HR, Payroll and Technology Trends

Payroll is essential for organisations, but the options for doing it well can be complex. This series of articles, produced by Deloitte in conjunction with SAP, aims to survey how a changing business and technology landscape affects payroll, and explain the most important factors for a successful implementation. Whether you operate at local or international level, the series aims to explain the choices, implications and practical actions that can help you implement the right payroll solution for your organisation’s strategy and operations.

The series starts with a general overview of the challenges for HR and payroll, then focuses in more depth on specific topics, including the different SAP payroll solutions, support models, industry- and country-specific factors, integration with other HR solutions (including time management), configuration and analytics, the user experience, implementation and migration.

In this overview, we consider the challenges of today’s business environment, how an organisation’s HR and payroll practices can support its strategic response, and the evolution of technology to help HR and payroll functions adapt to serve the demands of today’s business strategy.

Changing times for business and HR

As geopolitical and market uncertainties continue to define the business environment, organisations are shifting their focus toward improving productivity, while maintaining or increasing their profitability. Global environmental, social and governance (ESG) concerns are causing businesses to focus on sustainability, not only as a compliance requirement but, in many cases, as a strategic opportunity.

In the face of such wide-ranging global and commercial challenges, traditional models of competitive, siloed working are becoming less useful, and collaboration is increasing, both between and within organisations. Changing demands and demographics are causing a skills scarcity in many areas, and businesses must secure the skills needed to deliver their current and future plans. Meanwhile, the growth of artificial intelligence (AI) is also redefining how businesses make best use of their human intelligence and skills.

Overall, today’s business must be agile, fast and innovative, so it can adapt and stay relevant as the world changes, which requires the right people, in the right place, at the right time. Workforce composition is therefore becoming more diverse and flexible, while employee expectations are also changing. Employers that can offer personalised pay and reward packages, take advantage of remote workplaces and provide suitable skills development will thus be better-placed to attract, retain and develop the talent they need.

HR is therefore crucial in helping meet those challenges. Not only should the function help increase engagement and productivity by creating a more individualised experience for each employee, but it must also build a future-ready workforce, by anticipating, retaining, mobilising and developing both practitioner and leadership skills.

To deliver on that role, HR must itself become more agile and strategic, not only by innovating to improve its own efficiency, but also by driving the cultural change needed to meet the challenges and opportunities arising from both ESG initiatives and AI technologies. Collaboration therefore becomes essential, and the most effective HR function will be the one that can connect and integrate organisation-wide.

The challenges of payroll

While technology can help HR contribute to many aspects of business success, payroll is fundamental. Every organisation relies on accurate and reliable payroll – not only for compliance, but also to maintain motivation and retain employees. However, changes in the business landscape, technology and employee expectations mean that a truly successful payroll is one that can adapt and respond to the operational demands of changing times.

Today’s payroll management faces many challenges and opportunities, including regulations, technological integration, data security, accuracy and timeliness, adaptability and scalability, reporting, and employee expectations for remote working and self-service access.

As with the wider HR function, technology is evolving to reflect these growing demands on payroll. It is no longer limited to a large monthly batch process that makes standardised payments across the whole workforce, but can be now run in real time, as and when required, to support a variety of remuneration and benefit arrangements. As a result, payroll can now support agility and flexibility in the workforce, while also allowing each employee to receive a personalised service, to improve engagement and retention.

The right technology can also boost efficiency and effectiveness in the payroll function, by streamlining or automating routine tasks and freeing up administrators to provide personal attention when required for specific cases. Equally, improved and intelligent analytics and reporting can make payroll management and control more effective.

Just as the business environment is changing, technology is also evolving, and can increasingly support the HR function to ensure the business has, and will have, the right workforce. Employees can enjoy an elevated experience of engaging with routine HR services, through the efficiency of self-service features and the convenience of intuitive mobile apps, allowing HR staff to give more attention to specific individual needs and expectations, informed by clear and accurate real-time insights.

Comprehensive HR data and AI-powered analytics can provide intelligence on talent, to identify skills gaps, and help close them by providing personal learning and development recommendations. Meanwhile, intelligent technologies can also help build talent pools from internal and external sources, avoid bias, and thus identify the very best candidates for each requirement.

Modern HR systems can provide a “single source of truth”, with a cohesive body of employee data that can be used to develop consistent processes and experiences. Meanwhile, AI can help HR teams access knowledge and data more easily, enabling them to respond quickly to employee needs. The latest HR technology, such as SAP SuccessFactors, is built around best practices and standardised workflows, enabling a dispersed HR function to operate quickly, consistently and flexibly, while built-in localisation can radically simplify the work of regulatory compliance in many countries.

With enterprise software now becoming widespread, the right HR solution can integrate to provide a more connected and holistic view across all the organisation’s people and activities, with intelligent analytics that improve reporting and decision-making about the workforce and processes. Furthermore, cloud technology and advanced security can deliver cost-effective flexibility and scalability, while maintaining the privacy of sensitive employee data and ensuring legal compliance.

SAP offers three payroll technologies, which range from the mature to the cutting edge. In our next article, we will introduce these solutions and discuss which factors an organisation should consider, to identify the solution that offers the best fit for its present and future needs and constraints.

Are you currently facing challenges with your HR/payroll operational processes and/or technology set-up please reach out to Guus Brouwers (gbrouwers@deloitte.nl and/or Gert-Jan Koops (gkoops@deloitte.nl) to explore the options.