COMPLIANCE
payment became much more prevalent, with most commercial and industrial transactions in England, the US and France made by checks rather than bullion, bills of exchange or notes. By 1900, workers whose pay packets were made up of coins and notes, started to receive a payslip alongside their wage packet, leading to the creation of what became known as the ‘pay envelope’. Then we saw many developments emerge which reshaped the way employees were paid, and Austria became one of the first countries to develop a postal giro system, which allowed for direct account payments to banks. By the 1950s, Europe had begun to pay employee wages directly into accounts via cashless payment transfers. Naturally, this gave rise to developments within payslips. In 1951, the creation of the LEO I (the world’s first business computer), transformed payment with the introduction of the first automated payroll. An experienced clerk usually took about eight minutes to calculate one employee’s weekly pay; LEO I managed to do the same operation in just 1.5 seconds, showing for the first time just how successfully technology could transform payments. Today, most employees are paid on a bi-weekly or monthly basis through Bacs, along with either a paper or emailed payslip. However, a combination of globalisation, advances in technology and changing employee demands, along with the rise of the gig economy, means the demand for even quicker and more flexible payment options is growing.
has left finance teams grappling with increased errors, inflated costs and time constraints, while more than a third (36%) said that payroll processes distract them from critical tasks. Worryingly, 91% of businesses make errors every month but these mistakes can have a knock-on effect on employees. More than a third (35%) of employees have had to borrow money from friends or family because of payroll errors, while 30% had to borrow money using a credit card or loan. Not surprisingly, this can have a huge impact on employee morale, with half (50%) of employees stating they would leave an employer because of repeated salary errors. It's clear that in today’s fast-changing, digital-first world, most legacy human resource and payroll systems are no longer fit for purpose. Payroll shouldn’t be viewed as just an ‘admin task’ – it’s a vital part of keeping organisations running efficiently and effectively, and has a key role to play in employee engagement and retention. Automating processes to remove inaccuracies will be the future; saving businesses thousands in costs, while empowering employees to have greater control of their payment data. Cost-of-living implications The vast majority (97%) of employers pay monthly but the number of requests from employees to change their pay frequency has increased by more than twice the amount in 2020 as employees are faced with the biggest cost-of-living crisis in 70 years. Changes to the workforce are also having an effect, with growing numbers of contractors and freelancers being used and flexible working arrangements on the rise. For the first time, businesses will also be dealing with a generation of workers who have never known life without the internet and smartphones. Their demand for digital tools and the immediacy it offers will be greater than generations before them. To survive and thrive in this new era, businesses will need to be agile and offer flexibility in how and when people get paid. Increasingly, we’ll see businesses use cloud-based platforms to fully automate
mainstream to meet employees’ needs. Software enhances the visibility of employee data meaning businesses can track payroll costs and use those insights to drive decisions, react to change and deploy resources more effectively. Not surprisingly, our research found that 59% of businesses believe data-driven technology will help them to become more strategic. A new era for employees Digitalising payroll isn’t just beneficial for employers, though. It also has the power to transform the way employees engage with their pay going forward. At MHR, our iTrent solution and People First Payroll system gives employees real-time access to online payslips so they can see exactly what they’ve earned up to that point in their pay cycle, enabling them to plan financially without a question mark over what they might receive come pay day. As technology continues to develop at rapid speed, the use of artificial intelligence in payroll will become more widely used, enabling employers and employees to better understand their: l pay cycle l overtime l scheduling patterns l benefits. The same goes for alternative ways of payment such as the use of digital wallets, as more and more employees use their phones to organise their finances. As the global war for talent continues, attracting and retaining people will be a top priority for businesses. Ensuring employees not only get paid on time but have greater control over their personal data and how and when they get paid, will have a key role to play in improving the employee experience, attracting staff and boosting productivity. n
Digital transformation Recent years have seen huge
developments across payment technology, with the likes of PayPal, Venmo and Apple Pay transforming the way people pay for services. The pandemic also led to an accelerated demand for digital services, with more people working remotely and choosing to go online to make and receive payments. But despite this boom in digitisation, for many companies, payroll methods have remained largely unchanged over the last few decades. Research by MHR showed that a staggering 72% of organisations still rely on human input to calculate payroll. Unfortunately, the lack of improvement
Links corner The following MHR blogs provide interesting further reading: http://ow.ly/TMpH50MUgHY http://ow.ly/6WOR50MUgLi http://ow.ly/CYfZ50MUgNf http://ow.ly/Nn1Z50MUgQh http://ow.ly/xGpj50MUgRW.
their payroll processes: l cutting inefficiencies
l eliminating time-consuming tasks l simplifying complex processes. New payment models, like earned wage access are also likely to become more
CIPP's Payslip Statistics Survey: http://ow.ly/xPIU50MUgUU.
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| Professional in Payroll, Pensions and Reward |
Issue 88 | March 2023
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