Payroll operations remain at the core of any company with more than one employee. Compensating people in a timely and accurate manner is crucial to ensuring employee engagement and retention. Maintaining a payroll system you can trust is an absolute must, especially in today’s rapidly changing workplace landscape.
Some major payroll trends may affect how many companies operate in 2023. Staying on top of these trends will help your business thrive. Here are the trends we anticipate making an impact on the world of payroll.
Transition to More Functional Software-Managed Payroll Systems
It’s no secret: the world of business is going digital. Payroll is no exception to this transition, and payroll operations have long been transitioning to software to fully manage payroll. Companies that choose to take advantage of the many features offered by a fully digitized payroll system have likely already begun exploring how these systems can integrate seamlessly with other operations in their business frameworks.
Adopting payroll software has long been proven to provide myriad benefits, and companies will take full advantage of increased benefits in 2023 to improve the experience of their employees and payroll staff.
Increased Efficiency and Accuracy
One major benefit to software-mediated payroll operations is that it allows payroll specialists to do their jobs more efficiently and effectively. Payroll software stores data and performs calculations that would otherwise be the direct responsibility of payroll staff. When these simple administrative tasks are automated, it leaves payroll personnel free to focus their energy on other projects.
Automation of certain payroll processes can also decrease errors, which are a major problem in payroll departments. A survey performed by the Workforce Institute at Kronos Incorporated showed that 49% of American workers will start searching for a new job after just two inaccuracies in their paycheck. This isn’t surprising, as 65% of workers live paycheck to paycheck, meaning any problem with earned income could have a major effect on livelihood. Companies will be focused on decreasing payroll errors in 2023 as they attempt to improve employee satisfaction and retention.
Automation can reduce errors not only to payment calculations but to compliance requirement adherence as well. Payroll departments are required to strictly follow all federal, state and local regulations when it comes to paying their employees, and failing to do so can have major legal consequences. It is important to have a system that automatically updates when these regulations change in order to maintain compliance and avoid penalties.
All-in-One, Self-Service Systems
Businesses are moving away from hiring outside vendors or payroll services for payroll operations, preferring to keep these functions internal. When payroll operations required serious overhead, outsourcing made sense. Now, with the help of automation, a payroll department can be only a handful of workers and an investment in cloud computing.
Making the move to all-in-one, self-service systems promotes transparency and provides greater control over interactions with employees and data. Cloud-based human capital management (HCM) systems that include payroll applications are becoming the new norm. Popular examples include Workday, Oracle Cloud, UKG and Ceridian Dayforce.
All-in-one systems also have the added functionality of interdepartmental communication, making it easier than ever to work and communicate with other areas within the company, especially HR. Stand-alone payroll software will become less popular in the future, with companies opting instead to invest in full-suite HCM systems that can optimize companies’ workflows in a single convenient application. HCM software value is steadily growing, and is projected to increase from $30.8 billion in 2019 to an estimated $33.04 billion by 2024.
Data Insights That Inform Strategy
The data collected by a payroll software can be applied to more than simple day-to-day payroll operations. In today’s world, data is king, and the insight it can provide to a company is an invaluable tool for pinpointing a company’s strengths and weaknesses and informing improvement strategies. In 2023, companies will be putting greater focus on analytics to improve all areas of business practices, including payroll.
Increasing Convenience and Personalizing the Employee Experience
Today’s workplace culture is experiencing unprecedented change and upheaval. Employers must find ways to adapt to the needs and demands of their workforces so they stay engaged and satisfied. One way payroll software can help companies achieve these goals in 2023 is by providing a convenient, user-friendly payroll interface that offers more personalized and flexible options for payment.
Self-Service and Mobile Access
Ensuring your company’s user interface offers mobile capabilities is no longer optional, especially as younger generations enter the workforce. Wendy Clark, brand and marketing strategist for Coca-Cola’s global brands, said, “If your plans don’t include mobile, your plans are not finished.” Ensuring that timekeeping and payroll applications are accessible via mobile devices will be key to remaining competitive in 2023.
Another growing area within digital payroll systems is self-service options to allow employees to perform essential tasks, such as submit their own timekeeping corrections for review, trade shifts, see their performance history and view past and current pay stubs. Allowing employees to view this important information from the comfort of a mobile device is revolutionizing the payroll landscape and we expect it’ll become more common across 2023.
Flexible Payment Options and On-Demand Pay
Cash payments and paper checks are increasingly uncommon in the digital age, with 93% of all employees now being paid via direct deposit. Direct deposit has been around for a long time, and reduces the risk of theft, fraud and missing checks. As we move forward into 2023, we expect to see an even more convenient payment method: on-demand pay.
On-demand payment, also sometimes referred to as early/earned wage access (EWA), gained popularity during the COVID-19 pandemic as a way for employers to increase employee retention by decreasing financial burdens and stressors.
A study performed by Instant Financial, an EWA business, showed that an increasing number of Americans are worried about their finances in between paychecks (54% in 2022 vs. 29% in 2018), have trouble making ends meet in between paychecks (51% in 2022 vs. 24% in 2018) and would prefer to receive their wages on the same day they work (79% in 2022 vs. 49% in 2018).
Based on these findings, we expect to see more companies offering all three payment options in 2023 as they attempt to satisfy and retain employees from every generation.
Navigating the Gig Economy
Statista estimates there are currently around 57.3 million gig economy workers in the United States alone. The American workforce is placing increasing value on flexibility and work-life balance—two of the main benefits of gig work. It’s not hard to see why 77% of gig workers report satisfaction with their current employment. As the number of freelance workers continues to rise, payroll software will need to adapt in order to meet more non-conventional needs. We expect that in 2023, innovations made by payroll software companies will include changes geared towards this type of worker.
Choosing the Right Payroll Software
Whether you need to upgrade your current payroll software or your company is still relying on manual payroll workflows and you’re interested in purchasing a payroll system for the first time, a payroll software can enhance your company’s daily operations. Sorting through the numerous options can be a challenge, so we’ve assembled a list of our top choices for modern payroll software in 2023 for your convenience.