01 November 2021

Jerome Smail, business journalist, engages with a team of experts to explore whether payroll should extend its role to advise and drive change in relation to employee rewards and well-being

The remit of payroll professionals has grown extensively over recent years. This is apparent in many areas, not least the increasing extent to which payroll is playing a practical role in delivering employee rewards and well-being.

However, grey areas exist, and many professionals in the industry might ask how payroll should go about extending its role in this area, and how can the function be proactive, advise and drive change?

To find out, I sought counsel from some leading luminaries in the field:

  • Eira Hammond ChFCIPPdip, head of payroll, Hi Group

  • Ian Hodson MSc ChFCIPPdip, head of reward, University of Lincoln

  • Simon Juffs, corporate business development manager, Radiant Corporate Benefits

  • Glyn King, group managing director, Datagraphic.


How can, and should, payroll extend its role, be proactive, advise and drive change in the field of rewards and well-being?

Eira Hammond: It is important to understand what motivates employees when considering implementing a reward or well-being package. For example, there’s no point in offering the option to purchase extra holiday if it is difficult for employees to take leave due to staff shortages.

Performing surveys and understanding what type of benefits would motivate your employees is relatively simple to do, and the resulting employee well-being package could have the potential to retain current staff and attract new talent, enhance employee well-being, improve productivity and reduce absenteeism.

Even if reward as such is not formally part of the payroll professional’s role, it is important they keep up to date and aware of all the options available when it comes to reward and well-being, processing them through payroll effectively and efficiently to remain compliant. This will also ensure their company is making the most of all employee benefits available to support their employees in the best possible way.

Ian Hodson: There are many additional benefits for which a company can use the workforce size to negotiate discounted rates. They can be operated through deductions via payroll at source, whether this be cycles, gym, health plans or insurances, which means payroll is intrinsic. There are also aspects of financial well-being, like short-term loans, where deductions direct from payroll and a lower likelihood of someone defaulting on repayment, means a guaranteed lower interest rate. For any other employee benefits, the operational involvement of payroll makes sense, as an extension to its service of efficiently resolving queries. It is also a respected voice in communications which could help to promote the offering.

Strategically, as we see a growing need to make the employee offering attractive, displaying an ethical approach to well-being and a culture that is engaging, payroll can lead on the progression of influencing the design of employee reward and well-being. This can be achieved through the analysis of payroll information and identification of trends, particularly those with financial implications, such as sickness absence. Knowing the problem and identifying solutions from the reward and well-being markets, and matching these to measurable key performance indicators (KPIs), will all help ensure payroll is involved in business change.

Simon Juffs: Successful employee rewards and well-being strategies all have one thing in common: an excellent communications strategy. Working within a wider team, payroll can certainly help drive change. As payroll typically communicates to staff on a monthly or weekly basis, gentle reminders and nudges using payslips (whether paper or online) can add value to the overall marketing campaign, so it makes sense for them to be involved at the outset.

Glyn King: Payroll professionals already have the key skills and the access to employee information they need to have a real impact on employee well-being. There are some simple ways payroll can help. For example, employees that are nearing the end of their career may feel anguish if they lack understanding about the process, what they are entitled to or the value of saving for retirement. Working with your organisation’s pension providers, you can help communicate and educate employees about automatic enrolment (AE) and the pension scheme(s) available.


To what extent must payroll rely on technology and software to achieve success?

EH: There are two scenarios that come to mind in how we use technology (or not) in payroll.

A company I recently worked with receives data via spreadsheets exported out of their human resource (HR) system, which is not linked to their payroll system at all. That data is manually input into payroll, then the team uses the same spreadsheets to perform a 100% check on the data and output from their payroll provider to ensure payroll is processed accurately. The same company did not have a system to record holiday or other absence information, so that data was all held on spreadsheets. Additionally, sickness is recorded by payroll and calculated manually before being loaded into payroll.

Also, in recent months I have been working with a brand new financial technology (fintech) company that specialises in technology and payroll (in the employee well-being sector). I have seen first-hand a payroll that has been fully automated. This is from the moment the client sends their data in a specific format on a secure portal, to that file being picked up, loaded, the payroll run, full validation process performed and reports sent back to the client. All without a single manual intervention.

There is a halfway house, though, where the key processes that are most prone to error are automated using a good technology platform, which reduces manual intervention and subsequently lowers the risk of errors. I believe it is crucial for payroll to utilise the best technology available to them. This could be through software providers offering the latest versions of their products or through implementing a new solution that enables more automation.

IH: Transitioning to online payroll advice seemed like a huge step when it was first happening but now we would not expect anything else, as we access everything through our phones and have one eye on the environment.

Online pay advice will always provide a continuous point of self-service to which other functions can be added and utilised due to the frequency at which pay details are reviewed. I believe we are somewhat dependent on technology to advance the service and offering, and the key word is ‘flexibility’.

Every organisation is different, and one size most definitely does not fit all, so what is really needed is functionality that can be turned off and on, as well as being adaptable to ensure it fits correctly.

SJ: More and more, we are looking to technology to inform and advise. If we take payroll, we can see that, in recent years, technology advancements have negated the need for AE middleware. This has generally been a huge success, saving money and reducing errors and omissions. The pensions industry has seen less compliance breaches as a result.

The link between payroll software improvements is evident.

GK: Whether you view technology as friend or foe, it is undoubtedly shaping payroll. It is creating a path for payroll to spend less time on data entry and number crunching, and more time applying their analytical and communication skills to the more ‘human’ aspects of the role. Unfortunately, without the help of technology, payroll teams will not have the time or resources to be proactive and advise change in important areas such as reward and well-being – areas that are not considered their core responsibilities.


Cost controls may be a factor for organisations restabilising and ultimately protecting jobs – how can payroll analyse the data they hold to influence good strategy design?

EH: I would like to believe that most payroll professionals are confident that the data in the payroll system is as accurate as it can be, and that being able to utilise that information to inform and support corporate decisions is one of the best ways payroll professionals can influence strategic design. Payroll should be able to accurately report turnover of staff and take up of employee well-being programmes, showing which reward options are more attractive to employees than others. Payroll should also be able to highlight trends in absenteeism using absence data and benchmarking salaries for the industry sector, using the benchmarking and salary surveys that are published frequently in the payroll industry.

A company I recently worked with made a strategic decision to close one of their global offices, and the decision process was supported by the payroll team dealing with that particular entity. Unfortunately, incorrect information was provided to calculate the expected redundancy payment, as the system used performed incorrect redundancy calculations, and so the strategic decision to close that office was invalidated. Consequently, this caused quite difficult circumstances for the employer who had much higher costs to contend with than anticipated.

IH: I think cost control is, not only about highlighting variable costs, but also about providing a perspective of what alternative costs may be. We often look at overtime costs as being an avoidable overhead but let’s offset that against what the overtime achieved, or the alternative of trying to engage casual labour at short notice. What I like to see is rolling trend analysis and comparison of year-on-year trends to identify significant movements in absence costs, holiday trends and benefit take-up to then determine what has changed and what may need to happen. Costs associated with labour tend not to become a problem overnight, but are more of a growing trend that can be identified early. I think the data is also particularly powerful if overlaid with other employment demographics to understand if there are also any gender pay issues emerging.

SJ: For small and medium-sized enterprises (SMEs) especially, salary exchange is often underused and so offers many employers a way to reduce the tax that both employees and the employer pay. For a business with fifty employees, an average salary of £30,000 and in a group pension paying 5%, typical annual savings for the employer could be £10,350 per annum.

With employers looking at ways to negate the costs of the new health and social care levy, salary exchange could help. Payroll can be proactive in analysing which clients and pension members don’t use salary exchange to work out potential savings. Even low take-up schemes can increase savings with a rejuvenated communications programme. Generally, anything lower than 70% take-up should be reviewed.

GK: Payroll teams have access to valuable data and knowledge to help provide guidance to other stakeholders within their organisation. For example, using timesheets and pay information, payroll teams can see how much is spent on employees working overtime. This information can be passed on to relevant departments to evaluate what areas of the organisation need help with working more effectively and efficiently to reduce unnecessary overtime costs. By cutting the expensive overtime costs, the core jobs of employees are more likely to be protected.


Do we need to think about setting objectives that are more focused on influential change despite the fact that transactional processing should always come first?

EH: I agree that transactional processing is important, but should it always come first? I’m not so sure.

Processing accurate and timely payroll is absolutely the priority but, like in the answer to one of the points above, we should consider utilising technology more effectively so that transaction processing is reduced because of automation. This will result in the whole payroll function being more strategic and offering payroll teams more in-depth roles than just that of data processing.

IH: Absolutely – we do for management and leadership roles and we need to get the wider team involved in supporting the change programmes alongside the day-to-day operations. That is what keeps roles interesting, fresh and exciting.

SJ: For larger employers, health and well-being governance committees are becoming more and more common with representatives from HR, pensions, reward and payroll coming together. Terms of reference and objectives are set at outset. A collaborative approach to health and well-being should always involve payroll and we are seeing more and more of this happening.

GK: Payroll’s core responsibility will always be to pay people accurately and on time. But as payroll teams start to use automation technology, they will spend less time on manual and administrative tasks and use the time saved to focus on other higher-value tasks such as providing guidance on financial awareness and insight to help improve employee well-being. It’s tasks like these that will help payroll become involved in, and influence, strategic decision making within their organisation. 


Featured in the November 2021 issue of Professional in Payroll, Pensions and Reward. Correct at time of publication.