Payroll has been one of the most complex functions of a business ever since businesses have been around. Besides, it must be repeatedly performed every cycle, whether it be month-over-month, weekly, or bi-weekly, making it complex and tedious, especially if everything is done manually each cycle. In this regard, technology has been the greatest contributor in taking a majority of the load off the backs of human beings involved in the process. This has greatly increased the efficiency, productivity, and accuracy of the payroll process over the last decade. With this progress showing no signs of stopping, it is extremely probable that payroll will keep getting newer upgrades in the future, making it even more accurate and fast than it has ever been before. Larger businesses have already started investing in such futuristic solutions, and with the trickle-down effect in play at all times, it will soon be common among every business of every size. But what are these futuristic solutions? How effective are they? Should you adopt now and have the first-mover advantage? Or should you wait? Let us look at the different payroll trends that going make it big in the future and the benefits they offer, should you decide to implement them.
Artificial Intelligence: Most businesses across most industries today are looking at artificial intelligence as a real game-changer – robots taking over humans. But is it really that? The simplistic answer is no. Artificial intelligence today, or in fact in the next 50 years, won’t be anywhere close to taking over the human species, as Naval Ravikant, a great Indian-American thinker, explain on the Joe Rogan Experience. AI, the state in which it is today, is great at recognizing patterns and doing repetitive, condition-based tasks accordingly. This makes it a great tool to be used in payroll processing. Large amounts of financial data can be analyzed quickly to check for aberrations, taxes can be processed and filed automatically, and businesses can be kept in compliance easily without almost any help from professional and expensive compliance experts and legal teams. Moreover, AI-based chatbots can take over customer service by sorting complaints, rerouting them to the right executives while easily guiding employees with non-urgent complaints to a solution without any human intervention. This AI-based approach is cost and time-effective as it circumvents the majority of human involvement, thereby avoiding common human flaws like inefficiency, inaccuracy, etc.
Pay Transparency: Pay transparency has always been an alien concept until recently, as things have begun to change in the right direction. If you were hired a few years ago, you would receive an offer letter that included your gross pay, your deductions, and your net pay – that is it. You couldn’t ask any more questions and businesses reserved the right to keep it a secret while employees had to play along to stay employed. This situation has been rapidly changing in favor of the employees because of two main reasons. Firstly, there is a general awareness today in the workforce across all industries that “the businesses need their employees more than the employees need their jobs,” thanks to the strong labor laws that are in effect in most developed and developing nations. Secondly, businesses are looking to retain their employees for longer times, and they now understand that the fastest way to make that happen is to promote trust. If the employees trust their employers more, they would be less likely to leave, and pay transparency has become one of the most effective ways to promote employee trust. This has resulted in a complete shift in payroll practices. Today, when you land a job at a company that follows pay transparency principles, you will notice these 6 differences in how your pay is communicated to you.
- You will be told the exact amount that will be credited to your account each pay cycle
- You will be told how the company conducted the market study to arrive at that number
- You will be told where you fall on the pay scale when compared to others in the market
- You will be informed about the exact steps that you might require to increase your pay as you spend more time with the company
- You will be informed why you are being paid more or less than the market rate
- Pay information of your team members within the company will be available to you and vice versa
Not just companies but governments too are realizing the importance of pay transparency. For example, Colorado (USA) state now requires employers to make pay transparent for all. This law went into full effect starting January 1, 2021.
Inclusion for Gig Workers: Since the pandemic, people have been willing to work remotely more than ever. This has given rise to the gig economy, where instead of working as a permanent employee for an organization, skilled and experienced professionals will dedicate their time and resources to work on different projects for different companies every year. Payroll software applications today need to evolve to accommodate the gig workers and their work schedules. Businesses will often hire gig workers to work on short-length projects because it is cheaper and quicker. Features such as contract management, flexible time-keeping, and scheduled pay release will help companies stay compliant while also making sure they establish a strong relationship with all the gig workers they hire for their projects.
Financial Wellness Packages: If we were to be brutally honest, most of us learn nothing about finance in schools or colleges. This gives rise to unfavorable financial habits like excessive/unnecessary spending, no desire to invest for the future, no desire to build an emergency fund for a rainy day, etc. Lack of good financial habits means that people often fall in financial trenches that are difficult to come out of. Financial debt is an instant recipe for stress, depression, anxiety, alcoholism, and numerous other mental and physical disturbances. All these factors may have a direct combined effect on the performance of an employee which is why more and more companies today are offering financial wellness packages to their employees. Employees are also given access to financial advisors and mental health experts who are well equipped to guide them and even bring them out of not-so-ideal financial and mental situations. Such care packages promote a great sense of trust in the employees while also increasing the overall quality of their lives.
Conclusion: Businesses that choose to implement these changes in their payroll today will have a significant competitive edge over their rivals. Some changes might be more expensive while others might be more difficult to implement, however, companies that still manage to pull it off will notice big, positive changes in terms of employee retention rates, improved work culture, and better employee trust. It works like the butterfly effect – slow but strong changes in the long term. If you are a business owner or a manager, the biggest question you will have by the time you finish reading this blog is the “cost to implement.” It is costly to hire data scientists and machine learning experts in-house to craft that perfect algorithm for your payroll needs, but it doesn’t have to be that expensive at all.
Exela HR Solutions offers instant access to all the solutions you need for your business at a fraction of the cost. We are world leaders in global payroll processing and compliance management and offer our services to multiple clients across different locations worldwide. Get in touch with us and start implementing innovative future-proof solutions to your payroll today.