Article Image - Transforming Payroll

The payroll department is responsible for managing the most basic employee expectation – getting paid. Frontier Software discusses the challenges of revamping payroll systems and processes, and why it needs to be done.

As the world adapts to a more virtual environment, companies are doing away with old, outdated processes that rely heavily on paperwork. Instead, they are embracing new systems, apps and platforms, and are ushering every area of business into a new technological age. 

But one department has proven particularly tough to transform, despite being responsible for the most basic expectation of employees – getting paid.

While not the ‘core business’ of most organisations, no company can function without a smooth-running payroll department. Frontier Software national professional services manager Martin Barlow says the payroll process has been largely left untouched, while departments around it have been enhanced by new technology – and part of the reason is its complexity and the routine nature of the job.

“Payroll should really be a ‘silent running’ business that never breaks,” Barlow says.

“Unfortunately, Australian tax laws mean that payroll is actually a very complex beast behind the scenes. All of the different rules and legislation mean that there is a lot of investment behind the scenes to make sure people get paid correctly every fortnight.

“It’s one thing to change a payroll system, but it’s another thing to completely transform what you’re doing,” he explains.

“In the past, dealing with a payroll matter would have meant a whole range of emails and forms, but transforming means scrapping all of that and saying, ‘if we were to design this process anew from today, what would it look like?’

“When you transform your payroll, you become more efficient with your resources, so you can channel your key resources into what your business is actually about”

Martin Barlow, Frontier Software 

“It’s about creating a new way of doing things, and it really requires an open mind to rethink your existing system,” he says. “That can be quite difficult in the payroll space, because the job is designed to be quite routine, and it's a very difficult industry to turn on its head.”

Barlow says organisations often leave their payroll processes alone for many years, stuck in the mindset of ‘if it’s not broken, don’t fix it’. But with technology evolving rapidly, companies that don’t leverage new opportunities will end up trapped in inefficient, time-consuming and costly processes – and this will ultimately impact staff satisfaction, as well as the company’s time and resources.

“Typically, payroll is a background function and an overhead on the organisation – it’s not core business, but it’s something you have to do,” Barlow says.

“You want it to be efficient, cost-effective, and you want it to work properly, but it does tend to get left by organisations that think, ‘if it’s not broken, don’t fix it’. Then the system ages, but the changes in technology over the last 20 years have created a raft of new opportunities.

“When you transform your payroll, you become more efficient with your resources, so you can channel your key resources into what your business is actually about,” he explains.

“If you can automate and provide as much self-service as possible, then you can redirect more resources into your core business. Another side is around staff satisfaction – they don’t need to fill out paper forms; they can just send requests to their manager via the system with a few clicks. This has become the norm, and it’s what employees expect.”

When it comes to transforming payroll, Barlow notes that a cultural change is often critical to ensuring that a new system can be implemented properly. An organisation needs to have buy-in from both its leadership and its staff – and this is where leadership and proper training become important.

Physically implementing a new payroll system without causing any interruptions can also be a challenge. Australia has recently seen a number of high-profile cases of staff being paid incorrectly, with major organisations having to pay out millions of dollars due to payroll errors. Making sure that the new systems are doing what they’re meant to do is therefore vital, particularly when it comes overtime and rewards structures, which is where most of the errors happen.

“The fundamental challenge of transformation is that you never want to break payroll,” Barlow says.

“You want to be able to move from A to B without disrupting anything, and so a lot of effort goes into the risk management, governance, project management and pre-planning to get you there. If you do it right, then you as a consumer should see no negative impact – only the positive, in the sense that you now have an easier system to use.

“You have to take your people along the journey with you, get them to understand why you’re doing it, and ultimately have them as champions for your new process and culture” Martin Barlow Frontier Software 

“The other important factor here is cultural change, and this is very often overlooked or seen as a training exercise,” he adds.

“You have to take your people along the journey with you, get them to understand why you’re doing it, and ultimately have them as champions for your new process and culture.”

Frontier Software has been on the market for almost 40 years and now offers a suite of of 16 different products, including payroll, HR systems, performance management and onboarding solutions.

While payroll transformation can be a challenging project to take on, Barlow says that if done correctly, the rewards for the organisation will be significant. However, companies will often need to rethink their payroll systems entirely, rather than simply installing new software and trying to make it work within their existing systems.

“It's a difficult project to undertake,” Barlow says.

“It’s difficult for people to imagine what the new process could look like, and how to transition from their current process into the new one. You have to bring your people along, and so the biggest challenge is actually the people and the culture. “At the end of the day, we know that our technology works,” he concludes.

“But there is a lot of configuration required for the particular nuances of every organisation, and so it’s important to project manage that in the right way. If you can do that, you’ll end up with a cost-effective and efficient process that meets all of your legal requirements.”

Article originally published in HCA Magazine, March 2022.