Three steps to unlocking the potential in payroll

Payroll: Neglect or Nuture? Take a new look at pay.

Did you know that pay accounts for 50 to 60 per cent of a company’s business spend?1 That’s a big expense to ignore. This free payroll optimisation guide by ADP looks at how transforming your payroll in three steps (or phases) can bring both cultural and commercial benefits to your business.

Three steps to transformation

The best way to avoid disruption and receive measurable results when transforming your payroll, is to break it down into phases. Start with optimisation to drive out inefficiencies. Then visibility and agility will naturally fall into place:

Phase 1. Optimisation
Drive out cost inefficiencies and look for ways to simplify payroll.

Benefits for Finance:

  • Long-term complexity eliminated
  • Processes simplified and modernised
  • Team productivity increased

Releasing significant cost efficiencies

Benefits for HR:

  • Streamlined team processes
  • Increased employee satisfaction and reduced HR queries
  • Effortless regulatory compliance

Phase 2. Visibility
Make changes enabling sharing of payroll-linked data for collaboration and more informed decisions.

Benefits for Finance:

  • Total visibility over spend
  • Strategic cash management
  • Accurate modelling, forecasting and reporting

Driving powerful insights

Benefits for HR:

  • Global payroll data integrated with HR systems
  • Advanced HR benchmarking and reporting
  • Accurate benefits planning and equal opportunities

Phase 3. Agility
Build flexibility into your payroll solution to adapt to new ways of working.

Benefits for Finance:

  • Core business flexibility
  • Effortless local compliance and reduced global risk
  • Pay continuity across workforce

Adapting to business and regulations

Benefits for HR:

  • Different pay structures by role and territory
  • Innovative talent attraction and retention
  • Simplified employee on-and-off boarding

Guesswork or guided?

To identify areas for optimisation, the guide recommends that you locate those weak areas in your company’s payroll function. Perhaps low data quality, a slow response to regulatory compliance, or a reliance on manual processes are issues you recognise? Updating your payroll systems will reduce payroll workloads, provide visibility of the entire process, together with automatic software regulatory compliance updates. Now your payroll and HR teams will have more time to focus on strategic activities, rather than being swamped by mundane admin tasks.

In-house or managed?

First, you need to decide whether to manage your payroll in-house or opt for a managed service. Keen to retain control? In-house may seem like the better option. However, with a managed payroll service, you save time and money, by supporting your company to meet compliance obligations, increasing agility and meeting skills gaps as and when needed. If you’re wondering which option to choose, maybe reflect honestly on the level of responsibility your payroll team can comfortably manage.

Taking a global approach

Perhaps you’re one of the 60 per cent of payroll professionals who believe that a global payroll model would benefit your organisation.2 Meanwhile, the guide highlights, many companies have developed a patchwork solution – running different payroll systems in different countries. To streamline into one global system, analyse whether there might be duplications between global and local payroll processes. Choose one global payroll system and allow regions to adapt as needed, which will save your business money.

70 per cent of global payroll processes can be automated by consolidating the management of payrolls globally onto one single platform.3

Manual or digital?

Running a manual payroll is fraught with risk, and any downtime or errors can be costly and time-consuming. Focus on automating simple tasks where there’s less chance of error, while keeping human input for more complex tasks, such as ensuring legal compliance or quality checks. Use these procedures to help you migrate from manual to digital payroll:

  • Automate time-consuming tasks: AI automates data collection and time tracking, delivering real-time analytics and reporting
  • Digitise paper-based tasks: reducing complexity and errors associated with manual processes, while saving costs for storing and security of paper documents
  • Add more functions to your payroll system: save your payroll team time and effort by integrating policies such as paid time off

Consolidating payroll for visibility

Merging your payroll platforms into one increases visibility from end to end, so it’s easier to spot trends and gather insight. Currently CFOs use spreadsheets for an average of 2.24 hours a day.4 Full integration between HR, payroll and ERP systems enables everyone in the business to see the full picture. In the process, payroll transforms from a business function to a strategic advantage. Plus, by consolidating, you save costs by no longer paying for tools the business doesn’t use.

Report or predict?

With a streamlined and integrated payroll, your business will have access to a greater level of detail. You can run reports on expense management, timesheets, leave and absences. Your teams will be able to more easily manage a global workforce, using smart data analytics to inform core decisions.

Still hesitant about making the leap? Here’s how payroll reports can be used strategically:

  • Informing future planning with a global perspective of your true workforce costs
  • Improving hiring practices with analytics to determine the cost-effectiveness of temporary staff
  • Retaining key staff by designing compensation and rewards to motivate employees
  • Improving productivity by using payroll data to analyse departmental performance
  • Driving equality and diversity to highlight gender pay gaps and nurturing diverse talent
  • Tracking KPIs to see how your company’s monthly payroll operations compare with competitors’

Becoming truly agile

So how do you become truly agile as a business? Through digital payroll, optimised for the needs of your company and with fully visible and integrated data. Plus, you’ll reap the following benefits:

  • Undertaking strategic planning, from easy access to accurate payroll data and insights, enabling you to make the right decisions and alliances
  • Improving employee satisfaction, as agile payroll is better able to adapt to new practices, such as flexitime and remote working
  • Responding to regulatory compliance changes, with flexible payroll enabling teams to comply rapidly
  • Managing employees globally through visibility of pay and other costs, allowing organisations to pivot rapidly due to worldwide challenges

For organisations who take that all-important next step, payroll has the potential to adapt to change, driving future growth.

1 Deloitte analysis 2017. Labour spending or overspending?
2 Global Payroll Survey, 2019.
3 Immedis blog. Supporting CFO Effectiveness with Global Payroll Technology .
4 Financial Director, 2019. State of the CFO role.

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