The future of payroll: Five trends that will transform your organisation

What’s next for payroll?

As a Global Payroll Strategy Advisor, I spend a lot of time watching trends and anticipating the future of payroll around the world. Technologies change and adapt to meet user needs, and payroll software is no different. As payroll becomes more and more essential to our organisations’ success (or failure), we need to be a step ahead and look to the future. So, what is next?

Five trends shaping the future of payroll

Payroll software is adapting and changing, and it’s worth keeping an eye on so organisations can stay ahead of the competition. These are the top five trends shaping the future of payroll and what you need to know about them.

1. On-demand pay

There are multiple providers that support employers with the ability to allow their workforce to draw down on the pay they have already earned up to that date. Although this can be a scary prospect for some, it has been proven to work by pilot schemes around the globe and is another great tool to improve the employee experience. Keep in mind, this is different from a cash advance in which employees access future pay. In this case, the employee is accessing earned pay. Also, the employer has the say over how much an employee can draw down on to reduce risks for both the business and the employee.

As employees are beginning to expect more modern ways to be paid, the monthly pay cycle will give way to on-demand pay options. Employers who offer increased earned wage access can add this to their list of competitive advantages, attracting new talent and improving employee retention. When implementing this opportunity, employers offering on-demand pay will need to align with local regulatory bodies to ensure this payment method is fully compliant in all regions.

2. Globalisation

Most global organisations have in-country or regional payroll teams who are experts in their specific country or region. But what happens if – due to unforeseen circumstances – your local payroll point person is unable to work and process payroll?

With a globally consistent payroll system, automatically compliant with all local regulations, any payroll team member around the world could jump into that specific country or region’s payroll system and process payroll without extensive training required. If your payroll employees have local internet issues or take unexpected leaves of absence, their organisational counterparts in other offices can pitch in.

A truly global approach is an essential part of the future of payroll. Avoid unanticipated payroll processing difficulties and improve organisational agility with a multijurisdictional payroll system. Aside from the positive organisational impacts of flexible payroll, a globalised system can also improve your payroll teams’ employee experience, allowing for time off during payroll periods.

3. Payroll in real-time

Payroll has always been known as a batch process, where everything is locked at a specific time during the pay period, and no changes can be made. Once it’s unlocked again, a batch process runs to make the required updates. Other integrated systems also make updates using a batch-style approach, even if they are implemented by the same provider.

What will be critical in the future of payroll is a system that is always-on and updates in real-time. For example, if overtime was allocated by a manager, the payroll team would immediately see the updated pay for the employee. Also, employees could see their real-time payslip with all updates calculated and reflected.

This real-time approach could save payroll teams a lot of time, as it would dramatically reduce manual processes that would normally be requested via tickets and other batch processes.

4. Artificial intelligence (AI)

AI chatbots, which have become increasingly popular in the last few years, are vital self-service tools that free up time from your HR and payroll teams.  They allow employees to find answers without navigating the (sometimes confusing) intranet to look up a company policy, see their remaining leave balances, etc.

AI is going to keep improving and saving time for all teams within the business, including your global payroll teams. Already, we see smart reports, which will notify specific teams when there are input errors and anomalies within your payroll. But the next step for AI is identifying the errors and anomalies, then searching through all system databases to confirm the correction. With real-time responsiveness and a ‘single system’ infrastructure (or enhanced integrations, e.g. with local regulatory bodies) we could start seeing this type of intelligence in the not too distant future.

With organisations spending billions on R&D, AI is only going to get smarter. and this increased access to more global data (especially payroll data) will only improve user experience, data and analytics, and support improvements throughout organisations. Payroll is becoming a strategic partner in business planning, and AI-backed payroll systems will bolster the role these teams play in coming years.

5. Single platform

Many providers sell software with different modules. They may have the same look and feel, but they are really just a set of standalone pieces that create a disconnected user experience. Whereas other providers offer a single system with all components your organisation requires, from HCM to Payroll, to WFM, to Performance all in one.

Some vendors may offer a standalone HR system or PR system. If these aren’t robust enough, they integrate with other suppliers to fill system gaps. Any time you have an integration, you introduce a potential failure point. You also create difficulties in reporting and analytics due to multiple data silos, and you could experience challenges managing multiple vendors. With a single platform and a single vendor, those challenges are immediately alleviated.

Since this type of software is possible now, it’s crucial for organisations to take the next step toward a more cohesive workforce management solution. This unified approach will form part of the ‘payroll in real-time’ aspect as all your data will be in one place and available on-demand. This will allow for data input throughout the organisation to be the most up-to-date, improving the accuracy of the payroll dramatically as changes could be made throughout the month until just before payments are made. On the other hand, the payroll data will also flow back out to the other areas of the organisation immediately, allowing for this data to be used where required, without limits.

In conclusion

There are great things happening in the payroll world right now. I, for one, am excited about the future of payroll and the value it can bring – I can’t wait to see what’s next!