In today’s challenging economic climate, considerations such as operational efficiency and cost-cutting are accelerating up the agenda for many companies.

As a result, cost centres such as payroll and HR tend to come under scrutiny as business leaders attempt to understand where it might be possible to reduce overheads or prune back on both direct and indirect expenditure.

Equally though, the last 12 months have shone the spotlight on payroll and HR like no other time in corporate history as boardrooms became dominated by topics such as business continuity for critical processes, the use of government support to protect jobs, the move to remote working and the future location strategy.  Payroll departments in particular, who are often under-invested in, have demonstrated both their importance and fragility over the last year.

To balance these requirements, a more strategic review of payroll and HR administration has never been timelier.  Human Capital Management (HCM) technology has now evolved to a point where many traditional payroll and HR activities can be automated, enabling teams to focus on more complex and strategic decisions, and de-risking the dependency on key players.                   

But these are important decisions and need to help future-proof your business.  Any failure to get it right will inevitably have a direct impact on the colleague experience, compliance and risk management, all of which have an important role to play in shaping wider business outcomes.

Five ways to transform payroll and HR

So, to set yourself up for success, here are five ways to improve the speed, accuracy and cost-effectiveness of your core payroll and HR activities:

1. Automate wherever possible

The sheer complexity of many payroll and HR processes is all too often underestimated. Payroll processing, in particular, is frequently considered as simple as pressing a button, but this notion is a far from an accurate reflection of reality.

In fact, around 65% of organisations still complete either some or all of their payroll processing manually, according to our research, with the figure rising to 68% for general HR tasks – even though many of them could actually be automated.

In a payroll context, for example, activities such as calculations and data input could easily be digitised, while the same is true of HR duties ranging from records management and onboarding, to time and attendance tracking. Once such processes have been automated, there is the added advantage of being able to analyse and report on the data generated using appropriate software tools, thereby facilitating a process of continual improvement.

Put another way, automation can have a positive impact on controlling expenditure and boosting efficiency by cutting staff costs, reducing the frequency of expensive, time-consuming errors, and freeing up the team’s time to focus on value-add activities rather than just completing admin tasks.

2. Digitise compliance

In the automation context, digitising your compliance processes is worth a special mention because of the central role they play in ensuring your payroll and HR activities are efficient and robust. Not only is it imperative to ensure employees are treated in accordance with the law, but compliance failures can also become a huge drain on time, money and resources.

For instance, those companies found to be in breach of paying the National Minimum Wage and National Living Wage face fines of up to 200% of the total amount owed to employees. In fact, during 2018/19, HMRC required non-compliant employers to pay out a huge £17 million in such fines as well as repay £24.4 million in arrears.

But automation can also help in compliance terms by eradicating the manual errors that could lead to breaches in the first place. To this end, many of the top software suppliers now include compliance features and monitoring tools built into their systems in order to reduce risk.

This means that, although payroll and HR teams will still need to be given regular compliance training, it could also be of great benefit to consult regularly with your software and service providers about what it is they are doing to help you stay on top of the issue.

3. Migrate payroll and HR processes to the cloud

Around 52% of organisations currently benefit from using cloud-based HR systems. The figure is just under a third in the case of payroll, according to our research – although adoption is expected to continue rising significantly, not least due to the impact of the pandemic and the drawbacks many organisations have seen from having on-premise solutions.

Another reason is that, although on-premise applications may offer a perception of more control, they also require a lot more time, effort and money to maintain. Cloud-based software, on the other hand, boosts the efficiency and cost-effectiveness of your payroll and HR processes by:

  • Enabling authorised users to securely access payroll and HR data from any online device, thus making remote working easier;
  • Shifting the cost of, and responsibility for, operating and maintaining your systems, which includes guaranteeing high performance levels, to a third party provider;
  • Making the process of upgrading and updating software quick and easy;
  • Ensuring flexibility if you want to change how your systems are used, or increase or decrease the number of users they support.
4. Ensure payroll processes are integrated with those of other business functions

Our research shows that one of the top five technology pain points for just over half of all payroll and HR professionals is a lack of integration between their key systems. This is because many organisations fail to either integrate their payroll and HR systems or to connect them with other applications from adjacent functions, such as finance or accounting. 

Systems integration plays a vital role in controlling costs and boosting operational efficiency. It enables data to be transferred seamlessly from one system to another; team members no longer have to manually re-key information relating, for example, to new starters or staff absences, which removes duplication of effort.

Integrated systems also enhance general productivity as they enable payroll and HR professionals to navigate quickly between applications – particularly if single sign-on functionality is included, which means they don’t have to enter multiple identity credentials – or, even better, benefit from automated, end-to-end workflows.

5. Outsource to a trusted provider

Under today’s difficult pandemic circumstances, even the most efficient of payroll and HR functions may feel overstretched and in need of extra support to meet deadlines, stay compliant and get help with complex and resource-intensive processes, such as calculating furlough allowances.

But either fully or partially outsourcing your payroll and HR service delivery can offer a number of cost and efficiency benefits. These include:

  • Achieving savings based on economies of scale and access to global labour markets – because your partner of choice runs payroll for a number of customers, it helps reduce management overheads, increase process efficiency and provides access to a high quality, global, workforce;
  • Reducing errors and input costs due to highly automated workloads, strict Service Level Agreements and optimised processes;
  • Cutting direct costs, such as maintaining an in-house team, and indirect costs, such as office rental, printing costs, software hosting and system maintenance;
  • Harnessing your data and converting it into useful insights on how to cut costs and boost efficiency further still.

To find more about Zellis’ market-leading solutions, including best-of-breed payroll software and expert-led Managed Payroll Services, get in touch today.