Expertise

Can better payroll mean better business growth?

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Yes it can.

Last week I spoke at the Rewards and Payroll Summit about modernising payroll. It was great day with informed insights from many payroll leaders.

The messages from the event were clear

Employees will be the driver for change, will demand pay when they want it and this will affect a company's ability to hire if pay on demand is not offered
Payroll professionals are ready for change - welcome it even
Technical innovation will be the enabler of change

The payroll sector is being asked to change and is facing an onslaught of financial technology and automation. A scary prospect for many, my observation watching people at work for over 35 years, people generally don’t like change and are confused over how to approach this.

Change in payroll is a particularly thorny topic. The risks of getting it wrong are great. The prosect of pay not arriving on time is too horrific to bear. We rely on pay and if that trust is broken and companies fail to deliver on this it undermines the trust between employer and employer forever. No number of gym memberships or free massage sessions will compensate for not receiving the correct pay on the right day.

We leave things as they are at our peril. Life Before the Pandemic, was predictable, office based for most and manual processes were part of the fabric of office life. Post Pandemic - working life has changed forever and no amount of wishing is going to close pandoras box.

The changing nature of the world of work is our biggest challenge in payroll. The relationship between an employee, the employer and money is changing forever. This is particularly true for SME's as the Financial technology on offer to the SME market has a closer relationship with the user experience around the use of apps and personal finance tech but this and will gradually infiltrate into very large companies.

The arduous path of being asked to do more with less will continue to get steeper. With the labour shortage and fewer people in the workplace will mean we as leaders will have to look for greater efficiencies as fewer people will be doing more. This will be impossible to achieve unless we automate back room processes.

Hybrid working is becoming standard, soon work form anywhere will become normal. The familiar physical infrastructure epitomised by banks of desks, private offices, reception desks etc will become less of a fixture in what "work" really means and will be replaced with something more fluid, relaxed and informal. As a result will see less of a distinction between what our employees expect from companies who employ them and what they experience as consumers.

User experience regarding pay will be that it should look inviting, offer good information and that companies look for ways to create accessibility. Employees will approach with the same expectation and viewpoints and will value organisations that move the UX ( user experience) to being one and the same.

Good payroll underlines the fundamental relationship between employers and employees. We all want to attract a new generation payroll professionals into this important space. The industry has plenty to offer the younger generation - it's well renumerated, its challenging, expert and rewarding but if it's too mundane and not progressive enough they won't stay. We have to excite them and we can only with innovation and technology.

The cost of living crises is bringing this into sharp focus - how can we as employers support and help our employees save money. How accessible and visible are we making this through payroll? Companies that ignore this innovation and do not embrace it will lag behind - in employment, retention, external views from stakeholders.

And what do the financial leaders think?

In [Caxton's own study of 158 financial leaders](https://resources.caxton.io/expenses-in-the-spotlight), over 75% said they consider their leadership transformational. In fact, our respondents see having a transformational mindset is key not only to effective leadership, but also as a driver of business growth. The majority (84%) see the application of technology as being a fundamental to this growth and the relationship between our respondents and their colleagues, particularly a strong relationship with the CTO of the business is seen as key to success.

Businesses who had prioritised the relationship between their CFO and CTO were more likely to have identified one significant hidden blocker to business transformation – too much time spent on manual processes no longer fit for purpose.

After accurately identifying the drag effect this was likely to have on the business and its employees, these businesses were more likely to have prioritised implementing automated systems that allowed employees to spend their time more efficiently.

So - what can we do?

The first step in this journey is to look to where bulk repetitive tasks can be replaced with RPA - robotic processing automation. If someone is pressing a button 1500 times then a robot can do this a free up that persons time to do something that only a human can do. Going forward its likely we will all be working with smaller teams that we will need to upskill to become more expert.

The second is to look to improve speed and efficiency in parts of the payroll process that tech has already demonstrated better pricing and greater speed and efficiency such as payment processing.

We, as employers, will be asked to step in more and more to help our people manage their finances, save money and cope with the demands of everyday finances. We will be become the stop gap and first port of call for financial wellbeing. Modernising payroll is just the beginning.