5 Strategic Moves for Modernizing Public Sector Payroll

In this article, we discuss:

• Preparing for Technology Change
• Connecting Data Across and Beyond Payroll
• Elevating the Payroll Practitioner Experience
• Embracing AI and Automation
• Meeting Employees' Evolving Pay Expectations

Payroll touches all parts of an organization and every person within it. Yet, payroll teams are often viewed as transaction processors. As both regulatory complexity and employee expectations increase, there's more opportunity for payroll professionals to become strategic advisors.

According to a new Workday Payroll survey, 92% of respondents recognize the strategic impact of payroll, and 89% say their current payroll solution could do more to uncover insights that inform the strategic direction of the business. This highlights an opportunity for payroll practitioners to expand their influence.

But many governments are still operating on siloed, outdated, complex, and inflexible systems. This can impede the ability for payroll teams to drive improvements and share insights-and hinder the ability for governments to better serve their constituents.

According to the report from Payslip, "Global Payroll Survey Results: What Needs to Change," 64% of payroll practitioners feel their payroll operations lack the agility, flexibility, and innovation required to support their organization. That's why more governments are looking to an integrated cloud-based payroll system that can free up teams to focus on more strategic pursuits-helping shape organizational growth such as optimizing current labor costs and determining areas in which to fund additional staffing.

To help guide governments to a new approach to payroll, we share five strategies that can better prepare them for modernization and transform payroll from an undervalued back-office function into a central element of a broader human capital management (HCM) strategy.

1. Prepare for Technology Change

Realizing payroll's full potential requires more than just adopting new technology and processing power. It's an opportunity to rethink what is and isn't working to truly transform operations.

In many governments, payroll-related complexities are introduced through negotiations with unions and the need to meet contractual requirements. Often, governments agree to these requirements without considering the complexities and the administrative overhead of meeting them. Items are periodically added to payroll processing checklists that compound manual effort.

With government leaders requiring more of their payroll systems than ever before, they need to ensure systems have the necessary data and processing capability to minimize any additional manual burdens on the payroll office.

Governments investing in new tech should comprehensively analyze legal and regulatory agreements to ensure the new system aligns with requirements. They should also expect to uncover pay discrepancies or other inconsistencies during implementation. For example, it's not uncommon to discover errors in a legacy system while parallel testing with a new system.

"By modernizing those areas [data and tech], taking out any sort of low-value work, organizations gain a payroll function that can be more dynamic, more efficient, and serve the organization's overall workforce."

David HudsonVice President of Product ManagementWorkday Payroll Products

Next, to provide a seamless transition to the new technology, governments should build a communication plan for policy changes, and set expectations for employees about what might happen at go-live. Transparency with governing boards (such as city council and state legislators) about the potential for unexpected issues at go-live is critical. Pulling in union leadership early will help minimize surprises and preparing appropriately (for example, backfilling positions, assigning project teams) will ensure operational continuity.

2. Connect Data Across and Beyond Payroll

Government leaders can gain valuable insights into employee performance, productivity, and engagement as well as overall operational health by analyzing a broad set of data points. Unfortunately, the vast majority of organizations don't integrate payroll data into their larger HR and financial systems. Potential insights are harder to surface when data is dispersed across a patchwork of siloed systems.

In fact, 2 in 3 payroll practitioners say that data changes require manual auditing and reconciliation in their current payroll systems. Not only is fragmented, disconnected data woefully inefficient, it also introduces significant risk of payroll errors. Often, the impact of data fragmentation results in extensive manual auditing and review of payroll results in an effort to track down and correct errors before payroll is finalized.

Unifying HR, finance, and payroll systems on a cloud-native platform removes data silos and ensures connected, consistent, and real-time data leaders can trust. And that accessible payroll data allows you to make adjustments to what you're doing and how you're working with your employees.

Additionally, a unified solution can leverage the entire worker record in automating validations and audits of payroll results so that the payroll team can focus on addressing the identified problems rather than spending time just finding the problems. Finally, a unified solution can use the entire worker record to drive eligibility rules and conditions that can ensure accurate data from time reporting through payroll processing-all without manual intervention.

For example, payroll data provides details on labor costs by department, program, service, or other attributes, offering insights to support better decision-making and compliance. From a workforce planning perspective, payroll data showing more overtime costs in one department versus another can prompt leaders to accelerate filling vacant positions or realize the need for additional staffing.

AI and automation can handle more of the essential and tedious tasks, such as inspecting and validating data, that consume so much of payroll's time.

3. Elevate the Payroll Practitioner Experience

Payroll administrators feel overworked over long hours of time-consuming data entry and nonstandard processes that occur in every payroll cycle. According to the Portfolio Payroll Salary Survey, 79% of payroll practitioners feel stressed, frustrated, and underserved by technology.

Elevating the approach to payroll and time tracking is a hugely important step to strategic HR. Workday research shows that HR functions that spend more than 15% of staff resources on administrative payroll work were twice as likely to be viewed as nonstrategic.

"Payroll professionals are so overworked and need help from technology to do their work more easily," said David Hudson, vice president of product management for Workday Payroll products. "By modernizing those areas [data and tech] and taking out any sort of low-value work, organizations gain a payroll function that can be more dynamic, more efficient, and serve the organization's overall workforce."

That's why the best payroll experiences are designed to help all employees. Streamlining and elevating the payroll practitioner experience can boost productivity and engagement, as well as help you hold on to your best talent.

Adopting standardized processes and leveraging the machine learning (ML) and AI embedded at the core of Workday can have a significant impact on the payroll practitioner experience.

4. Embrace AI and Automation

As mentioned above, lean payroll teams are shouldering workloads that seem to only be increasing-and their traditional tools of the trade do little to ease that burden.

That's where AI and automation come in. Advances in AI, hyper-personalization, and in-the-flow-of-work technology allow HR to be part of employees' everyday work lives. Employees can manage their time off, get specific answers to benefits-related questions, or find relevant development opportunities faster and with more context.

This technology won't replace payroll professionals-but these advanced technologies can augment human talent to create a payroll function that's far more efficient and better able to serve the organization. And many payroll practitioners agree-43% of them feel leveraging automation to surface data is the most important way that payroll teams can respond to rising strategic expectations.

AI and automation can handle more of the essential and tedious tasks, such as inspecting and validating data, that consume so much of payroll's time. For example, organizations can schedule automated audits to surface exceptions in an instant or tap real-time dashboards and data visualizations to access trends and metrics.

And when technology is effectively added to an organization, the results can be game changing. Tulsa County, Oklahoma, decreased payroll processing time by 50%, and Clark County, Washington, completes payroll 60% faster.

64% of payroll practitioners feel their payroll operations lack the agility, flexibility, and innovation required to support the business.

5. Meet Employees' Evolving Pay Expectations

Pay has always played a major role in attracting and retaining in-demand talent. But in recent years, employee focus has expanded beyond their paycheck to issues of pay transparency and greater flexibility in how and when they're paid.

In an era of near-constant change, payroll teams should be able to adapt to the evolving needs of the organization. New technologies such as on-demand pay, self-service pay modeling, and geo-fence time tracking give employees more flexibility and control of their work lives. These capabilities also help organizations attract and retain skilled talent.

Take on-demand pay, for example. With a configurable system, payroll teams can easily establish parameters, such as how often an employee can make such a request or a minimum number of hours they have to work first, and then automate the verification process for those parameters. Payroll teams can also configure tax reconciliation and compliance specifically for on-demand pay.

Workday can help government payroll practitioners in a number of ways. Self-service capabilities and an intuitive interface allow employees to quickly get the information they need, anytime and anywhere, on any device. The employee pay self-service dashboard empowers users to compare pay slips and pay components over time.

Workday can also help workers during difficult times with flexible payments and deduction options, such as pay advances and loans. Payroll can set up repayment plans and track payments and deductions with a centralized process. Personalized insights and transparency into total rewards offerings and programs elevate the employee experience for productive engagement.

To learn more about how Workday can help governments with their payroll, visit our website.