Payroll systems have undergone profound changes in recent years – and it’s an evolution that’s ongoing. Added functionality and capability of software has fundamentally changed the way payroll professionals do their jobs, as well as improving integration with other systems, such as time and attendance (T&A), and workforce management (WFM).

Developments have also changed the way employees interact with payroll. However, the improvements also bring with them challenges, such as compatibility issues and cyber security.

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When implementing new systems and data flows, additional verification checks aren’t always required, so how can payroll professionals deal with human error involved in the original input?

Chris Deeson: Data migration is thought of as being the biggest hurdle to switching software. It’s less of an issue than perceived and the reason for this is that you can often take standard extracts from the previous system and move them without touching the data, minimising human error. Using the previous pay period’s full payment submission provides a large amount of data and, critically, the year-to-date figures. It’s not perfect, but it’s a good enough starting point to be the industry standard. Data mapping tools are fantastic – they take time to set up from a software perspective but allow data extracts to be mapped into the new software. Where the mapping has been done, they’ll usually already have ‘learned’ the mapping from previous uploads from the same software. With these types of tools, often the biggest issues now relate to errors in running the payroll before migration rather than migration errors themselves.

Stuart Hall: My belief is that you should always err on the side of caution. Rather than believe everything will work first time, assume it won’t and look for potential errors. Do small trial runs and trust your instincts to check the results.

Julie Lock: Payroll accuracy is a critical part of a payroll professional’s role, and one they take very seriously. There’s nothing more demotivating than knowing you’re processing a payroll with errors. The two main contributors to payroll errors are:

• missing or inaccurate timesheet / absence data

• lengthy payroll cut-off periods.

• The solutions to each of these problems are:

• using a T&A solution to automate the capture of time worked, with accurate start and finish times, planned and unplanned absences, removal of buddy clocking time theft, and accurate calculation of gross pay, considering all payment and shift rules. Managers simply manage the data by exception. The data is then uploaded directly into the payroll solution in a timely manner, removing another opportunity for human error

• remove the time barrier causing the lengthy payroll processing times. Traditional payroll solutions take time to process the payroll, and to calculate and generate large reports and files, such as real time information and Bacs. However, there’s an alternative: payroll professionals can switch to a real-time payroll solution. Real-time payroll solutions process data live; they don’t rely on processes to be ‘run’, such as the payroll calculate, reports and files – everything is in a constant state of readiness. This means processing payroll takes just minutes, not hours or days. This frees more time for quality checking, giving time back to payroll professionals for reviewing variance reports and making amendments prior to the Bacs run, vastly improving the accuracy of a payroll run.

 

As employee self-service and chatbots become more popular, do you feel payroll teams are losing their personal touch and basically being distanced from employees?

CD: I work in tech, but I’m no longer young – and therein lies my conflict. If there’s simple information I need to find the answer to, and it’s outside office hours, then self-service is fantastic. It saves me time and I don’t miss a personal interaction. Chatbots are exasperating when I have something unusual I want the answer to, or if it’s a specific question to which they can only provide generic responses – especially when they pretend not to be bots and you catch them out. Self-service is good in terms of efficiency, but there’s a point where it’s extremely difficult to reach a person – and then employees lose out. And if the frustration is great enough – or simple issues spiral into big issues – then employers run the risk of losing employees. It’s all about judgment and balance, but it’s a fine line between efficiency and alienation.

SH: No, I don’t – in fact, quite the opposite. I think it gives payroll teams more opportunity to get involved – involved in better communication with employees, creating a better knowledge base for the company, the employee and themselves, and innovative technology, to keep ahead.

JL: I don’t feel payroll teams should be losing their personal touch or becoming distanced from employees. The concept of employee self-service is to remove the mundane administrative tasks of data changes, and holiday / absence balance recording and approvals. The change happening is a shift in the responsibility of data input. This gives payroll more time back to spend on employee well-being strategies to support financial and mental well-being, such as pay on demand and flexible working.

 

With the current cost-of-living crisis, how can payroll systems and technologies help individuals understand and better manage their finances?

CD: I’d argue this should probably sit outside of payroll systems. Certainly, the technological means of distributing this assistance should come from a separate financial well-being product, as this is a complex area that needs consistent focus. Whether this should be accessed via an application programming interface (API) link from an employee portal in payroll, or within an employee portal in human resource (HR) is arguable. I think the decision on how and whether to make this available to employees is more likely to sit with an HR department than payroll. Therefore, the link should sit within HR software for consistency.

SH: Every employee has their own views on how they manage their own money. In the past, it was good enough to just break even at the end of the month. Personal finances are simple, aren’t they? Money in, money out. At the end of the month, if the balance is below zero, you’re in debt; if it’s above zero, you’ve got a bonus! There are payroll systems available today which allow employees to create a personal budget within a money planning tool and to access helpful financial guidance. After all, understanding income and spending is key to good financial well-being. Employees no longer want an advice slip – paper or electronic; they want helpful personalised guidance from payroll.

JL: Most pay on demand solutions also offer financial advice to help employees manage themselves out of debt. They offer help and support with savings plans and guidance on how to navigate government saving schemes incentives.

 

What do payroll professionals need to understand in relation to cyber security and should it be part of mandatory training for all payroll professionals?

CD: The weakest link in terms of cyber security for payroll systems are individuals sharing passwords or using the same passwords on multiple sites. As a bare minimum, payroll professionals should be using two-factor authentication when accessing payroll software. Payroll professionals should also have a base level of mandatory training to raise awareness of simple things that can be done to maintain cyber security. However, there’s also an onus on payroll software to:

• have annual independent audited penetration testing

• become ISO27001 certified

• make security as tight as possible for end users.

The final onus should be on clients to use softwares that have those protocols in place. There’s no point spending lots of time on mandatory training of payroll teams if payroll software doesn’t have ISO 27001, doesn’t do penetration testing or it has lax controls.

SH: Criminals and fraudsters are always looking for their next victim and payroll professionals should do all they can to keep up to date with technology and to combat cyber crime. Yes, I think all payroll professionals should undertake regular training to ensure they keep one step ahead of criminals.

JL: Payroll professionals manage personally identifiable data, and special category data, such as medical information and financial data. Therefore, data security is essential to protect employees. General data protection regulation training ought to be completed annually, especially with the new mix of hybrid, remote and office working. Data protection officers must ensure that payroll professionals’ homeworking environment enables them to keep data secure. Training for remote working data security should be mandatory in these circumstances.

 

Will payroll systems evolve to provide full WFM functionality, to include scheduling as well as recording worked time, or will there always be a place for specialist WFM systems? If so, what’s being done to ensure WFM data integrates seamlessly into payroll?

CD: With my KeyPay hat on, we already have scheduling, T&A and timesheet functionality in the payroll software (and we’re not alone). This is definitely something that will continue to be more widespread in payroll solutions. However, does this sound the death knell of specialist softwares? Absolutely not. In broad terms, all-in-one WFM solutions work well for smaller businesses, but once you get into large numbers or complex scenarios, I’d argue that businesses are better off with specialist T&A rota solutions, which have comprehensive application programming interface (API) links with a decent cloud payroll software. Specialist softwares with their full focus on rota scheduling and / or T&A will always be able to adapt quickly to market changes. Conversely, I suspect it’ll be harder to justify those specialist softwares continuing to use comma-separated values exports and expecting their clients to manually upload them into payroll software and adjust. Businesses of all sizes are demanding integrated cloud solutions as a minimum, on the grounds of efficiency, security and business continuity. That isn’t going to change any time soon.

SH: I used to think the best option was to use a company that had modules for all your needs. But in reality, they may have a great payroll system, but the HR isn’t great, or a great HR but a basic payroll. The biggest headache was using different suppliers and finding systems like HR and payroll didn’t ’talk’ to each other. But today we have API, which allows different software to ’talk’ to each other. The good news is that there are some new payroll solutions in the market today that, not only allow seamless integration with third-party systems’ API, but their system can be branded to your company.

JL: The automation of data capture and calculation will eventually become the normal practice as it’s the most cost-effective way of producing accurate gross pay. There are already a few payroll and T&A providers who don’t rely on partnerships; these products are truly integrated. Those payroll providers who choose to partner with a T&A provider come with challenges, the biggest one being integration. Every customer has unique requirements and every implementation is different, so it’s impossible for the two providers to think of everything that will need integrating. Unfortunately, it’s the customer who’s left dissatisfied with a partially integrated solution for T&A and payroll. Customers don’t want two separate contracts to negotiate and manage. Users don’t want two different support portals to operate when raising queries, nor do they want two different support teams to deal with. Information technology departments don’t want to manage two separate sets of upgrades. Payroll providers will never have a right to an opinion on the future roadmap developments of the T&A solution or on any end-of-life strategies. My advice, go to one provider – every time. 

• Policy article
• Professional magazine