As 2020 ends, there is no doubt that COVID-19 has fast-tracked business transformations. Many retail and hospitality businesses have adapted swiftly to an online-based business model, and even the most traditional businesses have had to adapt to working from home. We have also seen back-office operations designed for previous normal come under the spotlight. Some of these back-office operations were not seen as worthy of transformation in the past but had to adapt quickly in the face of the biggest pandemic to rock the world in the last century. One of the highest risks was in the payroll department.

The threat to morale, bad press, and the regulatory impact of not paying people on time, or even at all was suddenly a real risk that required payroll teams to keep their legacy systems operational. Some organizations had to entirely bypass their on-premises systems and panic run payroll directly through bank accounts, requiring reconciliation of discrepancies at a future date.

What this entire situation has made clear is that transformation to the organization’s payroll departments can not continue to sit on the back burner. If it does, then it becomes far too expensive and inefficient to run. For those organizations still reliant on manual processes, payroll is incredibly prone to error.

Putting the above points aside, payroll continues to get more complicated each year. In the last month, COVID-19 drove a 400% increase in new regulations impacting payroll GLOBALLY. A report released in early 2020 by ADP and The Economic Intelligence Unit showed that three-quarters of businesses surveyed found the regulatory and legislative challenges in hiring, paying, and managing employees internationally increasing in complexity. Within Australia, we have also found there to be complications around the introduction of JobKeeper Payments, Jobmaker eligibility tests, as well as staying on top of workplace entitlements as experienced by Cosmetics Company “Lush” underpaying Australian workers by $4.4 million.

With the Fair Work Ombudsman hot on Lush’s heels, they found that Lush Australia underpaid staff by $4.4 million, including interest and superannuation. Along with this, Lush Australia had failed to provide its employees with a range of entitlements that they were owed. The Ombudsman found that the contraventions were caused by Lush’s inadequate workplace relations systems and processes, including a lack of training for staff and managers, a manual payroll system, and the absence of an HR department in a rapidly growing business. Lush failed to provide its employees with a range of entitlements they were owed including minimum wage rates, rates for weekend and shift work, overtime rates, and allowances. Record-keeping laws were also breached.

In the wake of COVID-19, organizations need to adapt to challenge old ideologies about payroll and stop treating it as a tactical silo. This approach overlooks the simple, but tactical advantages that payroll renovation can bring. For example, by transforming and connecting pay with HR and finance, businesses can reduce system complexity and increase efficiency. They can also reduce workforce management costs, including non-compliance fines, pay disbursement, and distribution expenses. 

Deeply digitized organizations also enjoy real cost efficiency and productivity advantages which can be useful when navigating unchartered waters. Deloitte sums up the need for cost efficiency in their paper ‘Cost resilience amid and after COVID-19, declaring that “To be prepared to face a new crisis such as the COVID-19 pandemic, companies have to swiftly adjust their cost models relying upon a truly agile and scalable business.” 

The Deloitte report also highlights that organizations “…need open, accurate payroll data to run and analyze current operating models, run scenarios and also know exactly what is going on, to look at how you allocate work, where, at what cost and with how many resources.” 

This leads to another overlooked aspect of payroll transformation; by moving away from manual processes, businesses can get a real-time view of their payroll data. This can unlock new insights not only for finance but also for HR teams who will be able to make smarter decisions related to areas such as talent acquisition and retention.

With all these benefits, it is time to take a new look at payroll and see it not as a cost center, but as a source of competitive advantage. Look at our Payroll Services in eastern suburbs to free up your time in the workday to focus on what you do best and leave the paperwork to the experts. Through this, you will see how payroll is a key element of digital transformation and how our structured program will increase efficiencies, enhance visibility, and Agility Company wide. We want you to be ready if the Fair Work Ombudsman comes knocking on your door. Feel confident in our tax expertise and you focus on building your organization to reach new highs.