Payroll is often overlooked as a critical function, reducing it to an administrative and repetitive task that falls under HR or Finance purview, depending on which department is keen to adopt it. However, with the evolving payroll mindset, the ongoing advancements in technology coupled with the rise in gig economy, payroll is no longer just an administrative function. In fact, Deloitte’s Global Payroll Benchmarking Survey revealed that 40% of organizations are intending to use next-gen payroll technology within the next 3 years.
As the workplace today continues to evolve, here are some ways in which the payroll function is also evolving along with the future of work.
Payroll will adapt to the gig economy
The gig economy is booming, and is expected to grow at a compound annual growth rate of 15% through 2026. This also means that payroll has to adapt in order to ensure timely salary payments to gig workers. While traditional employees receive their monthly or weekly, gig workers may have to wait weeks or months before they get paid. This may not be sustainable in the long-term as organisations may risk losing these valuable gig talents. Instant payments are becoming a popular option, particularly if gig workers have just completed a shift or a certain number of hours. This can be done through mobile payments or outsourcing to an external vendor to take care of these gig workers.
Flexible payments with cryptocurrency
While employers may need to increase compensation packages to attract and retain talent, not all of it needs to come in the form of a higher salary check. There are some companies that compensate employees in the form of cryptocurrency, or bitcoins. However, organisations need to be mindful of the pros and cons in compensating employees in cryptocurrencies. While it is efficient and reduces the need for intermediary institutions – which could potentially be beneficial for gig workers – cryptocurrency are still fairly volatile. Some employees may also lose out due to currency fluctuations. Nonetheless, cryptocurrency as salary payments may be the new norm in future and this is where payroll has to adjust to incorporate this new form of salary payment.
AI to lead with payroll management
Artificial intelligence (AI) has prevalent across functions, and payroll is no exception. AI-related features such as chatbots, automatic employee classification, or error notifications when it comes to inconsistent payroll calculations help to make payroll processes faster and more efficient. These features can also be a huge timesaver for the payroll department. AI-powered payroll software will be the future of payroll management.
Cloud-based payroll will be the new norm
Cloud computing enables access to data anywhere and anytime as long as an internet connection is available. This has enabled the rise of cloud-based payroll software such as Payday and Singroll. Research from Gartner revealed that over half of enterprise IT spending in key market segments will shift to the cloud by 2025. A similar trend is observed for payroll, where 74% of organisations are already using or implementing a cloud-based technology. Cloud-based payroll also enables automatic payroll data back-up and allows the payroll function to store massive amounts of payroll data as the organisation grows, without having to worry about physical space.
As the workplace continues to evolve, the payroll function has to also evolve alongside the business. Remote work and the gig economy have made the process of compensating employees more complex than ever, but with AI and cloud computing, these developments can help organizations and payroll departments to adapt quickly to the ever-changing business environment.