A New Era for Payroll Technology

Payroll is undergoing a transformation unlike any we’ve seen before. As businesses everywhere embrace digital innovation, payroll is evolving from a back-office function to a strategic powerhouse, capable of reshaping roles, teams, and entire business operations. This next phase of payroll technology promises to drive efficiency, accuracy, and new insights, empowering professionals to add greater value than ever before.

Historically, payroll has been a manual discipline and carried out by specialists wholly focused on accuracy, detail and precision. Outside of paying staff – which is obviously critical, after all, most people work to get paid – the wider value offered by the function has often been overlooked. That time has now changed. Payroll is increasingly playing a visible and valuable role within wider business remits, with organisations benefitting from insights from pay teams that support broader decision-making. That shift has been driven largely by technology – and will do for the foreseeable future. It wouldn’t be possible to gain insights from data without modern platforms, and payroll roles therefore wouldn’t have evolved to become more strategic as they have in recent years. This is a beneficial change; in fact, our recent Payroll Efficiency Index (PEI) report found that the sector is gaining in a variety of ways from the greater integration of technology.

The data showed that the overall performance of the payroll function has improved year-on-year, and highlighted that metrics like first-time approvals (FTAs) have reduced, along with decreases in both data input issues (DII) and the number of issues per 1000 payslips (I/1000). On their own, the majority of the results are impressive, but when combined they show that payroll teams are making fewer errors, and those that are being made are being picked up at validation and checking stages more regularly.

The day-to-day tasks of payroll practitioners have also adapted in line with the growth of technology. Payroll was once an entirely manual – and siloed - discipline but has evolved to hold a more strategic and broader role that offers a wider array of benefits to businesses than at any time in the past. However, evolution doesn’t stop. And the next step of the technological progression is the latest wave of Human Capital Management (HCM) system integrations.

Just as the introduction of computers and digital pay drastically shifted the roles of payroll professionals, this era of innovation is poised to do the same, especially for those operating in large, complex, and international organizations where the impact is most visible. However, despite these advancements, payroll runs remain challenging and time-consuming, often requiring significant concentration whilst navigating between multiple data sheets and systems to get the job done.

The latest generation of HCM integrations promises to change this. They will provide a more streamlined, agile and smoother experience by incorporating all data into one platform, which not only reduces the time and effort needed, but also decreases reliance on multiple spreadsheets, meaning payroll professionals have more time to spend on strategic tasks.  And when payroll teams have to spend less time on administrative activities, and moving between documents, they can focus more on strategic and value-add work.

Better connectivity with HCM systems also means that sensitive data is rationalised and synchronised around a single source of information, resulting in a lower risk of inconsistencies. This also allows for automatic validations and checks to be applied, ensuring compliance with tax laws, wage regulations, and other legal requirements. This is particularly key when more robust checks are needed when working across multiple geographies and territories. Most payroll professionals will recognise that keeping up with the varying international employment and tax regulations is one of the key challenges for practitioners. And getting this right is a high-risk, intricate and critical task. Having information held within one platform makes it easier to adapt to these changes and ensure that salary and tax information is being delivered correctly, which reduces time – and stress – significantly.

And it’s not just payroll teams and their employers that gain from the next generation of HCM integrations; employees do too. They benefit from a smoother and more coherent pay experience. We also can’t overlook the fact that granting easier access to relevant pay information through a single, properly connected system and self-service portal improves the employee experience by reducing the need for multiple platforms or apps.

The latest generation of HCM integrations – including our partnership with Workday – herald the next step of technological evolution in payroll, with practitioners, teams, organisations and employees all set to benefit.