New year, new strategy - Payroll and HR need to adapt

26 January, 2021

Research reveals that 35% of companies do not have a payroll strategy despite weaknesses exposed by COVID-19

London, UK – 26th January 2021: The past year has certainly been challenging, and with the onset of regional and national lockdowns and resulting mass closure of offices, payroll professionals have had their fair share of obstacles. From tackling the over 1,500 global legislative payroll changes, to the technical issues of trying to manage payroll remotely during lockdown, many teams are using systems and processes that haven’t changed in years, despite enormous changes in the world around them.

The business case for strategising payroll has never been clearer, as COVID-19 has exposed weaknesses across many industries and their operations. In fact, research from EY reveals that 35% of companies do not have a payroll strategy, and only 26% of businesses rate the performance of their current payroll provider as ‘good’. There is now a window of opportunity for payroll and HR professionals to prove to businesses how dangerous it is to leave blindspots across their payroll function. Conversely, this also provides an opportunity  to show organisations how a modernised payroll approach can optimise the core of how businesses operate.

Business weaknesses exposed by COVID-19 include:

  • Lack of global payroll process – When asked, 43% of payroll professionals said they had a very low or limited level of standardisation globally. This made communication between payroll teams difficult in a time of crisis.
  • Poor data quality – Low-quality, unharmonised data prevented timely reporting and slowed business decision-making at a pressing time.
  • Slow response to regulation changes – Organisations without a standard process for receiving and implementing regulation changes were at greater risk of violations.
  • Lack of digitisation and automation – Payroll employees processing high volumes of manual paper documentation found it difficult, or in some instances impossible to carry out their jobs remotely.

These weaknesses reveal a clear need for businesses to optimise payroll to drive out cost inefficiencies, enable sharing of payroll-linked data across the organisation to support collaboration and decision-making, and build flexibility into payroll solutions to adapt to new ways of working.

A holistic payroll strategy lays the foundation for a resilient business, ready to deal with whatever crisis is thrown its way. Deloitte’s recent paper ‘Cost resilience amid and after COVID-19’, notes that “organisations need open, accurate payroll data to run and analyse current operating models, run scenarios and also know exactly what is going on, to look at how you allocate work, where, at what cost and with how many resources.”

Jeff Phipps, Managing Director of ADP UK commented, “The rapid move to remote working combined with global economic challenges means there are many reasons why payroll needs to adapt. To be successful in today’s challenging landscape, all parts of your business need to be agile. Customising payment options to remain competitive in the war for talent, supporting flexible working options, and securing employee data remotely are all key reasons why payroll needs to adapt.

HR and payroll professionals hold some of the most valuable organisation and employee data, and insight from said payroll data must be used to support business decisions. The COVID-19 crisis has shown that a cross-functional team of finance, payroll, and HR, able to make a strategic impact quickly and efficiently, is no longer a ‘nice to have’, but is a necessity.”  

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Media Contact: 
Hannah Kerslake, Flagship Consulting    
Natasha Cobby, Flagship Consulting    
Eleanor Mackintosh, Flagship Consulting