The top five things you need for an efficient payroll

ADP - authored by Jeff Phipps, ADP, SVP ADP GlobalView

In the wake of COVID-19, companies the world over are renewing efforts to improve operational efficiency and cut costs. Under performing payroll processes are often top of the list. And for good reason. A disjointed, error-ridden payroll process can seriously hinder any company’s speed to market, undermine growth strategies and impact revenue targets.

The pandemic exposed lingering structural problems in payroll, revealing a pressing need for the function to evolve from unpredictable and reactive to data-driven and strategic. These issues look set to intensify as firms face ongoing difficulties in recruiting payroll professionals with sufficient strategic, technical, and analytical know-how. HR leaders now find themselves scrambling to play catch-up and build in the resiliency essential to future-proof the smooth running of business operations.

With good quality talent increasingly hard to come by, companies have begun to target employee well-being as a key area of improvement. Of course, here payroll can play a major role. After all, paying staff accurately, and on time, is a basic tenet of the employee well-being ‘psychological contract’.

Payroll errors can be costly for an organisation, both financially and in employee trust. Investing in payroll efficiency means investing the health of the business and happiness of the team that ensures it runs smoothly. Organisations shouldn’t see this as an expensive investment, as even for mid-market companies the investment can be profitable when it comes to the total cost of ownership of payroll, vs the advantages it can bring to an organisation’s health and growth.

So, what are the top five things businesses can focus on to ensure their payroll is running optimally?

Invest in the right technology

Businesses must invest in technology that will cut both costs and risks. A cloud-based, unified solution needs to be able to scale and grow as the business does. When evaluating the relative merits of global payroll technology options, a business should ask three basic questions. How will the new system demonstrably improve efficiency across its current payroll operations? Has the vendor designed its payroll platform specifically to expedite business growth efficiency? And, in what ways will the solution help the company hit the ground running in new markets?

Make sure payroll is streamlined and predictable

Improving payroll efficiency extends beyond how easy it is for the team to accurately calculate gross-to-net earnings, apply and comply with nuanced local labour laws and disburse salaries into employees’ bank accounts. To be optimal, payroll needs to be streamlined and predictable right across the payroll function.

Typically, a business will be looking to improve efficiency by lowering costs in system maintenance, payroll tax penalties, the cost of ad hoc connectivity, pay disbursement and workforce management costs. The most significant – and preventable – cost associated with inefficient payroll operations, though, is the regulatory fines meted out for non-compliance with labour-related legislation. These must be prevented at all costs.

Increase visibility to drive powerful insights

Businesses can’t control what they can’t see. To ensure maximum visibility, the payroll solution must be fully integrated with all existing human resources information system (HRIS) and accounting systems. This means that teams have one single version of the truth at their fingertips to ensure better decision-making and cross-departmental collaboration. Certain vendors, like ADP, have longstanding partnerships with all the major HR technology providers, and continuously invest in innovating integration technology so that solutions can map and translate data from external systems. This increased visibility informs finance and HR teams to drive powerful outcomes.

Deploy agile systems

It is important to deploy agile systems that are primed to seamlessly deliver pay and adapt to new ways of working as the business expands into new markets. If a payroll team can quickly provide credible pay-related information to senior managers, forecasting pay-related trends becomes much more straightforward, making decision-making a breeze. Even better if this information can be presented visually to mitigate misunderstandings. Scalability is crucial in this too – a truly agile system is able to scale and grow as the business does, in new or existing markets.

A dynamic payroll dashboard that breaks down performance across countries and alerts HR to potentially problematic areas in advance means that teams can swiftly intervene to resolve issues before they escalate.

Involve teams

It can be tempting to focus exclusively on technology’s role in driving payroll process efficiency and productivity gains, but what about the people who are following and implementing the payroll process? Does their reporting line impact overall efficiency?

In our payroll survey, we found that global payroll doesn’t often sit neatly under one business function. This means there are several groups of stakeholders with responsibility for the strategic direction of the service, each with their own views of what needs changing.

Whether the payroll function is centralised, regionalised, or follows a location-specific ‘centre of excellence’ shared service model, make sure the business is set up for payroll success by gaining important buy-in from teams from the off. Engaging the payroll, HR and finance teams, and employers as a whole in what efficient payroll means for them is key in the deployment of it. Remind them that the insights to be gleaned from payroll data will be crucial to future workforce strategies as the company continues to expand.

In our survey of senior payroll professionals around the world last year, three-quarters (75%) of respondents admitted to not being able to manage payroll 100% effectively. By undertaking the steps above, you can buck the trend and ensure you are running an efficient payroll process that will help, rather than hinder, your company’s plans for growth.

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