Why Tech Led Payroll Could Be the Only Way Forward?

May 24, 2024 thehrobserver-hrobserver-payroll

Traditionally, payroll administrators spend countless hours manually verifying pay discrepancies, such as unexpected salary changes or out-of-cycle bonuses, an issue that has driven companies to seek adopting fintech solutions that would help detect anomalies and provide clear explanations, thus saving time and reducing errors.

However, compliance in payroll systems remains a crucial matter due to the continuous regulatory changes, the complexity of multiple payroll inputs, and industry-specific challenges. 

“The core [issues] remains [within] compliance matters,” said Sundar Subramanian, CEO of Ramco Systems in an interview with The HR Observer. 

Agility in payroll

Imagine you are managing a multinational corporation across 20 different regions, each subject to its own evolving tax laws, social security regulations, and other statutory requirements. How swiftly can you integrate these changes into your payroll software while ensuring compliance?

The ability to adapt to both regulatory shifts and evolving business dynamics is what is known to be agility in payroll. Traditional, inflexible systems may struggle to implement such changes promptly. However, with an agile system, adjustments can be made almost instantly. This level of agility is essential for staying ahead in a constantly changing landscape.

The impact of this agility is significant. For instance, if you introduce a new incentive model to boost performance, its effectiveness hinges on its swift implementation. Only when these changes reflect accurately in payroll will you see tangible shifts in behavior and performance among employees.

Thus, the speed at which you can enact these changes directly influences employee performance and organisational outcomes. WIth AI driven system, organisations not only can ensure they pay their people on time but also understand the pattern within their organisation. 

Payroll is important, especially given the diverse stakeholders involved whether its employees or the government. Therefore, manual tracking and processing are impractical and error-prone, leading to potential chaos and inaccuracies. 

This has driven companies to seek technology-driven solutions that are deemed essential to manage these complexities, ensuring both employee satisfaction and employer regulatory compliance. 

“Hence, because of the complexity of the nature of this business, technology is a must. Doing without technology is sort of exposing yourself to a lot of manual errors, which this industry cannot afford,” said Subramanian.

“The most important part, because the statutory [conditions] are continuously evolving, the governments are introducing new taxes… is compliance, from a government, taxation perspective,” he added.

Automated systems are believed to help reduce the risk of manual errors, adapt to evolving statutory requirements, and address unique industry needs, such as multi-jurisdictional compliance in sectors such as oil and gas. Thus, leveraging technology is vital for maintaining accurate, compliant payroll processes.

“We are playing with people’s salaries, any manual intervention can be catastrophic if there’s an error. [We] as humans would make mistakes,” explains  Rohit Mathur, SVP & SBU Head, Global Payroll & HR at Ramco Systems.

Therefore, Mathur adds that the solution is driven by reducing dependency on manual labour and automating the process. 

Subramanian and Mathur are both advocates of automating the process of payroll, after all they were speaking during a roadshow for their software that they believe will help companies become compliant. But other payroll administrators asked about their experience for this piece have said that they believe that automation would ease their work and ensure an efficient process.

Payroll sits on data!

Payroll is a regulated industry as the government imposes taxes on it; but also it is an industry that has massive amount of data. Depending on the country, there are specific rules and regulations to ensure compliance with national standards and requirements and usage of that data.

“So the key thing is that at any point of time, it has to be compliant to the government, and the individual employee is not affected in any way,”  Mathur explains.

There are a lot of factors that contribute to  payroll, ranging from leave requests and bonus distributions to time and attendance records, expense reimbursements, and loan deductions. Each of these elements plays a prominent role in payroll management. 

“Payroll is sitting on a huge pile of data, which can be sort of really interpreted for a lot more meaningful insights at a board level. It’s not only operational,” Mathur

For instance, analysing patterns of sick leave can unveil underlying causes such as stress, enabling organisations to address employee well-being more effectively.

Additionally, payroll data can shed light on organisational diversity by examining factors like regional demographics and gender representation. Moreover, it can provide insights into profit and loss dynamics; hence a business can help in taking decisions on which branch to keep operational. 

“Payroll is a strategic department with meaningful insights,” said Mathur.

Omnia Al Desoukie

Editor, The HR Observer

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