In today’s world, it is not unusual to have your business disrupted. Change is happening rapidly. More rules and regulations are being developed and implemented. Economic hardships have created unwarranted financial stress in companies and their employees. To help you prepare for the challenges that are headed your way, we created this list of payroll challenges that businesses will need to direct their attention towards in order to minimize inefficiencies while supporting the overall well-being of their employees.
The COVID-19 pandemic rocked our world in more ways than one. Part of which included highlighting challenges and inefficiencies that they never thought they would encounter. As a result, companies have been forced to evolve rather rapidly while developing new systems to help them stay current with the constant, fast changes. While being able to adapt was important prior to the pandemic, it is more imperative than ever as the challenges faced intensify.
As a business owner or manager, it is important that you are using the right payroll technology. If you don’t, you risk not being able to grow and adapt to the continuous large scale changes including bulk hiring to accommodate new business needs, compliance orders, or system upgrades. Obsolete resolutions and methods may also present issues with security as there are still some payroll groups working remotely.
One of the most critical performance indicators of payroll performance is how many errors and how much time it takes the team to resolve such errors. Wasting valuable time and effort on payroll corrections will create more work for payroll groups to correct these mistakes. The time devoted to this takes away from time that could be better spent on strategic initiatives that could be valuable to your business.
Transitioning From Negotiable to Strategic
Previous payroll systems were created for a different time. Today’s world requires being able to adapt to sudden mass change on the regular. Many companies remain restricted by old-school practices and outdated technologies. In the past, payroll employees had time to complete spreadsheets and manually enter data, but now people cannot always make it into the office to get this work done.
By taking a strategic approach and being transparent when it comes to business decisions like improving the workforce composition and optimizing operational expenses instead of viewing payroll as a task-focused administrative function. As we transition from the slower paced payroll systems to fast paced, rapidly changing conditions, it is important that we adopt smarter solutions that are agile and adjustable. Below are four challenges of a continuously changing and complex payroll landscape and how companies can adapt with innovative resolutions.
Handling a Complex Payroll System
#1: Adjusting the Payroll Legislation
Over the past year, it seems that new regulations are being created in many areas at a fast pace, threatening businesses that fail to comply. Government funded grants, stimulus packages, and relief programs including the Coronavirus Aid, Relief, and Economic Security or CARES Act, compliance has become more challenging. Sure, these grants and stimulus packages have helped companies to stay afloat while keeping their employees on payroll. Changes being made in the legislation require time and resources for payroll teams to interpret and understand the changes prior to applying them.
You have to pay your workforce accurately, on schedule, and in compliance with the current jurisdictional requirements– which can be challenging especially for businesses that are growing, contracting, or restructuring. As the effects of these challenges accumulate can result in payroll errors, resulting in heavy fines and penalties. On top of that, if payroll is not done correctly or on time, employees may begin to question whether or not their employers are able to pay them at all. A study showed that in 2019, 22% of all employees claimed that they received their paycheck late at least one time last year, and out of those 35% felt that the lack of organization on their employers behalf was to blame while 25% felt that issues with direct deposit was to blame. Poor pay experiences, or even just one, can result in disengagement and a higher turnover rate. In addition, this can damage the employer’s brand reputation long-term making it harder to hire new employees and keep them hanging around moving forward.
What Can You Do? Companies need to leverage technology that will help automate tax rules in various jurisdictions. This can help minimize mistakes and noncompliance issues so that employee skills can be directed to finding strategic initiative that will continue pushing the business ahead.
#2: Constraints on the Payroll Team
In this day and age, companies are required to do more with less and as we continue to face economic downturns and disruption that place strain on the workplace, payroll teams are presented with a heavier workload and more pressure to deliver paychecks on time and accurately.
Illnesses, including COVID-19, have led to increased absenteeism for all workers but when it comes to essential employees like your payroll team, it can be quite challenging. Businesses have to determine whether or not they have adequate staff to handle the legislation in areas nationwide to deliver pay accurately and on schedule even to those employees who are working remotely and fill the gaps left vacant by absent employees.
What Can You Do?
If your payroll team does not have the technology needed to get their job done with very little errors, they will have to devote time fixing problems linked to manual data entry and processes. Real-time payroll has become the standard for employees and managers who desire to make smart payroll decisions.
By incorporating payroll, time, and HR data into one system you can reduce reporting time while making data management easier for payroll teams– this will help you avoid that payroll crunch at the end of each pay period. Companies are able to leverage payroll software that will constantly be calculating and updating payroll information instantly which helps to reduce wasted time and the amount of errors.
#3: A Changing Workforce
A worldwide pandemic rocked the way that businesses operate. It has challenged our understanding of which roles require employees to be physically present at the brick and mortar locations and which can be done remotely. A recent survey discovered that over 80% of CFOs and finance leaders plan to continue implementing remote working plans even after the COVID-19 restrictions are lifted. This has also become a preferred working arrangement for many employees– in fact, 60% of US workers who have been working remotely during the pandemic would prefer working remotely as much as they can moving forward.
As working remotely continues to be normalized by both employers and employees and the processes become increasingly digital, companies will be able to expand and operate easily across borders. But with global operations comes new payroll challenges as businesses are required to abide by various regional legislative requirements.
What Can You Do?
Despite being dispersed, workforces must be paid properly and on schedule, every time, regardless of the location from which they work. Consider centralizing your HR and Payroll into one centralized system. This will keep businesses compliant while also creating a better experience for employees, also improving the retention rates. In addition, centralized payroll processes and data get streamlined reporting across all operating regions which can help businesses gain a more holistic outlook of payroll instead of combining data from different systems in several locations.
#4: Increasing Employee Financial Stress & Burdens
In times of change and uncertainty, financial wellness is important. Employees need more flexibility when it comes to their finances. American workers have found themselves being overwhelmed by some levels of financial stress as a direct response to the pandemic. In fact, more than 50% of US workers have struggled to cover their expenses between paycheck in the last six months. This financial stress can have a negative impact on your company’s performance due to disengagement and increased healthcare costs, to higher employee sick days and turnover.
What Can You Do?
Companies can choose to provide on-demand pay solutions allowing their employees access to their funds at the end of their shift. On-demand pay technology is able to calculate pay based on the continuous calculation of wages enabling employees a true payday instead of a loan or advance based on their approximate actual earnings.
Businesses may also implement a self-service tool which will allow employees to access their pay information. This gives them the opportunity to ask any questions or address concerns. This visibility helps to build stronger trust between employers and their employees, as the transparency is appreciated.
Redefining the Payroll Paradigm
As economic conditions continue to create financial stress for businesses while forcing them to adjust their priorities, operations must be adapted. At the beginning of the pandemic when companies were first required to allow their employees to work from home, we saw an uneven impact based upon the location and the ability to access data remotely. Many businesses did what they could to remain stable and preserve.
At this point, cloud solutions are delivering up to 3.2 times the ROI of on-premise solutions because they are more efficient. Even still, before the pandemic, less than 40% of businesses worldwide were using cloud-based technologies for their payroll operations. The COVID-19 crisis brought about many challenges for companies but it also allowed business leaders to reconsider and reevaluate how payroll was being done while encouraging them to invest in futuristic solutions. Change is only occurring more rapidly which means that companies will need to make sure they have the necessary tools to handle challenges as they are presented.
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About Payroll Partners
As a leading payroll provider, we offer comprehensive solutions designed to fit your business. Our knowledgeable and experienced staff offers confidential and reliable assistance for every aspect of payroll. Count on us to deliver accurate and timely payrolls while accommodating your unique needs. From meeting your basic payroll requirements to management reports, and/or tax pay and file services, we can do it all.
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