If you were asked to name one area of work that’s undergoing a revolution right now, payroll trends probably wouldn’t be the first thing that springs to mind.
Here, we’re going to explore 10 aspects of digital payroll systems that are having a huge impact on how we work today.
The rise of digital payroll
The rise of digital payroll systems in modern times has represented a significant shift away from traditional business operations. These new systems offer increased efficiency and accuracy in payroll processing and a much more integrated approach to staff compensation.
With automated pay and tax calculation, along with real-time analytics, these tools have empowered HR departments across the globe to become more productive. Enhanced security features protect sensitive data, while cloud-based access allows for remote payroll management.
Additionally, these systems can streamline regulatory compliance across multiple legal jurisdictions, generating reports and updating tax rules automatically. This makes it more straightforward for businesses to expand internationally and employ distributed teams from multiple countries.
Once those employees have been onboarded, these tools make it easier to retain them too. The wealth of features available make it far simpler to deliver a streamlined and positive staff experience all around.
So, let’s dive in and explore 10 emerging trends in payroll management today.
10 digital payroll trends to improve retention
1) Personalized compensation packages
While salaries have always been negotiable to a certain extent, the biggest change we’re seeing in this area is the advent of personalized benefits packages. These are now key factors in attracting top talent and employee retention in general.
In 2023, it’s not unusual for new hires to negotiate benefits on a case-by-case basis. Commonly offered or requested perks include:
- Work-from-home stipends. As remote work becomes more popular, some companies are embracing this by providing money for home office setup or coworking space memberships.
- Wellness programs. These might include subscriptions to meditation apps, teletherapy services, or wellness retreats.
- Student loan repayment assistance. This is particularly popular in the UK and US, especially among younger workers.
- Professional development. Funds for attending conferences, enrolling on courses, obtaining professional certifications, etc.
Some companies also offer more unusual perks, such as adoption assistance, donation matching, or even paid time off to look after a new pet.
2) Real-time payroll access
Access to real-time payroll data is becoming more of a priority for various reasons:
- Accuracy. It allows for instant verification and corrections of any errors or discrepancies, saving both time and money.
- Transparency. Employees have ongoing access to their earnings, deductions, and benefits information, and managers can see up-to-the-minute payroll costs.
- Budget forecasting. Real-time payroll data can feed into budgeting and forecasting models, providing a more accurate picture of costs.
Offering real-time access to payroll data is much easier now than it used to be. For example, the increasing popularity of cloud-based enterprise resource planning (ERP) platforms has enabled many organizations to centralize critical operational data in a single digital repository.
These cloud ERP tools are often specifically designed for synchronizing real-time data updates. They also provide a better understanding of your business by combining your financial management with your time and attendance data. Ultimately making them ideally suited for this.
3) Flexible pay options
There are new developments in how employees receive payments too. While a physical check or bank transfer once a month still reigns supreme, employers are increasingly offering alternatives to suit the varying needs of their staff.
For instance, some businesses offer payroll cards, which are prepaid debit cards loaded with an employee’s wages. These are very useful for employees who don’t have bank accounts since they allow the user to do everything they would usually do with a standard bank card. Payroll cards are widely available from major names like Mastercard and Visa.
Granted, they do require additional administration to set up and manage, but this expense can be offset by other savings e.g. reductions in the cost of printing and distributing physical paychecks. Once you have this system up and running, it’s super simple to use.
4) Integrated benefits management
The ability to administer all staff benefits from a single platform can have a huge impact on efficiency.
For example, Celine is a senior HR manager at a well-known financial institution in the City of London. It recently introduced a unified benefits management platform for its staff, and she’s a big fan.
“It’s made such a difference,” she says. “Before, we used lots of different tools to manage our staff benefits. Pension payments, private healthcare plans, insurance – all separate. It was hugely time-consuming, particularly because this is a large company with thousands of employees, and a lot of them work abroad, so we have to be mindful of compliance with a range of regulatory environments.”
Since moving to a new platform and integrating it fully with payroll, Celine has noticed a sharp reduction in errors needing rectification. Overall, it’s been a boost for her team, who now have more time to focus on other core work.
5) Payroll data security and privacy
Payroll systems often contain sensitive employee information, such as social security numbers, bank account details, and addresses. This means payroll and HR software needs to have watertight security.
Firstly, it’s crucial organizations comply with all relevant data privacy regulations. Depending on where a business operates, that might mean the General Data Protection Regulation (GDPR), California Consumer Privacy Act (CCPA), or any number of other legal frameworks.
Payroll systems are becoming more sophisticated to deal with the proliferation of rules around data privacy, and many modern systems have features to support compliance, such as tools for data anonymization, data rights management (right to access, correct, delete), and data use reporting.
There’s also the question of protecting against cybercrime, such as data breaches and phishing attacks. As more payroll systems are being hosted in the cloud, businesses have to make certain their cloud provider is following best practices regarding security.
Generally speaking, most vendors will make sure their client data is protected with top-tier encryption protocols. That said, anyone using third-party cloud data storage needs to take ultimate responsibility for ensuring this is the case.
6) Personal financial management tools
Using apps to manage personal finances is becoming increasingly mainstream. According to Straits Research, the personal finance software market was worth $1.2 billion worldwide in 2021 and is expected to grow to $1.9 billion by 2030.
It’s easy to understand why. The convenience of being able to manage all your financial accounts and transactions from one platform is immensely appealing.
Although payroll departments are just beginning to wake up to the possibilities, we’re likely to see improvements in integration between business payroll systems and personal finance tools in the coming years.
For example, there already exists tax software that can pull data from various payroll systems to help individuals with several streams of income prepare their tax accounts. This kind of functionality is a big plus for anyone working multiple jobs.
7) Employee self-service portals
Self-service payroll portals like Payslip allow employees full access to their pay data at their convenience. This kind of service typically includes features such as instant payslip download, document management, and up-to-date tax information. Portals also often have additional functionality such as automatic leave entitlement tracking.
This level of transparency is, quite simply, what modern workers expect. In particular, younger cohorts of employees joining the workforce have grown up around apps that help them manage every aspect of their lifestyle.
Employers that move with the times and put software like this in place are far more likely to build a relationship of trust with their staff.
8) Mobile payroll applications
With the advent of cloud-based payroll applications comes the potential for managing this on the go. As remote and hybrid working has become more common, being able to offer flexible working routines is proving to be very popular with employees.
This applies just as much to HR staff as it does to everyone else. Businesses that normalize flexible working for the team members in charge of payroll tasks are more likely to be able to retain them in the long term.
Free-to-use image sourced from Unsplash
9) Enhanced payroll analytics
One of the premier features of modern payroll software is the sheer wealth of data it generates. Right from the start, applicant tracking and recruitment features can provide key insights into candidate expectations and help inform pay package policy and onboarding plans.
It doesn’t stop there. Sophisticated modern payroll solutions can also use predictive analytics to forecast future payroll costs based on current data. They can predict staffing needs and labor costs and identify potential problems or bottlenecks before they arise.
Some tools even include benchmarking features, which allow businesses to compare their payroll performance and expenses to industry standards and competitors.
10) Integration with performance management systems
As more and more organizations switch to using ERP platforms, an increasing number of HR departments are prioritizing the full integration of payroll with ERP workforce management solutions.
The benefit of doing this is that it makes for more streamlined operations. These performance and workforce management tools bring together all your business-critical data on workforce scheduling, attendance tracking, and work/time data collection. So, bringing payroll fully within them just makes sense.
Doing this is particularly useful if your business has a workforce comprising a mix of employees, freelancers, and independent contractors. That’s because it simplifies the complexities of dealing with what can otherwise be a very complicated bundle of rules.
Digital payroll trends: the big takeaway
The payroll trends we’ve listed here indicate one thing quite clearly: gone are the days of payroll being walled off from other business processes. The features offered by modern payroll systems focus on integration as a core virtue.
With the growing popularity of third-party cloud services, the ability to offer enhanced features and improved access to data is now within reach, even for smaller organizations.
In today’s business environment, top talent has a choice of where to work. Employers that recognize this and put processes in place to encourage transparency and convenience are the ones that will attract and keep the best of the best.
Frequently asked questions
- How are digital payroll systems changing?
- They enable remote access, real-time data, and seamless integration with other platforms for enhanced efficiency.
- What new compensation models are emerging?
- Personalized benefits packages allow employees to choose perks that suit their needs and negotiate on an individual basis.
- How does payroll data help HR?
- Real-time payroll analytics provide insights to inform budget forecasting, identify issues proactively, and benchmark against competitors.
- What do employees want from payroll?
- Self-service portals for access anytime, and mobile apps for managing payroll on the go and enabling flexible routines.
- Why does payroll software integration matter?
- Linking payroll to performance management and ERP systems streamlines workflows, especially for workforces comprising various worker classifications.