Adapting to the 'New Payroll World'

Firmin Zocchetto at PayFit offers a comprehensive guide for entrepreneurs, VSBs and SMBs to thrive amidst changing expectations

 

It’s important small business leaders are able to keep pace with the various elements a changing payroll ecosystem demands, be they regulatory, process and skills-driven, or things expected by employees.

 

The world of payroll has changed significantly over the years, and continues to do so. But why should small business owners and leaders care? Well, because these changes have coincided with equally seismic shifts in both the way that people work, as well as what workers expect of their paymasters. 

 

The ways that people are paid and managed has changed, with these two elements becoming much more closely linked in the process. What this means is that your employees’ payroll experience is becoming more aligned to their overall workplace experience. Because being paid correctly, on time, and with a readily accessible payslip that explains everything clearly, increases the likelihood that their views of management will be positive.

 

But rather than see these as existential challenges to overcome, small businesses can instead look to these developments as real opportunities.

 

How we work, and what employees expect

Perhaps one of the most significant developments in the world of work over the past few years has been the move away from purely office-based work to a more locationally flexible, hybrid model, as a result of the COVID-19 pandemic.

 

The pandemic made many people reassess their relationship to work, and how it fitted in with other aspects of life.

 

Additionally, many of those in the workforce have felt the effects of long COVID, the associated health impacts, and the need to take time off work. This has put a strain on payroll, as growing numbers of employee absences have to be tracked and accounted for. And, where long term sick leave has been required, Statutory Sick Pay (along with all the associated payroll calculations) needs to be administered and factored in.

 

Payroll and people management processes

Research in the aftermath of COVID-19 indicated that many companies experienced a loss of payroll capacity, meaning that they looked for ways to reduce the dependence on human work. A part of this has been a huge shift towards payroll automation, and payroll software in particular (moving away from manual calculations, spreadsheets, manually paying staff etc.).

 

So this has fundamentally shifted the way that payroll is managed.

 

Budgetary constraints resulting from macroeconomic shocks, including higher borrowing costs and inflationary pressures, have meant that small business leaders haven’t had the money to invest in all of the software they might have liked, so there’s an increasing need for tech that can ‘do it all’, so to speak.

 

This means payroll and other associated human resources elements, including leaves, absences, expenses, performance management and more. 

 

Increasingly, this demands that business leaders consolidate and streamline their processes and tech.

 

Evolving roles and skill sets 

Thankfully, with the advent of simpler to use and more automated software, payroll is taking up less time or headspace for business leaders than it used to. As leaders become more autonomous and no longer need to rely on third parties to run their payroll, there is the need to onboard and get familiar with the new technology.

 

As AI and machine learning start to play an increased role in payroll management, for example to automatically flag any month-to-month pay variances, an advantageous skill for leaders to have could be a knowledge of establishing processes and workflows for an AI to replicate.

 

An evolving regulatory environment

New tax years can bring with them updated rates and thresholds for things like income tax brackets, National Living Wage and Statutory Sick Pay, which all affects how payroll is calculated. Additionally, the new Labour government is currently tabling a bill to bring about sweeping changes to employment rights, which will add further complexity into the payroll mix.

 

Rather than spending time and resources calculating all of the new rates, and worrying about regulatory compliance, leaders are increasingly looking for ways to automate these, such as intelligent payroll software.

 

Listen to what your employees think

One of the greatest opportunities the new payroll world presents to businesses is to be able to better engage with and meet the needs of employees. And what better way to do this than by asking them what’s working with their payroll, and what’s not. For example, do they have the same consistent queries to parts of their payslip, are they being paid correctly and on time, are they empowered to take ownership of their pay with a self-serve portal, can they manage things like expenses and leave from this portal too?

 

If the answer to the above questions are ‘no’, then it’s time to look at ways to give some power to your people.

 

Identify skills gaps on your team

Worried about changing legislation and don’t have the legal capacity to get answers to your questions? Looking for ways to better engage with employees around payroll and HR? Perhaps you’re missing a tech wizard to create the ultimate software processes and workflows, and to help you get the most out of your payroll data? If you’re missing these sorts of skills on the team, you’ll reap huge rewards from identifying and then addressing them.

 

Review payroll methodologies (and software)

If, after all this, you’ve looked at your payroll processes and there’s still issues, then it might be time to explore ways to better streamline and automate things. One way of doing this is by investing in in-house payroll software, one that automates fiddly calculations, codes in legislation changes as they come into effect, is staffed by payroll experts who can be on hand to provide support should you get stuck, and above all one that’s simple to use and gives both employees and employers control and autonomy over payroll.

 

It could be a crucial step towards future proofing your processes and getting closer to your people at the same time.

 

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Firmin Zocchetto is Co-founder and CEO of PayFit

 

Main image courtesy of iStockPhoto.com and Domepitipat