December 2022

The Changing Nature of the Payroll Professional

By Eric Hachmer

Often when we talk about disruption, the conversation can quickly move to technology and the role it plays in driving innovation in mission critical functions, including global payroll. However, while technology is important, it is more often an enabler that payroll professionals can use to drive disruption and better business outcomes.

Such is the case with global payroll. The ability to disrupt the current operating model and unlock the power of the function will be enabled by technology but driven by frontline payroll professionals and the changing nature of their roles.

Based on recent research, including the EY 2021 Global Payroll Survey, we know that the future looks bright but also different for the payroll professional than it did just a few years ago. The skills required, and the value they bring to the business, will change dramatically over the coming years as payroll evolves from the day-to-day execution of a routine process to a source of strategic insights that support the organizations’ business imperatives. Exciting times are indeed coming for the payroll professional, and these will be driven by the following three key themes:

  1. Modern and Tech Savvy: Today’s payroll professional is increasingly digitally native and expects to work with new and emerging technologies. But EY payroll professionals expect the days of simple tools and manual processes to be behind them. They expect to be equipped with modern technology that includes artificial intelligence (AI), machine learning (ML), and integrated digital platforms that make work easier, more automated, and more relevant to the broader business objectives. The good news is global payroll continues to undergo significant transformation with heavy reliance on new and emerging technology to enable innovation.

  2. Career Pathing: As broader HR and finance functions evolve, the primary responsibility of the payroll professional is shifting—from providing payroll accuracy and timeliness to being a more integrated financial stakeholder offering compliance, risk avoidance, and data-driven insights. This allows payroll professionals to provide key insight in areas such as environmental, social, and governance (ESG), HR strategy, and the new way of working. The payroll function is increasingly seen as an integral part of the broader finance function. This is enabling organizations to attract talent that is innovative, agile, and looking for a broad set of workplace experiences to develop their careers.

  3. Regulatory Expert: The increasing use of technology is reducing manual effort and freeing up time for more strategic and higher-value work. We are seeing payroll professionals leverage this new capacity to elevate their roles as regulatory and compliance experts. It’s no secret that legislative complexity continues to increase at a local and global level. Organizations are increasingly looking to the payroll professional to provide insight and recommendations that can help guide a much broader set of priorities across the finance and HR functions, such as gender pay equity, environmental and social indicators, or potential fraud. These are all C-suite topics gaining attention and thus, increasingly rely on key roles like the payroll professionals as a source of accurate data, actionable insights, and policy recommendations that inform the broader organizational imperatives.

EU Gender Pay Gap Legislation

A great example of this is the ability to take a proactive stance on key legislative changes, such as the new European directive on gender pay gap reporting.

As referenced in a recent article by Michael Van Den Brand, EY EMEIA Global Payroll Operate Leader, wide-ranging gender pay gap reporting obligations are expected to pass into EU law as early as 2024, and companies across the trading bloc face a race against time to achieve compliance and manage pay inequality. Under the terms of the draft European Commission (EC) directive, female employees will have the right to request detailed data revealing how their pay compares with the pay of male colleagues who are engaged in the same work or work of equal value.

The EC’s draft directive would legally compel employers with at least 250 employees to publish an annual gender pay gap report containing the following information:

  • The proportion of female and male workers receiving complementary or variable components.
  • The proportion of female and male workers in each quartile pay band. This would involve ranking all employees based on their gross pay, from highest to lowest, dividing the workforce into four groups of equal size, and calculating the proportion of men and women in each group.
  • The average and the median pay gap between all female and male workers—broken down by basic salary and complementary or variable components, such as cars, bonuses, overtime allowance, in-kind benefits, and pension contributions.
  • The pay gap between female and male workers by categories of workers with similar value of work.

Companies will most likely be aware if a gender pay gap exists within their organization, especially if they are based in jurisdictions such as the United States and U.K. where top-level reporting is already required. Few organizations, however, currently invest the time and effort needed to fully understand what is propelling such inequality. The proposed EC directive will shift the center of gravity. Companies will be obliged to collate pay gap data so that, by default, they will have the insights to start addressing the problem.

The draft EC directive has elevated the gender pay gap from an important HR issue to one that now deserves full C-suite attention. With an estimated two years until the directive could pass into law, companies may consider fast-tracking the process of assessing and addressing any pay inequality issues that may exist, making incremental adjustments as required and introducing guardrails to prevent future issues.

Taking a proactive approach to this new directive and being equipped with the right data and insights at an organizational level will mean relying on the payroll professional to ask better questions, use technology to bring the right data together, and bring actionable insights for the C-suite to stay ahead of the changing legislation.

Most Important Skills

So, if that is the role of the future, what skills will be most important for a payroll professional? One of the biggest themes will be the continued shift from process professional to true business collaborator. Payroll process competency is assumed and is quite simply table stakes. For payroll professionals to elevate their roles to business partners, they will require a new and enhanced skill set that couples core technology with cognitive and interpersonal skills, including the following:

  • Critical Thinker: With more accurate and readily available data, there is an opportunity for the payroll professional to do more and provide their insight on key issues to stakeholders. A payroll professional of the future will be a problem solver and require the skills to identify an issue, consider a broader set of potential solutions, and decide on which parts of the organization to engage.

  • Active Communicator: As the role evolves and interacts more broadly across the finance and HR functions, the ability to communicate effectively with different audiences will be an important trait. The payroll professional will continue to be the professional on process and compliance but will also need to effectively and efficiently share and communicate these insights in a vastly different way given the changing nature of the audience and the types of questions being asked.

  • Strategic Advisor: Payroll may continue to be a core function, but the outputs will have the potential to play a more strategic role in the organization. Employee retention and engagements, social purpose, and risk and fraud avoidance are all key themes where the C-suite increasingly directs its focus. The ability for the payroll professional to elevate the function so that it enables more meaningful conversations and better decisions in these areas will require a more strategic mindset across the entire payroll function.

In summary, the global payroll space will continue to advance rapidly with new organizational needs, changes in technology, and a constantly evolving mandate. At the heart of this are the global payroll professionals who have a unique opportunity to elevate their roles by expanding their skill set, mandate, and strategic value to the organization.

The views reflected in this article are the views of the author and do not necessarily reflect the views of the global EY organization or its member firms.

About EY’s Global Payroll Operate

EY’s Payroll Operate provides managed payroll services in over 159 countries designed to transform companies’ global payroll function and create a distinctive employee experience via one team, one methodology and one next-gen technology platform. We are part of GCR’s managed services portfolio. Feel free to reach out to any of the team members above for more information.

Eric Hachmer is EY Americas Payroll Operate Leader.
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