How to Raise the Profile of Payroll from "Pay Execution" to "Pay Equity"

There are 5 million job titles within payroll on LinkedIn right now. There are also half a million payroll companies, 60,000 payroll jobs, and 16,000 payroll groups.

It’s safe to say there's a lot going on in the payroll industry at any given time. 

And yet, despite the fact that payroll specialists are at the forefront of adjusting to the new normal post-pandemic reality, there’s still a way to go before payroll has a distinctive voice and a seat at decision-making tables.

Jaco Van Der Merwe sat down with Barbara Hodge to talk about why it's time for payroll as an industry to get together to discuss what we can do, what we are good at, and how the fluid boundaries can be redefined as technology advances.

LISTEN to the podcast here.

Jaco is a passionate payroll professional, with the moniker ‘The Payroll Pundit’, one he earned a few years ago, because, as he explains: “I always have something to say about payroll. Now, I have the opportunity to present to the world the musings of a payroll professional about how we operate and what could be done better.” 

The importance of technology in the payroll industry

Jaco says that technology enables payroll to deliver on other aspects of intersections that they haven't traditionally executed in the past. During the pandemic, for example, we saw payroll rise to the challenge of being agile and responding to various changes in laws, relief schemes, and more. Payroll was at the forefront of doing that by being responsive and by owning the process.

“At this point in time, the technology is growing at a pace that allows payroll to justify a seat at the table when we talk about strategic matters.” - Jaco Van Der Merwe

This is the crux of what we want to dive into today, the importance of technology process automation to enhance the payroll value proposition. Many people still treat payroll as something that's dull; something that happens behind the scenes; a field you rarely think about until something goes wrong. The other side of the debate is that there's a lot more that could be delivered in terms of value that leaders might be overlooking within payroll.

With the advancement of technology, we are beginning to see the intersections that are possible. Companies are creating a space for payroll to actually own processes and drive business initiatives because they are able to look upstream and downstream across the entire payroll process, which is facilitated by things like robotic process automation and artificial intelligence. 

Here's an example that Jaco gives us:

“Artificial intelligence is checking and verifying whether processing has been completed correctly. So certain rules built into the system can determine whether someone is gaming the system when they are submitting a timesheet that is perhaps inaccurate. Or, at the same time, if someone is clocking for billable hours, but on the HCM system show as on vacation, we now have systems that pick up those discrepancies and alert us to them so that we can do something about it. Whereas in the past, that was all manual intervention; a person had to sit and do that.”

Understanding the opportunity for payroll in companies

In many organizations the payroll department is the department that has an exact idea of how many people are employed. Jaco says:

“Payroll is the single source of the truth, because that is the last point before the information goes into all sorts of different places: to the business, to the government, to the employee. And really, what I've seen in the past couple of years working on payroll transformation and implementing HCM systems – specifically where organizations are seeking a single source of truth – the first place they go to for data is the payroll department. Because we are generally the people that know the latest information about promotions, job changes, hires, terminations, and all those kinds of things.”

Raising the profile of payroll from ‘pay execution’ to ‘pay equity’ 

“Consider that we require so many data points from our employees to be legally compliant. We need to know their names, sometimes their family status; we need to know their demographic information, taking in simple data points like race, gender, size of family or level of education. And just putting next to that another data point, for example, total compensation, can tell a story about how many men we have that are paid more than a certain amount? How does that compare to female counterparts? How are our pay practices distributed across races or regions and locations?” Jaco says.

When leaders look at the data within payroll from a holistic perspective, the role of the function can bring huge strategic change to the issues of the day as it relates to talent.

If you like the audio medium, and would like to hear a detailed interview that dives much further into the opportunities, the people, and the systems you need to leverage the immense data pools that sits within your payroll department, listen to the SSONext podcast with Barbara Hodge and Jaco Van Der Merwe here.