At no point in its young history has there been so much focus, investment, and innovation directed at the critical process and profession of payroll. Modern payroll technology has advanced rapidly, enabled by cloud platforms and digital technologies, and accelerated by the onset of artificial intelligence (AI). AI alone is poised to profoundly reshape the process and profession and elevate the outcomes for the employees and the businesses it serves.
For decades, payroll has often been an afterthought in many organizations, mostly viewed as a required back-office function, perceived as simply ‘printing checks,’ and commonly last to receive investment or executive support. Payroll is also complicated, and despite a lack of investment, its brilliant leaders make it seem effortless. Of course, if payroll appears ‘to work,’ given the risks involved, it must not be broken – so why invest in ‘fixing it’?
As a result of this mindset, many organizations have remained somewhat paralyzed, operating without a modern payroll operating model and infrastructure capable of supporting their strategic plans and largely missing out on payrolls' potential value and ROI.
With so many payroll leaders managing a high-stakes process with limited respect, support, and investment, it’s no surprise that nearly 80% of global payroll professionals remain stressed, frustrated, and underserved by technology. Over 60% indicate their global payroll operations lack the agility, flexibility, and innovation required to support their businesses.
Help has arrived.
What excites me most about the rapid innovation we are experiencing is that it has converged with the emerging awakening that payroll is anything but a simple process. It comprises equal parts employee experience and wellness driver, controllership and risk management, and a data-rich resource and advisor for supporting strategic plans.
‘Payroll of the past’ is very manual and static, mostly a reactive process, siloed and generally led by the organization (payroll is ‘the last to know’). However, thanks to technology, ‘Payroll of the future’ will be highly automated and augmentative, real-time, and proactively collaborative, with payroll professionals leveraging their data, expertise, and insights to guide the organization along its strategic path.
Technology is no doubt shaping and will power the future payroll operation. The maturation of AI is moving us into what I call the ‘Golden Age of Payroll,’ where automation will give way to augmentation and empower payroll professionals to combine their highly adaptable and rich skill sets with deep data and insights to return greater value and strategic impact to their businesses as strategic advisors!
Payroll’s hidden value.
Simply put, payroll’s value and strategic impact lie in its data, compliance expertise, and ability to remain reliable, scalable, and resilient as it enables the organization's strategic direction.
Think of any company like an F1 racing team.
They may have the best technology or product (the car), the best talent (the team lead, driver, pit crew, etc.), they may have all the ‘athleticism’ money can buy (expertise, winning strategies, and so on), but what if all of that is running on inexpensive, outdated, and ill-fitting tires that didn’t mature with the innovation sitting on top? That F1 race car isn’t going to handle well, perform at its best, or achieve any of its goals despite all it did right.
Leaving payroll operations and its practitioners out of modernization plans and underestimating the impact of poorly performing payroll leads to precisely this analogy: a high-performance machine sitting on poor tires, unable to handle and deliver the results needed to ‘win’.
Modernizing payroll operations empowers payroll professionals to meet organizational investments and facilitate strategic initiatives with rich skills, expertise, and deep insights.
I've often said that payroll curates one of the most extensive, most accurate, yet underutilized and overlooked data sets in any organization. What if payroll paired their deep compliance expertise with these rich insights to enable the organization to navigate growth (M&A, divestitures, global expansion) or change (process improvement, org redesigns, CBA negotiations)?
More importantly, what if those datasets were activated in real-time and in concert with other HR, organizational, business operations, CX, or countless other organizational datasets to provide predictive and predictive insights?
Those collective insights are the pathway to helping the organization ‘see around the next corner,’ navigate volatility, and enable strategic direction. They also enable the most essential business acumen any organization hoping to be around for any amount of time must have: organizational agility.
Payroll is immensely impactful (or it can be a detriment if not nurtured) in the broader strategic picture. While AI will change the role through machine-enabled processing, it will also augment and empower payroll professionals to leverage their rich insights and expertise to enable the agility needed to compete in the modern workplace.
Lean in and prepare to ‘meet the opportunity.’
The saying goes that luck happens when preparation and hard work meet an opportunity. This moment in history, this wave of innovation and focus on the value potential of payroll, is payroll’s opportunity and a true inflection point for the process, profession, and the outcomes it can enable.
Digital technology and cognitive automation are rapidly advancing, making their presence felt across the payroll function and experience. Long overdue for innovation and plagued by a manual past, modern payroll professionals are poised to excel in the future of payroll.
As their roles become increasingly augmented, payroll leaders will need to shift their focus from a process-centric mindset to an ‘infinite payroll mindset’ and become the strategic partners and compliance advisors their businesses need as they navigate their growth journey.
I believe payroll professionals at all levels are in a solid position to excel in the future of work and payroll. Their future rich skills, deep datasets, and compliance expertise are perfectly timed and will be amplified and empowered by AI.
The chart below is from the 2023 WEF Future of Jobs Report. It shows the probability of organizations evaluating a skill to be ‘core’ for its workers in 2023 vs. the probability of the skill appearing in its reskilling/upskilling initiative over the next five years.
Notice the skills in the upper portion of the quadrant: analytic thinking, creative thinking, resilience, flexibility and agility, motivation and self-awareness, curiosity and lifelong learning, technological literacy, dependability and attention to detail, empathy, and active listening.
Sound familiar? These are the exact skills and qualities necessary for a payroll professional or leader and precisely what I would be looking for if I were staffing a payroll team.
Now imagine if that payroll professional has all their rich data in real-time and at their fingertips and, thanks to machine-enabled processing, also has the time to focus on value-added tasks and initiatives vs. manual data entry and processing, ticking and tying, and cobbling reports together across countries. What if that practitioner also has a proactive engagement with executives, HR, finance, and business operations, such that payroll and its data can be consulted as decisions are made, vs. reactively after it's too late to provide insights?
When payroll is empowered by technology, engaged and championed by executive leaders, and prioritized within the HR and business strategy, suddenly, payroll’s value becomes visible, its impact becomes measurable, and it becomes invaluable to enabling strategic plans and initiatives.
Tips for success.
Adopt an ‘infinite payroll mindset’. I’m a fan of Simon Sinek’s book ‘The Infinite Game,’ and I believe payroll can leverage the infinite mindset in payroll. Infinite-minded leaders are focused on the ‘long game’ over short-term gains. They focus on embracing challenges vs. avoiding them, and change is a core characteristic as they are constantly learning, improving, and evolving. They welcome feedback, seek expertise to enhance their own, and maintain a continuous improvement approach to elevating their work and those around them.
Dress for the job you want, not the one you have. Payroll must shift its mindset and positioning away from a simple back-office cost center and processor to a trusted strategic advisor. Payroll leaders must become value enablers that support the business as a strategic partner, proactively sharing their insights and expertise in support of key initiatives.
If they won’t offer you a ‘seat at the table,’ make your own table and invite others to join you. Although payroll is highly impactful when engaged proactively, the practice still longs for representation and proactive engagement with strategic plans. Payroll leaders of the future can’t wait around to be led; instead, they must lead. If payroll isn’t being engaged proactively, ‘create your own table’ by identifying a few key KPIs that are most essential to your direct leadership. Invite them to regular meeting cadence to share your insights and POV for that data and use it to drive the change you want to see for your operations and organization. Start small, stay consistent, and tell stories with your data that can enable business outcomes.
(Curious about building your table: click here for the HR & Payroll 2.0 podcast episode on this topic.)
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