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Understanding Payroll maturity – four ways to optimise your Payroll practices

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In recent years, Payroll processes have significantly evolved thanks to the move towards transformation projects, the increased adoption of cloud and the desire for Payroll practitioners to get more involved in business operations. With a need to contribute to key business decision making, Payroll professionals must have a mature and potentially global Payroll solution in place to support the new range of challenges they face.

Payroll maturity can be a challenge to measure, as its definition changes from company to company. Factors including business structure, technology landscape, current use of platforms, company vision and future growth plans all impact the definition of Payroll maturity within an organisation. That said, there are several key areas to consider when looking to benchmark current Payroll maturity and apply best practices moving forward.

1. Integration

Integration is a vital area to evaluate when investigating Payroll maturity. With the shift towards a “best-of-breed” architecture, the key question to ask yourself is, “is my Payroll solution working seamlessly within my landscape?” Not only should your Payroll add value to other areas of the business, it should also be able to eliminate manual processes via automation and be a viable solution across markets.

The least mature Payroll solutions either do not integrate or have limited integration with other platforms (such as Time & Attendance, HR and Finance). In this instance, human error is likely to be prevalent as individuals will need to manually move data from place to place. The most mature Payroll practices are found in organisations that have partnered with a single vendor to ensure sophisticated integration that maximizes the investment in each “best-of-breed” solution.

2. Compliance

Compliance can be a tricky business, especially across markets. But it’s a vital element of Payroll and businesses must, therefore, be honest with themselves about how compliant they are at a local and international level. With ever-changing legislation, across every city, state and country it can be hard to keep up. Therefore, compliance needs to be engineered within your Payroll. Compliance means Payroll maturity, you cannot have a mature payroll if it is not compliant.

Instead of making Payroll staff trawl through government websites to understand compliance, a mature Payroll system automatically upgrades to ensure compliance as legislation changes. Vendors should also share these legislative updates, in real-time, with relevant teams and provide guidance on best practices moving forward. Additionally, a mature payroll solution will adopt best practice controls and frameworks to ensure customer information is kept safe and secure.

3. Functionality

Incorporating both compliance and integration, the functionality of a Payroll system is a determining factor of Payroll maturity and is key to its success. Considerations regarding functionality are twofold.

First, you must decide whether your Payroll solution performs the way you need it to for your business. Ask yourself “does it provide the level of reporting and analytics your organisation needs?”

Secondly, and perhaps more importantly, does your Payroll function in a way that supports your business operations? Does it support workflows and encourage user adoption? Perhaps through an intuitive user experience that can be accessed via any device? It is vital that Payroll performs at both levels in order to be successful within an organisation.

4. Service

Finally, businesses must consider how they are going to service their Payroll requirements. Key questions to ask yourself are “Should I outsource my Payroll?” “Do I outsource all or some of my processes?” If you decide to run payroll in-house you may also ask yourself “Is my payroll platform software-as-a-service?”, “Do upgrades happen automatically?”, “Does my hosting include vulnerability assessments and a disaster recovery plan?”. A mature Payroll service must be all of the above.

Regardless of how you choose to address your payroll requirements, the underlying payroll technology requires someone to look after it. There are many ways of doing this today, for example, through cloud, hybrid and on-premise deployments. If you’ve opted to outsource, then you must also evaluate the maturity of your provider; “what do they provide?”, “can they support your growth?” The bottom line is, however you choose to service your Payroll, it must also support the other areas of maturity; functionality, compliance and integration – in order to be truly mature. “Service” is easily one of the most important factors of Payroll maturity as it provides the foundations of partnership between a vendor and a customer.

Payroll maturity will not be completed overnight. It takes time to get into a rhythm and understand what a business, and its Payroll practitioners, need both day-to-day and longer-term. In my experience, those that are struggling with Payroll maturity will find one of these four elements missing from their current practices.

Payroll professionals need to have the time and data to focus on moving the business forward and support key decision making. Therefore, it will be vital for Payroll departments to find the right balance of maturity, support and cost in order to make a positive impact to an organisation and its employees.

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