It’s easy to take your company’s payroll technology for granted – until it becomes obviously outdated. That’s why it may be time to evaluate whether the processing system you have in place will be able to grow with your business.
Payroll continues to evolve from a back office function to a strategic Finance function – identifying trends and sharing key insights to resolve critical issues. But in many cases, the payroll technology many of your peers are working with doesn’t quite have the capability to keep up with this shift.
A whopping 85% of organizations are experiencing some kind of challenge or limitation related to their payroll technology, according to Ceridian’s “Future of Payroll Survey,” which was conducted in partnership with the American Payroll Association and the Global Payroll Management Institute. Some eye-opening findings from the report include:
- 39% of respondents said their current tech lacks features they need
- 25% said they don’t have the right tools to properly analyze valuable, strategic data, such as labor costs, absenteeism rates, salary ranges and pay benchmarking to ensure employees are getting market rate pay
- As a result of data silos, almost one in three companies don’t actively track payroll key performance indicators, such as pay accuracy, on-time delivery of pay, time to process and commit payroll, overall payroll costs, average cost of producing a payroll payment and days to produce retroactive pay corrections
- 37% weren’t using the full capability of their software
- 34% said their payroll technology has repetitive processes and requires too much manual effort, and
- 43% named compliance as their biggest payroll pain point.
Vulnerable to disruption
If a pandemic, hurricane, flood, earthquake, wildfire or tornado were to bring things to a grinding halt in your area, would you still be able to run payroll? For a surprising number of businesses, the answer is “well, that depends …”
Just 54% of businesses surveyed are using cloud-based technology to enable payroll processing from anywhere – meaning roughly half of responding organizations aren’t using best-in-class technology to empower their payroll functions and professionals.
When asked via Zoom if those numbers were due to application security and data management concerns, Lisa Weckman, the vice-president of product management at Ceridian, said that’s understandable.
However, she said, the players in the payroll technology market are heavily investing in advanced technology that also includes enhanced security measures to minimize data breaches, such as third-party testing, active monitoring and role-based security controls.
What about on-demand pay?
Nearly three out of four (71%) payroll professionals say their companies have no plans to implement earned access/on-demand pay to promote financial wellness among their employees, creating a gap between the benefits that employees want vs. what they’re offered.
For example, a Ceridian/Harris Poll survey found that 78% of workers say on-demand pay would make them more likely to stay with their current employers. That indicates that employees want more from their pay experience than just self-service access.
But if your legacy payroll technology is unable to accommodate the continuous tax, retirement plan contribution and other deduction calculations involved in offering on-demand pay, recruiting and retaining top talent among the younger segment of the workforce could become a struggle.
“If employers don’t start to get on board, they’re going to find themselves in a situation where they’re not competitive (in the current labor market),” Weckman said. “Instant access to anything is an expectation, whether it’s food, whether it’s media, whether it’s your pay … I’m confident that on-demand pay is going to be a critical employee engagement tool.”
Modern payroll technology solutions can make calculation of earned pay for on-demand access a realistic option for your people. Pay distributions can even be supplemented with a tax-compliant earnings statement.
Next-generation payroll technology
Besides continuous calculation of actual pay, some of the other capabilities available in modern payroll technology solutions include unified time and pay engines that calculate in real-time, and rules engines that are adaptable to a variety of custom business needs – such as being able to switch tax jurisdictions with agility as an employee works in different locations.
Weckman advised business leaders to start planning to “invest in a holistic, cloud-based payroll solution … that can help them simplify their business process by replacing those archaic legacy systems, to help drive efficiency (and) promote (tax and labor law) compliance.”
Modern solutions can provide payroll pros with more informative data to drive business growth. “There’s a wealth of data in a payroll system. What’s important is leveraging the power of data, and then using that data to predict and to provide insights, and to notify (Finance leaders) when (certain) situations happen proactively,” she said.
But keep in mind that payroll software isn’t one-size-fits-all. Some vendors’ solutions are just for small businesses or large enterprises with more than 100 employees, while others are intended for specific industries. A good place to start taking a look around is the payroll software reviews section of BetterBuys.com.
