There are few areas of business operations more closely guarded than payroll. For many organisations, the value passed through it makes it their largest monthly outgoing. Clearly, finance and other directors from the C-Suite are focused on ensuring money paid to employees is paid accurately and securely. Given all that, the focus of HR and payroll teams at the outset of the lockdown was on keeping business running as near normal as possible and providing vital support to employees.
Inevitably, over the period of the pandemic, there have been a raft of challenges to negotiate. Typically, those businesses running on-premise applications have struggled with the lockdown most. When people were first sent home, the challenge was around how to access their payroll engine remotely in a secure and reliable fashion. In one of our recent client virtual coffee mornings we discussed some of these operational challenges.
Having reliable, secure access to the payroll system via a virtual private network (VPN) is critically important for any business. Companies need a resilient, secure system in place to guard against hackers. Issues with the VPN must be quickly addressed as any ‘downtime’ means the payroll team is unable to access their on-premise system, and the business risks unacceptable delays to payments or teams finding ‘work-around solutions’ to their connectivity challenges with insufficient security built in. Even in the Cloud world where access is so much easier organisations still need to ensure that access to their payroll application has the right security controls to ensure access is only being made from the appropriate people as well as from and through the correct addresses.
Another key area of risk is around data security and confidentiality. Every organisation has a duty of care on data. They are governed by GDPR. For most businesses, also, compliance with the ISO27001 standard can help to ensure best practice and high standards in payroll. However, many internal payroll departments do not go through this certification / accreditation process. This puts the emphasis on the employees to ensure compliance and if they are working from home, it may be difficult to know whether the approach is fully secure and that in turn could put those businesses at risk. So, as the pandemic gathered pace and remote working became the norm, payroll was challenged above all by issues of security and data confidentiality.
Today, as the lockdown appears to be beginning to ease, payroll and HR have other challenges to work through – and many relate to the raft of changes in working practices that we are seeing at the moment. Some workers in construction and manufacturing, for example, are going back to work, while others are not. It will be a staggered approach for many companies, and they will need payroll support to run alongside that.
At the same time, the Government is extending furlough schemes, until October at least, while there is talk of furloughed employees who go back to work part-time having their wages subsidised by the taxpayer. Payroll and HR teams have had to deal with all this variation, not to mention the attendant issues around SSP, Carry Over of Annual Leave and DWP/DEAs orders, while also having to manage the challenges of working remotely themselves.
Finding a way forward
If businesses don’t have the right processes and technologies in place, it can be a major administrative headache on top of the access and security issues that we have highlighted above. For many years the delivery of great payroll has also included excessive levels of admin tasks, such as manually re-keying data from one system to another, additional checks because of these manual activities, employee data that impacts payroll residing in three or four different places and the use of excel to consolidate data from multiple for reporting purposes. Now we add to this, working remotely so you could have four people, working in different locations completing all these admin tasks! So, what is the solution? Organisations are hugely advantaged if they have already moved to cloud solutions as that will likely give them a strong infrastructure of security and governance as well as the ability to work in an agile manner away from the office.
Cloud is an enabler here, but the way businesses set their organisation up within the cloud to deliver great payroll services is even more important. Many organisations, after all, have cloud payroll engines but if they are fed by another HR,, time and labour and recruitment system (HCM) the data will originate in that system and that can cause connectivity and efficiency problems. In contrast, a single cloud-based HCM and payroll system removes the requirement for the transfer of data from other systems to payroll and takes away the need for manual interventions.
You can see, all across the traditional payroll outsource sector, clients that have needed to create little cottage industries of administration to manage the impact of a HR application feeding a separate payroll application. These cottage industries are very expensive; add little true value and can result in businesses incurring multiple millions of pounds in costs.
By moving to a single cloud-based HCM and payroll system, businesses can eliminate much of this bureaucracy and achieve enhanced security. Just as important in these difficult times, they also add to the agility and flexibility of the payroll system. By embracing the combined capability of payroll and HCM operating as one, businesses can get more immediate access to the HCM and payroll data at their disposal and more quickly and easily make the adjustments required by initiatives like the furlough and SSP rebate schemes. That, in turn, contributes to employee well-being by ensuring that changes that impact them happen quickly and efficiently.
Combining HR and payroll
In summary, cloud brings many benefits in this context but a single cloud HCM and payroll system is even better for businesses. It is inherently more secure because it removes human intervention and therefore reduces risk. If businesses don’t have one HR payroll solution and their whole HR pay benefits cycle is made up of data coming from multiple systems then that is a bigger risk to them. Equally, this approach supports greater agility by making key data available, where and when it is needed, across the organisation, enabling payroll changes and adjustments to be made quickly and easily and facilitating reporting on the results.
Managed services can also have a key role to play here. The benefit of outsourcing HCM and payroll to an expert partner is that rather than focusing on just delivering a payroll service, they can instead concentrate on ensuring that the business’s whole HCM data flow works efficiently and effectively. If the third party has the capability to deliver HCM & payroll outsourcing as one solution on a single platform, then they have an opportunity to drive reduction of risks, significant efficiencies and automation into an organisation.
The key point, however, is that a single HCM & payroll system delivered in the cloud, is a driver for increased security; less risk and enhanced agility. It is interesting to note that the current period of lockdown has also been one of the busiest for financial processes and activities. It will have been stressful for every payroll team but for businesses operating in the cloud, with a single HCM and payroll system, that process is likely to have been just a little less concerning.
Richard Dutton, Account Director, Symatrix