How payroll process is affecting the employer & the employee?
British workers are facing pressures on their finances, not seen since the Second World War, but the cost-of-living crisis is fast turning into a cost-of-business crisis, which is less talked about. Caught up in spiralling costs, falling consumer spending and the fight for talent, as well as facing the spectre of a recession, corporations are having to do things differently. It’s why payroll is now in the crosshairs.
Employee and business productivity are linked. Today, both are on a knife edge. If people aren’t paid on time and correctly it risks plunging families into penury and work productivity drops. At the same time, businesses are drilling down on outgoings. They’re trying to make savings and function more efficient, as they absorb higher costs as inflation rises and energy bills soar.
“Human resources have seen a lot of investment in recent years as businesses try to attract and retain talent, but bizarrely, payroll has been woefully overlooked. Paying employees is often as high as 80% of a firm’s running costs. Yet many corporations right now are using systems that don’t meet the needs of a 21st-century business. As firms transform digitally and cut costs, they must rethink payroll,” explains Will Jackson, managing director for the UK at Zalaris, a global leader in HR and payroll solutions and services.
Avoid postponing the implementation of the payroll system
Many businesses still run aged and paper-led systems. Others lack visibility on the payroll since data exists in silos. If they have operations in multiple countries, there’s little consistency across territories. Huge inefficiencies also exist because payroll is often perceived to be just a back-office function. It also garners little attention since it falls in the cracks between HR and finance, yet it has a direct effect on employee experience. Often payroll isn’t even connected to many human resource systems, such as time recording, travel and expense processing or time and absence management.
Recent payroll errors at Next and Asda, which left staff out of pocket, made headline news. This shows that issues with faulty systems and processes can have an impact, not only on the corporate image but staff retention, workers’ well-being and families’ lives. These incidents have thrust payroll responsibilities into the spotlight, as has the global pandemic. Covid was a lightning rod for wage management when businesses had to manage furlough schemes, sick pay and remote working more effectively.
“Getting people’s pay correct can no longer be an afterthought, neither can outdated systems and manual back-office administration be the acceptable norm. The pandemic highlighted how mission-critical payroll is. Those businesses who elevate it so that it’s strategic to business growth will win,” explains Jackson.
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Digitising the payroll system is the solution
Like many business functions that are evolving digitally, payroll is now going through its revolution. Many more tasks are being systematised. Robotic process automation has matured and is now mainstream, machine learning is also gaining ground in payroll technology.
By 2025, 65% of all payroll processing, audits and managed services will be automated and processed with no manual interventions,
– according to research from Gartner.
What was once incredibly labour-intensive involving a lot of manual input can now be done efficiently via digital platforms, and the results are shown on dashboards via any device. This also allows for consistency across countries, subsidiaries, and job types. Now the cost-of-business crisis is spiking interest in such services.
“Accurate wage management is one of the most important tasks in running a business. A good working relationship with employees is directly dependent on the payroll. Those who run it are the fourth emergency service for companies. But systems and staff increasingly need to be accountable and transparent, as well as adapt at speed as observed during the pandemic,” says Jackson.
How outsourcing helps your business?
Payroll must also keep up with local employment legislation and tax laws, which are changing all the time. Lack of compliance is not an option – employees also expect more. For instance, the new concept of ‘on-demand pay’ allows staff to access earned wages before payday. This is extremely helpful for employees to effectively manage their finances as the cost-of-living crisis kicks in. In essence, the demands of payroll are increasingly complex and time-consuming.
This is why outsourcing this function is gaining traction across many countries. Data-led platforms on the cloud can now deliver consistency and transparency. With up to 30% cost savings versus in-house operating models, outsourcing increasingly makes sense,
– details Jackson.
“As the global economy tightens, corporations must focus on what they do best: keeping their core business thriving. Administrative functions are peripheral to this. Keeping up with employment regulations and worker expectations is best done by an expert third party who can do the heavy lifting. This is where we come in, we live and breathe payroll. It’s our core business. Zalaris has hundreds of in-country payroll experts, utilising PeopleHub, our single, unified, and global HR and payroll solution used in over 100 countries.” adds Jackson.
And Jackson isn’t exaggerating the company’s global network. Zalaris employs nearly 1,000 employees across 16 countries and processes payroll for 2 million employees every month. With more than two decades of experience in payroll solutions, Zalaris provides services to companies such as GlaxoSmithKline, Telefonica-O2 and Siemens and is approaching €100m in yearly revenue.
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Key success factor – Transformation
Outsourcing ensures future-proofing payroll since technology, resourcing and legislation are continually evolving. There are also other benefits, as HR and payroll solutions can encompass recruiting and onboarding candidates and staff retention, as well as retirement and alumni management. However, many businesses are wary of an outside party handling payroll citing concerns about lack of control.
“With many clients, it’s about going on a journey with them and realising what can be achieved. Businesses need to be more agile, they need to meet the rising expectations of a more globalised workforce, who expect a more intuitive, easy-to-use HR and payroll solution. Firms also need to be GDPR compliant with wage and HR data or deal with ESG issues around employment. Times are changing, and businesses need to step up,” concludes Jackson.
Zalaris being a global payroll provider, our cloud-based platform allows you to automate your payroll process with just a few clicks. Contact us to learn more about our outsource solution that will free up your time, save you money and reduce compliance risks.