Payroll Strategy Development: Payroll on a Page Part 3 – The Payroll Value Proposition

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Jaco Van Der Merwe
04/12/2022

What is the payroll value proposition? Perhaps we should first understand what is a value proposition? Borrowed from our colleagues in the marketing department, it simply means “an innovation, service, or feature intended to make a company or product attractive to customers.” Using Osterwalder’s model, we have identified who our customers are, what type of relationships we have with them and how we reach them.

Now we focus on payroll. And this is not a daunting analysis since we regard payroll as we regard all other functions of the business. Any organisation pursuing growth, knows that it needs to understand the balance between efficiency and effectiveness. The biggest organisations in the world, who pay thousands of workers, will need bigger teams of people dedicated to payroll than a sole proprietor whose payroll strategy is surmised in his dealings with his accountant. Fact is, every organization needs to have a set of principles and a plan, that addresses a mechanism to compensate the people, or person, for their work towards achieving the organization’s goals, in an accurate, compliant and timely fashion. This plan is a payroll strategy.

Viewing payroll as a value proposition, from a value creation perspective, requires an innovative, service orientated, and solutions focussed mindset. Intimidating, I know. It also requires the simple ability to listen. If we sit quiet for a moment and think about the best approach for us to determine how to enhance the payroll value proposition, the result will ultimately lead back to the people that we are creating value for. It is after all a supply and demand economy and if you don’t supply what your customers demand, they will look for it elsewhere. For example, if you don’t give governments their dues on time, they will go and look for it in their law enforcement and investigations department.

Looking back to the customer segments that we have identified in Payroll on a Page Part 2 – Customers, we know who to ask the very simple question ‘How can we do better?’ And hopefully the reflection on who you are striving to create value for would have already prompted thoughts about what exactly it is that they need you to give them.

As an employee you are a customer of the payroll department. Have you ever felt that the user experience could be improved? Are you able to contact the person responsible for processing your pay directly when you have questions about your payslip? Would you like to receive your pay when you need it, instead of once a month or every two weeks? Would you like to be paid in different currency, like crypto? It is important that payroll be attuned to the needs of this customer segment since payroll is after all the mechanism that facilitates the very essence of the employee-employer relationship. This perhaps explains the tendency for payroll to report into HR.

People managers will have definite ideas about shortening turnaround time on reporting requests and improving access to people analytics which drive key business decisions. Self-service is taking off atunprecedented levels, and as we pass more and more of the administrative duty to managers with ESS portals, we need to ensure that we are truly adding value with such system implementations, and not merely moving work from the back office to the front office, distracting managers from logging billable hours and thereby building poor data quality into our processes.

HR and Payroll strategies are inextricably linked, due in most part, to the multiple data pieces shared between the two. But, like payroll, HR as a function also serves as a mechanism that facilitates the employee-employer relationship. Therefore, united in a desire to provide employees with the moments that matter. Additionally, as a customer segment, HR needs support from payroll from a compliance perspective. This is truly where income tax and labour laws meet in situ.

Finance’s responsibility to account for all of the expenses incurred by the business in its pursuit to convert key resources into its product offering, drives the interaction that it has with payroll. The payroll value proposition for this customer segment should therefore be focussed on the translation activities that payroll performs. Payroll essentially processes business decisions into numbers that Finance can then work with.

Understandably, it is difficult to view the interaction between payrolls and governments from a customer centricity point of view because the relationship is mandated or forced. That does not mean however, that a customer centric lens will not give us a useful perspective of payroll. And we know that caution is better than cure when it comes to anything related to compliance. This arguably defines the bare minimum of the payroll value proposition.

Our focus, at this stage, should be on understanding what exactly it is that we need to provide to our customer segments against the backdrop of how we deliver it, which we defined earlier in part 2 under channels used to reach our customer segments. In the analysis of these responses lie the answers to what the payroll value proposition should look like for each individual organisation. There is truly no one-size-fits-all approach. But there is best practice, benchmarks and knowledge sharing which can bring fresh and new ideas from outside the organisation to the table where each organisation’s payroll value proposition is discussed

In the next part we will take a closer look at how we create value for our customer segments, and what tools we need to do it as well as who will we need help from to create our value proposition.