As complexities around the workplace and workforce increase in a globally hyper-connected and diverse business world, cost pressures are becoming a looming reality.  This, combined with the tepid macroeconomic outlook, is forcing organisations to streamline their business and people operations to better the bottom line. 

One significant cost-to-company in today’s knowledge economy is the employee cost because people are the primary resource. As a result, driving efficiencies in people processes is critical to business performance. HR leaders must carry out the due diligence to instate business-relevant HRIS, especially for core HR processes such as payroll. Payroll management has a direct impact on a company’s profits and losses. Hence, an efficient and effective payroll management system is a must to realise synergies between people and businesses.  

The importance of having the right payroll process

Payroll systems are a basic HR operations activity but involve a series of critical steps such as defining the payroll philosophy, gathering and validating payroll inputs, payroll calculations, administering statutory compliance and accounting principles, ensuring adequate pay-outs, and post-pay-out reporting. 

However, the different workforce formats that have emerged recently, such as hybrid, distributed, gig, flexi-work, etc., are creating a need to automate the payroll process. For example, the size of the gig workforce is on track to surpass the full-time workforce by 2027. Such workforce dynamics have added a high degree of complexity to payroll operations, and to manage this complexity in an error-free manner, here’s why it is a good idea to move away from manual payroll management to payroll management systems:    

• Reduces human error in maintaining payroll data and records, such as hours worked, work formats, taxation and deductions, etc. 
• Ensures adherence to compliance and legal terms, avoiding costly tax penalties 
• Saves man-hours in cumbersome administrative tasks and prevents disengagement of payroll staff due to tedious, repetitive work
• Ensures timely and accurate disbursements, thereby minimising employee grievances and fostering employee engagement 
• Ultimately, it aids business productivity by driving efficiency and effectiveness  

Checklist for choosing the right payroll system

Investing in the right payroll system can make or break the process efficiency from a people and financial perspective. To ensure that organisations are on the right track when digitising payroll processes, here are a few things that must be kept top of mind: 

• Relevant to business:

Every business is different, hence the payroll should align with the business’s unique needs. HR should assess factors such as the nature of the industry, size of the organization, type of workforce, business cycle, etc. and invest in a payroll suite that works for the business strategy. 

• Streamlined workflows and operations:

The payroll system must have streamlined workflows for all tasks, such as wage rates, shift and overtime pay, timesheet management, approvals, risk and compliance adherence, generation of tax statements, etc. HR and finance must outline the operational details such as number of employees, budgets and cost centres, employee benefits, pay-out frequencies, payroll tax laws, etc. For instance, Akrivia’s solution allows managers or employees to request funds in advance for business purposes.

• Ease of use:

A tech platform with an intuitive UI/UX goes a long way in easing payroll processing for the payroll team and addressing employee inquiries. For example, a mobile app or mobile-friendly website can help run payroll from smartphones or tablets, upping the usage and adoption of payroll technology. A payroll system such as Akrivia has features such as sending employees notifications to complete the pending financial activities within deadline dates. A big plus is the sustainability element – it even eliminates the paper trail with its ability to save all documents online.

• Employee-first:

A self-service employee portal allows employees access to their personal payroll data and helps them independently carry out activities such as viewing and downloading outstanding advances, payslips, and tax declarations, claiming benefits, submitting declarations and tax proofs, requesting loans and advances, etc. The portal also helps in organisational payroll communication, such as payroll philosophy, payroll policy, etc. This openness and transparency can foster a seamless bond between employer and employee. It reduces the administrative burden on the payroll team, opening up their bandwidth for more value-adding tasks.

• Data diligence:

In the digital age, data dependence is high, especially for a financial-led process like payroll. Investing in new-age data science and data management systems will help organise and clean the payroll data, keeping it up-to-date and accurate in real-time. This is a must for data to flow into the right technological systems and to enable accurate payroll execution.

• Intuitive and adaptable technology interface:

The right technological platform is the next step after the right data. Investing in a payroll system must reduce manual and repetitive tasks and enable an efficient, inclusive processing of all payment tasks. Also, it should be flexible to accommodate changing workforce dynamics in real-time. For example, the nature of employees may change with time, and an organisation may hire more contract workers with specialised skills. Such changes need to be factored in in a timely and accurate manner.

• Support and servicing:

Untimely and inaccurate salary pay-outs or lapses in taxation and compliance can quickly blow up into ugly employee issues such as grievances, loss of motivation and even lawsuits. Hence, 24x7 support must be available through various channels, such as phone, email, chat, etc., to ensure accurate processing and timely grievance redressal. 

• Analytics & Reporting:

Doing periodic and detailed data analysis and reporting is necessary to carry out checks and balances and avoid financial leakages in payroll administration. Auto-generated reports and forms according to compliance help identify lapses and ensure adherence to business operating plans and compliance standards. A payroll software with cost-centre-based expense reporting will help organisations gain great insights into the company’s expenses.

• Integration:

Payroll is interlinked with all people processes such as total rewards, performance management, talent management, learning and development, and beyond HR to Finance and Accounting management. Hence payroll system cannot operate in siloes. HR must ensure the payroll system integrates seamlessly with the HRIS and accounting software to ensure a seamless data flow and outcomes flow.  

• Cost:

Cost is always a primary consideration when choosing any HRIS, and many formats exist in the market – by number of employees, scope of services, pay period, etc. HR must evaluate the ROI of various payroll systems to ensure it is a sustained and justified investment. 

Investing in a new payroll system may seem like an operational decision, but it has a direct and far-reaching impact on the company’s financials. Hence, CXO involvement is a must to ensure a sound evaluation and smooth transition to a new system. Being a core and critical HR process, payroll professionals must work closely with the HR team and the business to ensure seamless implementation and adoption of the new system. After all, payroll expenses are closely linked with the core business goals. If you want to learn more about how Akrivia HCM can support you in digitising your payroll processes, schedule a demo today.