One consequence of that outdated perception is that organizations don't invest in the latest technology to enable payroll to act more strategically,

Payroll professionals to the top brass: "We get no respect."

So say the results of the "2019 State of Payroll" study conducted by the American Payroll Association on behalf of Kronos Inc. The survey of 651 payroll professionals from North American companies found that most feel that top management doesn't see them as a strategic partner.

"Historically, many organizations have viewed payroll as a tactical function — due to its transactional nature, heavy administrative requirements, and because payroll teams have often struggled to demonstrate how they deliver strategic value to the organization," the authors write.

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"But times are changing. More organizations are investing in efforts to track KPIs and measure the business impact of internal processes — including payroll," they write. "Significant changes to state labor regulations like minimum wage increases and mandatory family and medical leave, as well as federal proposals to change the Fair Labor Standards Act overtime threshold and the W-4 format, are putting payroll at the forefront of organizations' compliance strategy. Ultimately, these factors are pushing organizations to transform the role of payroll."

Aptly titled, "Changing the Perception of Payroll: How payroll can raise its strategic profile and deliver critical business insights," the report found that while the majority (78 percent) of payroll professionals view payroll as a strategic business function that can provide critical insights, engage employees and support organizational goals–most feel they lack senior support.

Indeed just one in five (22 percent) say their C-level executives view payroll as capable of being a catalyst to support strategic business growth. Many even don't think their functional department leader believes that, with only 28 percent getting the support of those managers.

"As the adoption of payroll technology accelerates, payroll teams have new opportunities to become strategic contributors," the authors write. "But that can't happen until payroll shakes the perception that it is solely a tactical, back-office function."

One consequence of that outdated perception is that organizations don't invest in the latest technology to enable payroll to act more strategically, according to the report. Nearly half (45 percent) of the respondents say their payroll solution is at least six years old, while more than a quarter (27 percent) say their payroll solution is 10 or more years old.

Processing payroll takes more than an entire day at three-quarters (72 percent) of organizations, while half (50 percent) of payroll professionals say they still do not track key performance indicators. Just 10 percent say they don't know basic performance metrics like the cost of payroll per employee, "further perpetuating the myth that payroll is a back-office cost center."

"Trying to make a strategic contribution with an outdated payroll system is a huge challenge," the authors write. "With their limited capabilities, rigid reporting, clunky interfaces, and reliance on disparate data sources, older payroll systems get in the way of today's modern payroll teams. The result? Inaccurate, inefficient payroll. No insight into workforce data. Poor employee experience."

Respondents say the top "must-haves" in a new solution include security access options based on user role (94 percent); on-demand reporting (89 percent); frequent compliance and regulatory updates (85 percent); real-time reporting and analytics (84 percent); and employee self-service (82 percent). To improve data quality, eliminate duplicate data-entry and achieve real-time visibility, nearly two-thirds (60 percent) prefer a payroll solution unified with time and labor management and/or human resources.

"Payroll sits at the intersection of business data and employee data — the sweet spot for delivering critical insights into the health of an organization," the authors write. "Without effective reporting tools, it can be difficult to accurately assess issues like pervasive overtime, time theft and low productivity. And when you can't see these challenges clearly, senior leadership can't develop the best strategies to address them."

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