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Paradigm Shift: Payroll as a Strategic Value Enabler

Global TransactionsManage Compliance
Payroll As Strategic Value Enabler

I recently had the privilege of joining G-P’s Pangeo Perspectives podcast, along with Sara Dhooge of SD Worx, to discuss payroll modernization and why the critical process is primed for a much-needed paradigm shift. You can watch the full episode “Payroll Management: The New Key to Global Growth” here or listen on demand through your podcast platform of choice.

The following are four key takeaways from the conversation and some “pro tips” for unlocking the strategy-impacting value potential from your organization’s payroll operating model.

Payroll isn’t what it used to be….

Exiting the pandemic, organizations of every size found their payroll business continuity plans (BCPs) had weathered the perfect storm of circumstances. Payroll operating models around the world left limping along with outdated technology, learned firsthand that payroll modernization could no longer be the can they kicked down the road.

Access to strategic workforce insights, ease of cross-border money movement to a globally distributed workforce, and a compliance “target” that never seemed to stay in one place became the new payroll reality. Not to mention the complexities of rapidly changing sentiment toward the employee experience and payroll’s massive role at the core – facilitating the trust, transparency, and wellness expected from the modern workplace.

Pro-Tip: To enable timely, accurate, and compliant payroll globally, the critical process requires a modern infrastructure of people, processes, and technology. The modern payroll operating model must be agile, scalable, resilient, and able to support the strategic ambitions of the business. To support the organization in executing its strategic goals, payroll must unlock and activate its data to become a central and synergistic element within the HCM strategy.

…and it’s getting harder.

Despite the payroll practitioners of the world consistently making payroll appear to be a simple process, the reality is that payroll is anything but simple, and it only looks to gain in complexity and risk.

In my research among payroll operations leaders, compliance reigns supreme as a central driver for organizations that invest in payroll modernization. The complexity of regulations globally continues to accelerate, placing greater burdens on payroll teams to manage a moving target of statutory requirements that compound as the organization scales.

With total talent strategies (an agile mix of full-time equivalents, ICs, freelancers, etc.), a must-have approach to accessing skilled talent globally and remaining competitive, organizations of every size are increasingly finding their footprints stretching toward new countries of operation and “long-tail” payroll needs, which only adds to the complexity.

Further, with flexibility, the essential currency in the “war for talent,” modern practices such as choice of roles, projects, shifts, work location like work from home (WFH) or work from anywhere (WFA), pay method, and more, are all table stakes in shaping the modern employee experience. Enabling a hyper-personalized EX is essential to engaging skilled talent seeking to shape work experiences that meet their needs and goals, and payroll is central to enabling it.

Along this theme, remote work and WFA will continue to pull companies deeper beyond borders and further compound the complexity and risk. Digital pay methods such as earned wage access will become increasingly expected as a standard fixture in global payroll operating models and the “modern pay experience.”

Pro-Tip: Managed payroll services can provide a compliant vehicle to accelerate global payroll transformation. Enabling organizations with access to payroll technology and continuous innovation, deep country-level compliance expertise, and leading practice process design, each working in concert to modernize payroll for greater resiliency, agility, and scalability. Further, with payroll becoming increasingly complex, highly technical, and global, more organizations are seeking managed service partners to help, particularly with the skills gap, a genuine concern as payroll talent pools continue to shrink.

Seek solutions that offer highly flexible adoption methods, allowing your organization to engage technology-enabled services incrementally (from point solutions up to comprehensive up to fully managed services). Focus on “best-in-breed” payroll providers with solutions that complement and extend vs. rip and replace approach, allowing for existing payroll resources and investment to be retained and complimented with the ability to expand as needs change.

Emerging from simple processor to strategic partner

With artificial intelligence (AI) advancing, back-office processes are poised for a massive shift from automation to augmentation, and nowhere is that more welcomed or needed than in payroll. Historically, highly manual, reactive, and often static, payroll as a process and profession will be profoundly impacted by the infusion of AI. AI will remove the manual effort toward touchless payroll, surface valuable insights along with prescriptive guidance, engage payroll’s rich dataset through real-time analytics, and drive improved business and employee experience outcomes while enabling practitioners with valuable time to support strategic initiatives.

As we move deeper toward augmentation, the payroll practitioner role will evolve from a simple processor to that of a strategic partner. Through its data and insights, payroll can impact material change by telling stories with its data and operating as a strategic advisor to the business as it navigates its growth journey.

Pro-Tip: Dress for the role you want rather than the one you have. Payroll must advance their mindset from the simple back-office processor toward a strategic advisor and center of expertise (COE). As automation gives way to augmentation, now is the time for payroll practitioners to lean in, leverage technology, and engage their rich set of future-forward skills (e.g., analytic thinking, adaptability, creativity, resiliency, flexibility, agility) in concert with their deep data and insights to reposition themselves as strategic advisors to the business.

Elevating payroll also requires executive leaders to recognize payroll’s value potential and be both “invested” (prioritizing and championing payroll culturally) and “investing” (adequate budget and investment) in the critical process and providing payroll and its practitioners adequate support and investment and shaping a culture where payroll is a trusted advisor to the business.

An essential ingredient in organizational agility

Possibly the most valuable and strategically impactful resource payroll holds lies within the rich yet often underestimated data sets it curates. The depth and potential of the data housed in payroll, paired with its expertise and understanding of the organization and compliance at scale, can be immensely valuable if activated. When paired alongside broader HR, business, and operational data sets, the organization can leverage its data to seemingly see around the next corner, leveraging cues, nudges, and prescriptive insights to plan, prepare, and make calculated course corrections along its strategic path.

Unlocking those insights requires a modern global payroll infrastructure of cloud technology, bi-directional APIs and integrations, AI, and analytics, all enabling highly reliable, scalable, agile, and resilient payroll operations and allowing payroll to focus its expertise toward facilitating strategic change and initiatives (e.g., mergers, divestitures, country expansion initiatives, and more).

Pro-Tip: Leverage rich payroll data to tell stories and enable material change. Start small and grow, use the tools available to you, and don’t try to boil the ocean all at once. Begin by identifying the data available and put together your own dashboard of impactful metrics.

Conduct regular conversations with your executive stakeholders, leveraging 2-3 key metrics, KPIs, or data points that you believe to be most relevant to them. Focus the discussions on data (not emotion) and begin a dialogue around what the data is telling you. Work together to act on key findings and advance from there to drive improved stakeholder relations, build trust, and open a dialogue for material change and progress.

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