The future of payroll

01 November 2024

The CIPP held a roundtable discussion to explore ‘the future of payroll’ as part of this year’s National Payroll Week celebrations. Kavitha Sivasubramaniam ACIPP, CIPP freelance editor, highlights what the experts think is on the horizon for the industry

Host:

Kavitha Sivasubramaniam ACIPP, CIPP freelance editor

Attendees:

Samantha O’Sullivan ChMCIPPdip, CIPP policy and advisory lead

Natasha Taylor ACIPP, consultancy relationship lead

Richard George MCIPPdip, director of education, The Payroll Centre

Abu Choudhury ACIPP, director UK and EMEA, JGA Recruitment Group

Gemma Creamer, director – permanent division, Portfolio Payroll UK & ROI

Julie Lally MCIPP, managing director – payroll, Ciphr

Caine Bingham, head of data acquisition, Experian

Michelle Keith ACIPP, customer operations and transformation director, Moorepay

Nick Clarke MCIPPdip, director of product management – payroll, legislation and portal solutions, Zellis

Jeremy Levene, VP growth marketing, EMEA, Dayforce

Eilidh McFarlane MCIPPdip, payroll manager, Angus Council

Michelle Sutton MCIPPdip, head of reward, SUEZ

Karen Beckett BA (Hons) ChFCIPP, head of payroll and benefits, Dorset Healthcare University NHS Foundation Trust

Deborah Sharpe MCIPPdip BA (Hons), head of payroll, Historic England

Michal Lodej, group editor, Shard Financial Media

To kick off National Payroll Week 2024, as people across the country held events designed to celebrate and raise the profile of the profession, the CIPP gathered experts from the world of payroll to explore what the future holds for the industry.

In-house payroll professionals, as well as experts in the provision of payroll services, recruitment and education, discussed:

artificial intelligence: benefits and considerations
continuous change
future wellbeing initiatives
payroll careers now and in the future.

The roundtable considered findings from the CIPP Future of Payroll Report 2024, reviewing the results and shedding light on key industry developments.

AI: benefits and considerations

At the outset, participants round the table talked about AI and how much it’s currently being used by employers. The CIPP report found that just 6% of those surveyed said they use some form of AI within their organisation in relation to payroll processes, while 84% don’t and 10% are unsure whether they do.

There was general agreement that a lot more people use AI than they realise and that there’s a lack of awareness around what AI enables, as well as what processes are already in place that include its use. Delegates agreed that more education is needed as there’s still a lack of understanding of the differences between robotic automation and AI in the industry.

Those taking part in discussions were asked whether they thought attitudes towards AI in the workplace are changing. They highlighted the myth around concerns that AI would replace jobs, stating it was unlikely to become a reality. The experts suggested that there’s more work to be done to change people’s perceptions. While payroll people say they’re short of time to embrace new legislation, they said AI can help by taking on more process-driven duties and freeing up professionals for more strategic ones. It’s about learning and understanding where it can help in the workplace and what advantages it can bring, participants said.

Often, people’s views are tainted by what they see in the media, but AI can help with transactional work, speed up, improve and remove various time-consuming tasks. With the use of AI likely to accelerate, participants recommended it should be treated as an assistant that can alleviate the administrative burden as payroll becomes more complex.

Experts spoke about the benefits AI can offer payroll people in particular, rather than employees. For example, it can analyse data and identify errors, improving the quality of payroll and reducing the amount of time administrators spend on reading reports, etc. It can therefore drive accuracy, making payroll more efficient.

Some believed it could also be included in the customer experience, providing organisations are clear and transparent about it. The benefit of doing so includes allowing a query to be narrowed down before the customer interacts with a person, thereby ensuring a speedier process.

People automatically worry about job security, said delegates, but AI can free them up to focus on what they want to do, such as looking at financial wellbeing. They believe employers recognise payroll professionals as stakeholder managers and will never want to get rid of that human touch within their organisation.

Experts said payroll is often quite slow at adopting anything new due to being cautious by nature and caring about getting everything right. But building capacity within the payroll team by implementing AI frees up payroll professionals to take on more strategic roles within the business and become more than just an operational function. That’s how you reduce fear and get people on board, advised the roundtable participants.

However, the upfront investment which often comes before the savings AI brings can be a challenge for the public sector.

Continuous change

Delegates discussed this year’s survey findings which showed that, when asked if they feel there’s been increased pressure to implement changes in shorter timeframes, more than three-quarters (76%) of respondents said yes. As many as one in two (51%) revealed it had increased stress levels on the team, while nearly the same percentage (49%) said it had increased the team’s workload, resulting in overtime.

Participants agreed that, when professionals have had to deal with change in short timeframes, it’s often been thrust upon the profession by government, such as the changes to National Insurance over the past few years. Since this isn’t usual practice, they hope for no further ad-hoc in-year change. However, social media has brought more criticism of the government, so it has to be reactive, which the experts said could be likely to bring shorter timeframes for implementing changes.

There was also talk about the legacy left by Covid. During the pandemic, fast-paced internal and external changes had to be implemented at the right time, such as those brought about by furlough. Since payroll did well to deliver these so quickly, there’s now an expectation that it’ll be able to manage any changes within a shorter timeframe than pre-pandemic.

Some said legislative changes didn’t affect payroll professionals that much since the systems suppliers needed to implement the changes, but acknowledged they still had to test what the software providers were doing and educate employees about any alterations. They discussed how payroll software vendors may also encourage change in terms of updating systems, introducing AI solutions or getting rid of legacy technology.

Internally, delegates said some companies that talk about transformation underestimate the level of resource and commitment that change needs, highlighting that payroll has grown and become more complex.

Experts noted a behavioural shift too, explaining that pressure on payroll has increased with the cost-of-living crisis. Unions are fighting to get pay awards backdated, which is having a big impact on payroll’s workload. At times, payroll is also bringing in change by taking matters to the board and leading the movement, although participants admitted it was rare for payroll to approach C-suite for buy in.

Future wellbeing initiatives

When exploring data from the report that showed just 7% of employers offered earned wage access (EWA), while a further 4% said they were planning to and the vast majority (89%) don’t provide the option, roundtable attendees described the results as “shocking”.

However, they agreed the topic is a polarising one, with some employers arguing it may not encourage good spending habits.

In certain industries and businesses, such as in the hotel trade, EWA is expected, and organisations would see a huge plunge in staff retention if they took the option away from employees.

Most attendees believed that if organisations didn’t offer EWA, desperate employees would find a way to get the money elsewhere – with some turning to extreme measures. They said good employers would take some responsibility for their workforce’s financial wellbeing, giving them the option not to have to go to payday lenders or even alternative, illegal lenders.

And it’s not just low earners that make the most of EWA, some delegates reported. The fact that employees can use it if they need to also provides “reassurance in their pockets” for any unforeseen expenses, such as if someone’s washing machine breaks or they need a new boiler. People also use it to book holidays or take advantage of sales periods at certain times of the year, such as in January.

One delegate suggested that the common practice of changing pay dates to ensure staff are paid pre-Christmas could be interpreted as a version of EWA.

There was general consensus that EWA is just one part of a broader wider financial wellbeing package.

Some organisations provide grants, such as those introduced in Covid, to help with funeral costs. Also, delegates said discounts on grocery shopping really help employees, offering huge savings that can be made over the year.

But simply offering financial wellbeing initiatives and employee benefits isn’t enough. Payroll and human resources (HR) teams need to promote them and involve the senior leadership team, delegates advised. They said communication is essential, and this can even be done via the payslip to increase uptake.

Employers also have a duty of care. While they aren’t responsible for people’s debt and payroll teams are not debt counsellors, they can signpost advice and support to people and provisions that are trained to help.

Once staff feel supported financially, they will be more productive and organisations will experience better staff retention, providing a huge return on their investment.

Payroll careers now and in the future

In terms of how payroll careers are shifting and how much payroll professionals are now involved in other parts of the organisation, more than half (56%) of those surveyed for the Future of Payroll Report 2024 said they hadn’t experienced a shift, while the remaining 44% said they had.

Roundtable delegates explained payroll’s involvement in the businesses often depends on the organisation, with some professionals having a greater presence now compared to in the past through initiatives such as company roadshows, benefits booklets and much more.

Looking at the key skills payroll professionals must hold, the report found legislative knowledge topped the list, noted by nearly all (96%) of those polled, closely followed by organisational skills (93%), technical knowledge 90%

and communication skills 90%. Interestingly, industry knowledge was deemed a key skill by fewer than three in five (57%) respondents.

Roundtable participants disagreed with the majority of survey respondents, explaining that legislation and industry knowledge can be taught, but passion and a willingness to learn is more important. They said providing you know where to go to gain knowledge, you don’t need to have it from the outset.

However, analytical skills and problem solving are really important, according to the experts. Practical skills, flexibility and adaptability, being relatable and evolving with times were also listed as essential payroll attributes.

Keeping up with legislation and the changes it brings is vital and payroll professionals have to be ahead of the game, they said. Educating people entering the industry about the pace of change is really important too.

Professionals need both experience and a qualification, as well as a natural aptitude, some participants believed. They said entry level roles are integrating qualifications into the position to offer career progression once they are gained. Training on the job can work but it has to be supported with qualifications, so there has to be investment from employers.

In recruitment, it was noted that some employers are now asking for qualifications for manager or senior level roles. But not every expert makes a manager and not every manager makes an expert, although sometimes a person can do both, delegates agreed. Therefore, it’s a good idea to create two avenues of payroll career progression and organisations must make training and qualifications available when the time is right.

The CIPP has provided a huge level of credibility to payroll and has significantly helped to elevate the profession, the panel agreed. Additionally, IPPE qualifications give payroll credibility and while people shouldn’t be forced into studying for them, they should definitely be encouraged to do so.

The report found that manager was cited as the highest level of payroll role within their organisation for most participants (54%), followed by head (17%) and director (14%). At the bottom of the list were chief payroll officer (4%), supervisor (2%), coordinator (1%) and C-suite (<1%).

Delegates said that while payroll is part of finance or HR, it probably won’t ever be a standalone function. While it holds most of the data and can make data driven decisions, payroll doesn’t have to be at the board table for business discussions as long as it maintains a good working relationship with those who do.

Experts advised professionals to be open-minded with their career paths and put themselves forward for different projects. It’s hard but it can be done, and to expand further you have to make a conscious choice to diversify, they agreed.

You can see the Future of Payroll Report 2024, here: https://ow.ly/9xUA50TAi1o and the Payslip Statistics Survey Report 2024 here: https://ow.ly/AlCs50TAiaA.