The payroll industry is adopting ever more advanced automation technology but how and where can it be best deployed to deliver cost savings while keeping customers – HR people and their employees – happy?
Robotic Process Automation (RPA) has already made significant headway across several business processes − many companies are deploying RPA technology on a commercial scale, especially in banking and finance.
The technology is especially adept at processing – and making decisions on – large batches of data quickly and accurately. This not only improves operational efficiency but frees up skilled staff to focus their energy on more creative and rewarding tasks, improving employee engagement and job satisfaction. RPA is already doing the heavy lifting in areas including processing loan applications and insurance claims.
Of course, there is already significant automation in payroll, with very advanced platforms capable of handling hundreds of thousands of complex gross-to-net calculations. However, the industry has been slower to adopt automation technology because decision trees tend to be more complex and, typically, not as well documented as in other industries.
That looks set to change as artificial intelligence (AI) and machine learning (ML) technologies become better at helping companies automate ever more complex processes. We are starting to see the adoption of more sophisticated AI and ML systems capable of handling multi-step payroll processes ¬– even helping to drive their simplification.
But payroll is not just about number crunching. It's about dealing with people – HR personnel, employees, tax authorities and regulators – professionally, sensitively and intelligently. It still needs the human touch. How do multinationals get the most from automation, while handling the diverse, and often nuanced, differences in language, regulation, culture and social norms around the world?
We have seen how the traditional shared service centre model has failed to deliver the efficiencies and cost savings expected from consolidating all payroll functions into large regional centres – the 'non-technology' barriers proved too difficult to surmount without significantly higher headcount than anticipated.
At TMF Group, we've always recognised the importance of having skilled local payroll experts working closely with local employees and tax authorities. Our business is founded on the presence of in-house, in-country experts in over 80 jurisdictions. At the same time, this local service is underpinned by a global technology platform delivering timely, accurate payroll schedules, reports and insights across the whole organisation.
So how should we make best use of advancing automation capabilities? Where and how should we implement the technology to best effect to improve the accuracy and performance of payroll systems, while maintaining and improving employee satisfaction and regulatory compliance across different jurisdictions?
One approach that has been gaining traction over recent years is to separate payroll into front- and back-office functions.
Specialist, front-office tasks and interactions are handled by real people – native speakers who understand local regulations and cultural norms.
Less specialist, back-office functions can be handled by ever more capable technology, freeing payroll experts to tackle higher-value tasks.
To derive the most value from automation capabilities, such functions can be handled in hubs in lower-cost locations where geographic borders meet in a given region. With enough scale to benefit from automation, service delivery is carried out with the right mix of native speakers backed by instant access to specialist local teams. The commercial benefits of separating transactional work in the hub from specialist in-country activity are clear.
For payroll, the boundary between specialist front-office functions and process-driven, back-offices may shift over time but will never disappear. The key will be to adapt the business model to get the most out of payroll automation without losing human expertise.
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At TMF Group we make it our business to keep up-to-date with market and technology changes through our wholly owned local office network. Our HR and payroll services have been recognised by market analysts Everest Group and NelsonHall for global coverage, delivery capabilities, scope of services and innovative technology solutions.
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