Unleashing the Value of Payroll Requires Respect, Invested Leadership

We must recognize that payroll influences everything, and it must be respected and nurtured accordingly, a payroll expert said on May 10.

A lot has changed over three decades, but none more so than the expectations and importance of payroll, said Pete Tiliakos, principal analyst, and strategic advisor for 3Sixty Insights. Tiliakos spoke to a group of payroll professionals at the 42nd Payroll Congress, where he presented the first ever Payroll Professional Confidence Index. The study sought to capture the sentiment of payroll professionals worldwide and gathered input from 739 payroll professionals in 28 countries and five continents.

The need for strategic investment in modern payroll operations has never been more pressing, said Tiliakos, a sentiment echoed by many of the study’s participants. According to the study, 74% of payroll professionals said they lack confidence that their organization is doing enough to unluck payroll’s full value. The lack of confidence is mainly due to lack of modernization among many employers. Only 12% of participants said they worked for organizations with modernized or transformed payroll processions.

While an overwhelming majority of participants said they were cautiously optimistic for the future, most are concerned with AI automation and digitalization, along with the increasingly shrinking talent pool for skilled payroll experts. Many professionals are concerned about their changing roles and how it may impact their careers, he said.

According to the study, many payroll professionals feel undervalued and overlooked for the strategic impact they can provide, with only 39% of respondents saying they are perceived as “centers of expertise.” Intelligent automation and digital technology are rapidly shaping the payroll industry yet lack of respect for payroll professionals endures, said Tiliakos.

One of the many ways organizational leaders can support payroll is through greater financial investments, ensuring the long-term success of their payroll operations, said Tiliakos. Participants named cloud technology, analytic insights, and mobile employee self-service as some of the most impactful digital technologies that can enhance their payroll operations.

However, investing in new technology won’t suffice to help unleash the power of payroll. Along with the implementation of new technology, most respondents are seeking education and training, along with a “seat at the table” for informed and proactive decision making, Tiliakos said. Investments “must be underpinned with executive support to champion payroll as a center of expertise,” he emphasized.

One of the study’s most surprising results was the lack of partnership noted between legal and payroll departments, a relationship that is essential to achieving success in an ever-evolving payroll compliance landscape.

Many employers view payroll as payday processors, ignoring the many critical functions the departments serve, said Tiliakos. “Payroll is like an iceberg. It’s so much more work and risk than what we see on the surface,” he said.

According to the study, payroll operations where executive relationships are strongest are delivering nearly three times the value and strategic impact to their business, “fundamentally outperforming those lacking executive and cultural alignment for payroll prioritization.”

Organizational leaders must not only invest financially but must also be personally invested in championing and prioritizing payroll as trusted advisors to the business, said Tiliakos. Technology can empower payroll leaders to activate their skills, while executive support can help increase the return on investment for their payroll operations.