Payroll Automation Part II

Increased payroll complexity means automation can’t come soon enough.

Zellis HR

Feb 5th 2016

Payroll Automation Part II

Increased payroll complexity means automation can’t come soon enough

For over two thousand years, payroll has been a crucial function of any business. Maybe not the most headline-grabbing function, but nonetheless essential.

Evidence of its importance can be found as far back ancient Egypt where busy scribes enthusiastically documented all elements of commerce onto stone tablets and papyrus scrolls, including the hours worked and wages paid to labourers.

When labour shifted from the fields to the factories during the Industrial Revolution, the need for payroll became ever more vital. As workforces grew, the need to record and reward hours worked became more burdensome – and the payroll department was born.

Fast forward to 2015 and payroll remains vital. However, the type of tablet we now use to record and view payroll on is now very different. As technology has become pervasive in all work environments, digital innovations are constantly being deployed to improve the way we work.

Impact of technology

The internet has undoubtedly accelerated this. You only need to look at the speed at which social media has become embedded in our culture to realise the impact of the internet. The ability to also access advanced enterprise software through ‘as-a-service’ models has quickened the pace of change within business.

We’ve watched as robots have automated the role of labour in factories for years, but we have not witnessed this to the same extent among white collar jobs. Yet this is changing. With easy access to advanced applications, either off the shelf or as-a-service, those roles are also being automated.

Replacing jobs with technology has never been popular among workforces – not since the Luddites began smashing machinery in cotton mills during the early 19th century. But there are a number of reasons beyond replacing jobs why organisations should be looking at payroll automation.

Government legislation

It used to be that a payslip would simply contain the details of wages paid and the amount withheld for tax. This changed in the twentieth century as National Insurance contributions were also added. And it is now getting increasingly complex.

With the government now wanting people to take greater responsibility for their own retirement income, auto-enrolment for pensions has been introduced. A desire to reduce congestion on the roads has also seen initiatives like the cycle to work scheme rolled out. Efforts to tackle the gender pay gap will also force businesses to publish bonuses paid to all employees next year.

These added requirements are only likely to increase. All this legislation and regulation is making the role of payroll ever more complicated – and organisations will need systems to simplify the process.

Changing workforce

As technology enables more flexible working arrangements, companies are also increasingly hiring remote staff, often freelancers on limited contracts. According to the Office of National Statistics, self-employment is at its highest level since records began – about 15% of the workforce.

This has led to a higher turnover of staff. The growth of zero-hours contracts, which now represents 2.3% of the workforce, has also added complexity.

Managing the requirements of a more volatile workforce, which can change shape and size on a daily basis, has now become the norm for many organisations. This is requiring systems that can be rapidly updated and integrated within a business.

Handling personal data

HR finds itself responsible for all the data this generates, including everything from the storage, processing and protection of personal details.

There is a growing requirement that organisations ensure they have the wherewithal to keep that information safe from both external and internal threats. Any failure to do so could result in severe damage to the reputation of the business.

Not taking steps to adequately protect data can also result in organisations receiving heavy fines. The UK’s Information Commissioner’s Office has the ability to issue monetary penalty notices up to £500,000 for serious data breaches under the Data Protection Act – and it has repeatedly proven it is prepared to take action.

Automation is becoming an inevitability

The cost saving benefits of automation is rapidly increasing the probability that the role of payroll will be automated at some point.

An Oxford University and Deloitte study has predicted that there is a 97% probability that over the next two decades, companies will use technology to fulfil the roles currently played by payroll managers and wage clerks.

But with growing complications placing pressure on these crucial functions, the need to deploy automation tools to help manage this increasingly complex responsibility is likely to come sooner rather than later.

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