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Getting Off The Uphill Payroll Cycle

The sight of highly paid financial professionals hard at work is, thankfully a common site in most businesses. But in more cases than anyone would like to admit, those trained and certified individuals are often engaged in highly manual, process-heavy workflows, many parts of which could be achieved by anyone with basic computer skills.

The Payroll functions are a good case in point. In many companies, a highly complex and operationally fragile set of procedures exist that must be gingerly stepped through each pay cycle. These are processes in which policies, rules, and exceptions are carefully applied, with the resulting figures carefully checked and double-checked before the budget holder finally approves the pay round and instructs the bank.

“It almost feels like programming. You have to understand the rules and configure the rules to do the calculations,” said Judy Barnett, Operations Director at ADP, in a recent conversation with Tech Wire Asia.

Programming models representing the stepwise movement through code to reach an outcome are certainly very similar to payroll processes. Even some of the language used is similar, with ‘batch processing’ (borrowed from mainframe computing) applied each cycle before the whole, time-dependent roundabout begins again.

Although workflows can be less than ideal, it’s an area so sensitive that a wholesale change, like that which might be brought about by digitization, is often treated with great trepidation: in Australia, companies can be taken to court for getting it wrong, and everywhere, payroll errors are a PR nightmare waiting to happen.

Sometimes, necessary changes to payroll policies have to happen, of course, like the implementation of Domestic Violence Leave, plus an increasing raft of equal pay legislation to be observed by every organization.

But the fact remains that the majority of payroll functions in businesses today may be accurate but are reactive rather than proactive to change, and there is huge scope for improving business productivity and employee experience with the digital transformation of this central part of every organisation.

People at the core

The types of people who work in Payroll are most definitely specialists: “They really get into the minutiae of things – the check and the balance,” Judy said. As the Operational Director of a company that specializes in the digitization of Payroll, Judy has experienced the understandable friction between payroll staff and other stakeholders who would like to reform the process. Recent fears that AI will take over some very specialist roles (like computer programming, for example) feed the tendency to be protective of what is a highly complex job that’s very difficult to achieve well.

Many staff are wary of change not necessarily because they fear for their jobs, but because the results might not be as reliable as those existing highly accurate albeit inefficient processes. Digitization is not, Judy stressed, going to lead to mass redundancies. “So rarely do we end up in a conversation that says, well, I won’t need Payroll in my organization anymore. That’s not it at all.”

Digitization and automation in Payroll are about what Payroll practitioners should and could be doing in an organization rather than worrying about data entry, manual calculation and processing, and file and report creation. Plus, of course, the wider Finance function and the rest of the business must be aware of the impact digitization will have. “Payroll practitioners own this process, so while we’re talking about technology here, our technology is wrapped in a service. We deliver the ability to run your payrolls for you at whatever level you, but [we’re here] to bring that conversation about your business and make sure you’re staying current and compliant.”

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Policies rule

To understand Payroll, you must understand the rules and create formulas to do necessary calculations. “The ADP platform is based on policies. You don’t have to name those things. You can say, I need a Leave policy, a Deductions policy, an Allowances policy, and [the software] helps you think about it in language that humans use, rather than in terms of programming. The ability to change and articulate what is needed gets a lot simpler, but it also means [staff] will be able to talk to the rest of the business about how things work. It elevates their capability to do that at the same time.”

Having policies defined in software means that companies can adapt the rules over time, according to need (and perhaps even experiment with changes to model outcomes). There’s also the massive benefit of ‘rolling data,’ that is, staff input information into the payroll system as and when it’s available and see the effects the entry has in real time.

Here, levels of automation – also defined in software – can respond according to preset rules. “It’s always calculating,” Judy said. “In traditional, legacy payroll products, you put all your entries in and then you run the batch and that’s your payroll process for the month. Our software is always calculating. So, the moment you put information in, the Payroll’s calculated, so anyone can see it. If you put your Annual Leaves in […] it’s recalculated. You’re not waiting for the end of a pay period for the calculation to be done.”

Seeing is believing

In most modern software used in data-intensive applications, the concept of a dashboard is nothing new. In the context of Payroll however, data can be surfaced in many ways – the ADP solution comes with many dozens of pre-built, commonly useful templates built-in, and the ability for an individual to create their own specific views. These, too, are available to other stakeholders in the business, like upper management, HR, or Compliance Officers (with necessary restrictions and/or anonymizations in place). Instead of a closed loop of a monthly cycle, the information is right there, in dashboards that are as broad-brush or granular as required.

Automation can be as proactive as required too, merely flagging possible anomalies, or correcting them without supervision. Most ADP users want technology to do just the menial tasks: “It’s like, ‘How do we help you do your laundry and your dishes so that you can do the analysis?’ We help you ask: Do you have the right pay frameworks? Are you doing all the things to assess pay equality? Are you doing all the things that are value-add?” Judy said.

The ‘Next Generation’

July 1st this year sees ADP release the next iteration of the Payroll platform, as yet unnamed at the time of writing. Without giving away too many details, it’s noteworthy that ADP Payroll is built in a modular framework based on the concept of mini apps. Therefore, you can expect a rapidly expanding portfolio of more modules that build out functionality as users require.

“The back end is future-proofed, and its cloud-hosted basis allows us to be agile. From a Payroll practitioner’s place, there will be access to new features as and when they appear.”

Once Payroll professionals escape much of the time-consuming intricacies of the traditional, locked-in pay cycle, the organization can begin to work towards core objectives with employee pay as another string to their strategic bow. Offerings like early pay release, small loans, savings schemes, charity funding, and employee pay mobile apps all become possible.

This is the type of creative thinking that brings significant benefit to the business, something that simply isn’t possible if well-paid professionals must spend time navigating through manual calculations and multiple spreadsheets every month.

To find out more about the ADP Payroll solution and how it might bring value across the organization (and perhaps save a little staff sanity, too!), contact a representative near you or schedule a demo.