New survey data shows payroll technology has a way to go before delivering the value companies are looking for. Ninety-five percent (95%) of payroll, HR, and finance leaders report challenges with payroll technology, 40% of them saying those challenges are significant.
Cloudpay’s report, The Tech-Talent Equilibrium in Payroll, showcases the battle of balancing payroll technology with payroll talent to elevate the discipline to a strategic business function of the business. Companies are eager to integrate new technological innovation that enhances automation, but the current tech needs human expertise to maximize its application. Until companies secure the right mix, they will continue to underutilize technology solutions and struggle to optimize efficiency and profitability for their organizations.
The Increasing Complexity of Payroll
The payroll profession is no longer about number crunching in the back office. As systems and legal requirements become more complex, technical literacy and insight-driven strategy are leading the most innovative work.
Almost two-thirds (63%) of payroll and finance experts shared that technology is essential for their business, which means more tech-savvy talent is critical for building a unified tech platform that serves customers and employees alike and makes a significant impact on the business.
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Where Technology is Working and Where it Isn’t
Currently, technology is most effective at improving efficiencies. Automation streamlines data entry, reduces payroll errors, and minimizes risk. Industry leaders cite the areas that technology is having the most positive impact on the business as improving payroll efficiency (80%) and automating payroll processes (79%).
But it’s personnel who drive improvements and take those efficiencies to the next level. The highest satisfaction rates for payroll professionals are their ability to review and improve processes (82%) and their knowledge of country-specific regulations (80%).
Too much reliance on technology results in the payroll function lacking the problem-solving, strategic, and expertise-led capabilities of payroll personnel. While investments in AI, automation, and APIs are necessary to gain a competitive edge, these technologies alone aren’t enough to impact the business substantially. This is especially true for larger organizations with multi-country payroll and compliance demands.
So where is technology falling short? When it comes to integration, 94% report disconnected systems and solutions as a challenge, and only 24% are very satisfied with their integration between payroll technology and other systems like HCM software.
Technology struggles when it comes to compliance, too. Increasingly complex compliance regulations, which vary from country to country and even within the same country, are desperately seeking tech solutions to keep up. Forty percent (40%) describe adhering to various compliance demands around the world as a significant challenge
This is when we need human expertise the most. Payroll subject matter experts can help apply and optimize the technologies that aren’t performing as best they could. The problem is that payroll skills are in short supply. Human expertise is limited, with 72% of companies reporting a payroll talent shortage.
On the Hunt for Payroll Experts
Fifty-three percent (53%) of respondents value technology over personnel but are struggling to leverage payroll tech solutions in the most strategic way. Reasons for the talent shortage include insufficient development of existing practitioners and a lack of awareness of payroll as a career in its own right – many use payroll as a stepping stone to other HR and finance roles.
Fifty-eight percent (58%) of leaders consider payroll expertise very important, and shared the specific areas where payroll personnel contribute the most:
- 44% say personnel have an extreme impact on payroll timeliness. While technology helps with data, it’s human expertise that streamlines and coordinates different departments, keeping in line with various deadlines.
- 37% report personnel have an extreme impact on compliance because of the knowledge that qualified practitioners possess.
- 35% believe personnel have an extreme impact on making the most of data, analysis, and reporting.
While AI and other automation tools increasingly handle data analysis and trend detection, it’s the people who interpret, analyze, and make recommendations based on the output. Strategic decision making requires human analysis, even with advanced technology tools in place. While it’s tempting to try to fill the talent gap with more technology, it’s clear some tasks can’t be replaced by tech.
Securing the Most-Needed Skills
The payroll skills most in demand have evolved. Leaders report they are satisfied with certain skill sets within payroll, including reviewing and processing payroll on time and accurately (76%) and knowledge of country-specific regulations and legislation (80%). But analyzation and interpretation skills – the areas where human expertise is needed most – received the lowest rate of complete satisfaction.
The top five expectations of payroll experts are, in descending order, compliance knowledge, technology skills and experience, analytical skills, management skills, and problem-solving/resolution skills. These five areas cannot be replaced by technology, and must be filled with human talent.
How do we fill these talent gaps? It’s time to reposition talent investment rather than replace it with more technology. Leveraging payroll talent can mean recruiting new payroll talent and highlighting what a lucrative payroll career path looks like. Provide a career map that outlines what the worker’s next career steps could be.
It also means investing in training through professional development. This step is critical to keeping skills sharp and staying on the cutting edge of payroll strategies. Training talent through shadowing others and hands-on learning keeps talent engaged and their interest piqued. Investing in webinars, conferences, and other training resources shows a company commitment to the talent. This not only helps with retention but up-levels the knowledge, and subsequently output, of these workers.
Alternatively, outsourcing to a comprehensive global payroll solution provider allows companies to take the pressure off of filling all talent gaps at their own companies, and instead rely on a third-party partner that has the multi-country expertise and an integrated platform already in place.
Payroll, HR, and finance leaders have made it clear that companies have some gaping payroll talent holes that need to be filled. Regardless of the chosen talent acquisition strategy, an emphasis on striking the right balance of tech and talent is critical to elevating the payroll function to the strategic advantage it has the potential to be.
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