What is the current state of payroll? Earlier this year we partnered with the American Payroll Association (APA) to conduct a survey with the goal of exploring the state of payroll, how organizations measure the business impact of payroll, and payroll’s transformation from a tactical function to a strategic one.

Our biggest finding – warning, it’s a doozy – is that there’s a huge perception gap between payroll and the rest of their organization. We found that while 78% of payroll teams view themselves as strategic, only 22% believed that C-level executives viewed payroll as strategic.

Yikes.

But there's good news too – our survey also uncovered some clues that may provide some insight into why there may be such a large perception gap and how payroll can bridge that gap. Here are our top three takeaways.

Man jumping over rocks payroll perception gap concept

1. Over half of payroll teams don't track KPIs

It’s difficult to demonstrate your impact on your organization without tracking critical key performance indicators (KPIs). Most executives review business KPIs like spend to budget, revenue to budget, customer satisfaction, etc. regularly to understand how their organization is performing and identify areas for improvement – with the goal of creating strategic plans that better focus their resources to deliver the most positive impact on their business.

KPIs can help communicate payroll’s business impact by tracking cost savings, efficiency improvements, and compliance violations. 

What to track? Common KPIs tracked by payroll teams include – error rate, total processing time, average cost per paycheck, average compliance fines per employee, percentage of off-cycle checks, and percentage of employees on direct deposit.

Beyond KPIs, payroll sits on a wealth of business data that they can leverage to identify workforce trends, such as total wages, excessive overtime, etc.

Providing these analytics and KPIs to business leaders along with insights into what may be influencing them and opportunities for improvement, can help elevate payroll’s role in an organization.

2. Fewer than 1 in 10 employees view payroll as a strategic function

Beyond reporting and KPIs, payroll can play a critical role in the employee experience.

Significant changes to labor regulations like the overtime threshold increase and new mandatory family and medical leave, as well as the proposal to change the W-4 format, give payroll teams an opportunity to strategically impact their organization’s employee experience based on how they adjust to these changes and communicate about them.

Instead of reacting to employee questions about these changes, payroll teams can proactively establish a change management strategy to better prepare and educate their employees.

A benefit for all: A solid change management strategy will also benefit payroll teams by lowering the number of employee mistakes that need to be fixed and the number of inquiries that need to be answered.

This is also true for internal changes – payroll can better support their employee experience by creating a user adoption strategy for new technology.

For instance, if your organization is rolling out a new HCM solution, payroll teams can set up short training sessions to help employees understand how they can edit their time cards, view their pay statements, and change their direct deposit information, among other tasks.

This proactive approach will increase payroll’s visibility across the organization and help shift the perception that payroll is a back-office role.

3. Organizations with the lowest error rates close out payroll faster

Haste doesn’t mean waste. Our survey found that organizations who close out payroll the fastest – under one day, also have the lowest error rate – under 0.1%.

The speed and accuracy of payroll is heavily influenced by technology. And another study by Aptitude Research found that payroll teams can realize greater speed without sacrificing accuracy by leveraging a solution that unifies payroll with timekeeping and HR

Unification is a top priority: our survey found that payroll’s unification with timekeeping and HR systems is the most important among business systems.

Payroll efficiency is more critical than ever – before payroll teams can transform their perception and become a more strategic contributor, they need to have more time to dedicate to strategic planning and initiatives. Don't just settle for the way you've been doing things up to this point; instead, investigate technology solutions that can automate some of your daily tasks for you. Our data shows it'll increase your accuracy while also giving you breathing room to talk strategy.

Conclusion

Payroll teams have some work to do to bridge the perception gap and these takeaways provide a great start, but they just scratch the surface on all the findings from our survey. Get more survey insights and learn how payroll can raise its strategic profile in our latest ebook.

Download the eBook

Published: Tuesday, September 3, 2019