a process of coordinating a tune at an andantino, melodic pace, composing of perhaps a couple of violins (Legislation), a cello (manual payments), a double bass (Manual calculation payments), several woodwind instruments (process and data flows) and maybe a small brass section (Inland Revenue Submissions and audits). These would be harmonised perfectly to create a beautiful sinfonietta symphony, or in payroll terms, an accurate, efficient payroll process.
Of course, sometimes extra rehearsals were needed, especially when payroll deadlines and complexities requested more attention, such as at year-end when P11Ds had to be processed; however, for ten months of the year, the payroll manager could focus on conducting a small band to deliver a competent tune. Payroll was only about paying employees on time. If payroll wasn’t heard, it was considered a success. However, times have moved on.
Two decades ago, when I first entered the payroll profession as a payroll recruiter, the issue was that although payroll departments conducted their small bands perfectly, the tunes they played were rarely listened to (or acknowledged) by their HR or Finance counterparts. If they were heard, they were undervalued or “Poco, un poco”, which resulted in payroll professionals failing to gain the traction that would allow them to rise in strategic prominence.
Beethoven created his most famous overtures after he began to lose his hearing. The deafer he became, the harder he worked to be heard. He already knew how instruments and voices sounded and how they worked together, so he focused on ensuring that his greatest work, his Ninth Symphony, was his most masterful. It was longer and more complex than any symphony he had previously created, and so it required a larger orchestra.
Fast forward to the present day and, finally, Payroll is beginning to be heard too. Post-pandemic, we have seen payroll operations thrust into the limelight and, as a result, payroll composers are now leading much larger orchestras than ever before.
PAYROLL HAS EVOLVED
Today, the small payroll chamber ensembles of the past have evolved and developed into full philharmonic orchestras delivering full-scale symphonic payroll repertoires. Much broader components now make up the total composition of a payroll operation, with complexities manifold and integral, rather than stand-out and rare.
Old monthly and weekly pay cycles are becoming outdated. Payroll professionals now handle multiple, concurrent flexible pay cycles. The rhythm and tempo of payroll is also changing. Figures from research undertaken by the TUC highlight that the gig economy nearly tripled in the five years to the end of 2021 in England and Wales. Payroll tax arrangements differ for those working within the gig economy compared with employees. Additionally, some contractors may now fall under the IR35 rules in the UK, further enhancing the complexity of the payroll process. And let’s not even mention words such as furlough, mini-budget, Chancellor, cost-of-living, real-living wage or NMW!
Putting this into perspective, according to recent research by SD Worx published in 2022, “nearly 1 in 4 HR Directors believe their company’s lack of capability makes payroll processing more difficult.” Why? Because payroll is no longer transactional. Payroll managers now compose many complex moving parts. Strategic trend analysis, interpreting complex legislation, implementing automation, supporting employee engagement, enhancing wellbeing with reward and benefit initiatives, managing global cross-border payments, introducing pay-on-demand services and leading remote teams all form part of the modern payroll professional’s remit. Payroll may be more complex than ever to manage, however, the results are symphonic when these components are harmonised to play a tune. Better profits, improved employee retention, enhanced employee engagement and wellbeing. The positive effects are endless. There is no denying that playing a payroll tune is more challenging than it has ever been before, however; finally, the payroll composers, found at the heart of these orchestras, are starting to be heard.
THE PANDEMIC MOVED THE COMPOSERS NEEDLE
Meanwhile, the recent pandemic forced almost all business-critical operations (including payroll) to function from remote environments. Remote working opened a pandora’s box of opportunities for companies keen to broaden talent pools, while simultaneously improving working conditions for those eager to secure a better work/life balance. Companies are now setting up global offices to overcome staffing challenges, requiring payroll departments to evolve from UK-only operations to globally compliant functions. Within the next five to ten years, the location of talent is likely to change further. Recent research evidence suggested that 54% of the world’s college graduates are from the major emerging markets: China, Brazil, India, Russia, Turkey, Mexico, and Indonesia. Payroll is already adapting, and as globalisation trends continue, the demands on payroll professionals to be conversant in global legislation and cross-border currency payment management will only increase.
Innovation is also infiltrating the payroll process more than ever before. The payroll technology market is estimated to be valued at £27 Billion in Europe alone; hence it is not surprising to see an influx of new payroll opportunities come to the fore. Pay-on-Demand, interactive payslips, cryptocurrency payments, blockchain ledgers, cloud-based solutions, and more add layer upon layer of complexity to the process. The payroll composer now needs to understand, manage, and immerse significantly more instruments into its orchestra.
Research published in 2021 shows that many Millennials and Generation Z want to be paid in Crypto wallets, and conversations surrounding the dissolution of the traditional payroll cycle continue to increase in volume. Meanwhile, employee-led labour markets are demanding more from their reward and total compensation packages, forcing payroll operations to change to ensure high employee satisfaction rates. Subsequently, payroll operations are now directly impacting employee attraction and retention success, heightening its importance as a strategic operation.
The smallest orchestra is the chamber orchestra. I believe payroll took 15 years to evolve form chamber orchestra to the next size up, which is the sinfonietta. Pre-pandemic, the payroll industry was getting noticed, it achieved chartered status and relationships with HR and Finance had improved considerably. However, Post-Pandemic, payroll has rapidly advanced the composer’s needle. Payroll leaders are now managing full, philharmonic sized orchestras with a responsibility for providing a far greater impact on overall organisational performance than ever before.
PAYROLL DIRECTLY IMPACTS ORGANISATIONAL PERFOMANCE
Now considered the most valuable commodity in the world, data is handled in increasing volumes by eager payroll composers keen to identify trends and analytics that can impact broader organisational objectives. Payroll data can identify trends in absence management, regional pay gaps and benefit utilisation that impact organisational performance. Notably, understanding how payroll can influence employee wellness has become integral in contemporary payroll operations. Payroll is no longer transactional; the automotive robots can handle this aspect of the process. Instead, payroll is becoming far more strategic, providing value across the employee cycle, and improving business performance in the process.
Recent evidence suggests that more than one in four large companies struggle with the complexities of payroll legislation. More than a third of large companies report that workforce composition makes payroll processing more complex. The rhythm and tempo of payroll have changed, and payroll professionals have adapted to deliver more complex melodies and harmonies than ever before. Given the extent of the changes presented, it is not difficult to understand why. Simply put, listening to a philharmonic orchestra can be a powerful and engaging experience. Payroll composers are orchestrating influential operations that help sustain the composition of a business by ensuring employees are engaged and retained. When employees are happy, operations are empowered and can work in harmony to reach new levels of performance.
WILL PAYROLL START TO PLAY OUT OF TUNE?
The question is: How many more sections can payroll composers manage before the orchestra starts to play out of tune?
Payroll professionals are required to perform a cadenza (improvise) more and more as the layers of complexity continue to permeate the payroll process. That is why I believe it is time for organisations to invest in payroll operations to ensure that its composers have the support they need to deliver strategic success. I hope the “finale” will be board level stakeholders appreciating the value and harmony payroll composers bring to the table in supporting broader organisational objectives.
My wish is to see payroll managers recognised and promoted to become strategic payroll people directors. I want to see organisations provide training to improve strategic leadership skills.
Whatever happens, one thing I know for sure is that payroll professionals are composing overtures that are finally being heard, and it is about time too!
Encore, encore!
Of course, a symphony is only as good as the musicians that make up the orchestra. The same is true of payroll departments! JGA Recruitment is an award-winning payroll recruitment firm that can ensure that every payroll professional in your ensemble is skilled and qualified to deliver a perfect tune, so you never miss a beat! If you need support recruiting in your payroll department, contact us today.
Written by Nick Day, Managing Director at JGA Recruitment Group – the UK’s leading Payroll & HR Recruitment Consultancy and Executive Search Firm.
JGA Recruitment Group| Payroll & HR Recruitment
E-Mail: nick@jgarecruitment.com | Tel: 01727 800 377
Copyright©: JGA Recruitment Group 2023
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