Editor’s Note: Jaco van der Merwe is the Global Payroll Transformation Lead at Kantar. In his current role, van der Merwe is engaged in effectively building, leading, and managing a global payroll review leading to implementation of approved models covering standardization, technology processing, reconciliation and accrual management, resourcing, reporting, and compliance associated with global payroll. A native of Johannesburg, South Africa, van der Merwe began his career in payroll almost 15 years ago, where he worked for an outsourced service provider that operated across multiple industries such as consulting, engineering, mining, energy, and hospitality. In 2013, at the age of 27, van der Merwe joined forces with two business partners and co-founded an outsourced service provider that specializes in full-spectrum outsourced HR. During this time, he was also pursuing an undergraduate degree at the University of South Africa while taking weekend classes for a National Diploma in Payroll Administration. Following graduation, he joined Kantar (then Millward Brown), while studying toward an MBA, which he completed in 2018. Van der Merwe managed payroll operations across the Africa and Middle East region while representing payroll on various global projects. Van der Merwe now lives in Toronto, Canada, where he recently gained the Payroll Compliance Practitioner designation from the Canadian Payroll Association (CPA).
What is the impact and consequence of the COVID-19 pandemic to global payroll?
As with many of the disasters we face in life, COVID-19 was sudden and unexpected. Initially, our primary response was reactionary. Not only were there daily changes to legislation and reporting requirements, while our companies made difficult strategic decisions about furloughing workers and implementing salary reductions, but we also had to learn how to work virtually and remotely. I witnessed payroll as a profession come together in extraordinary ways to adapt, modify ways of working, and share knowledge. Vendors were hosting discussion forums, webinars, and Q&As with experts. Payrollers created communities to share updates, news flashes, and virtual coffee sessions to check in with each other. I believe it is all these things that have brought us closer together, which enabled us to keep paying our people accurately and on time. And this generated some much-deserved credibility for the payroll profession.
A year later, with many of us still working from home, we have come to terms with the new normal. We have adapted to virtual team meetings and rosters that determine whose turn it is to go to the office to collect the mail or print the pay slips. But the pressures to react with more agility and skill than usual have not yet subsided completely. Government relief measures are still changing, albeit less frequently. New reporting requirements have been imposed, bringing about perhaps the most challenging and arduous year-end reconciliation and reporting activities, and business endeavors have changed as managers try to pivot creatively. This requires more problem-solving and strategic thinking skills from the modern-day payroll professional.
Are there any lessons we can learn from the pandemic?
There are a few important lessons for us to learn from the pandemic. First, a lesson in preparedness. It is vital to have documented business continuity plans that enable the prevention of and recovery from potential threats. By their very nature, these plans should protect payroll assets, operations, and staff to ensure swift recovery when disaster strikes. Second, a lesson in teamwork and collaboration. The saying “no man is an island” rings truer today than ever before. For example, in our endeavors to adapt to virtual ways of working, close collaboration with IT departments were crucial for assisting us with setting up VPNs and accessing files and folders on our servers securely. A quote in my Introduction to Business Management undergrad textbook resonated with me. The author states, “Communication is the lubricant that makes it possible for change to take place in an atmosphere of understanding and acceptance. The need for effective communication has never been more pressing.” The best way for us to bridge the gaps between our function and others, and to improve interdepartmental working relationships, is to communicate.
Lastly, a lesson in emotional intelligence. We have all struggled with growing accustomed to not visiting family and friends, not being able to travel, and not having quick catchups with your favorite co-worker at the water cooler. For some, this struggle has been harder than for others. It is important that we remember this when dealing with our colleagues. As Laura K. Murray, Clinical Psychologist and a Senior Scientist in Mental Health at the Bloomberg School, says, “Leadership will be one of the most heavily tested skills throughout the coronavirus pandemic” and “Emotional intelligence is at the core of being able to make [these] behavioral shifts and ultimately helping you attain all those adjectives describing stellar leadership.”
How can companies better leverage payroll data for strategic decision-making; how will payroll data emerge as a critical analytic business tool?
Payroll is a data-producing operation. A multitude of data points are produced every pay period, even for small organizations. The value of payroll data is often underestimated by organizations, and for the past few decades payroll analytics have been limited to detecting salary trends and evaluating employee costs. But thanks to improvements in technology infrastructure that facilitates easy and reliable reporting, the analytical maturity of payroll is improving. Business leaders are also realizing that just having data used to be enough, but with the advent of big data—and the systems that can leverage it—a competitive advantage comes from the ability to understand, analyze, and interpret trends in the large amount of data that the payroll function produces.
One of the key management issues that relies on payroll data is pay equity. The topic of economic equality is also climbing up the priority list of many organizations as society demands businesses eliminate the gender and race discrimination built into their remuneration practices. Additionally, pay equity laws have been in existence for a long time, but governments are ramping up their efforts to close the gender and race pay gaps by requiring businesses to submit salary data by gender and race, which informs amendments to equal pay acts. Payroll inherently has the most current and up-to-date salary data of the entire organization and using this salary data for pay equity analysis will ensure that business leaders do not make decisions about pay policies based on irrelevant or old information. Businesses that have embraced equal pay audits as a way of understating their pay practices and identifying areas of policy that need improvement have a happier and more productive workforce. While businesses that see pay equity audits simply as a compliance exercise are generally more exposed to wage discrimination lawsuits and higher employee turnover.
The analysis of payroll data also edifies return-on-investment (ROI) calculations. For as long as the employment relationship has existed, organizations have been trying to maximize the value of its biggest asset, its people. Today, it is common knowledge that human capital is an important source of competitive advantage, and organizations that invest in their people report increased levels of employee satisfaction, improved employee retention, and greater productivity levels. All of these lead to an improved bottom line. The salaries, benefits, and perks that organizations provide their employees are an investment in their human capital. Not being willing to spend a little more to invest in the development of employees makes the biggest expense on the income statement seem like a waste.
What career and life advice do you give to a new employee in payroll?
People think that the very nature of payroll limits creativity. It is true that the environment that we operate in is characterized by rules and regulations that dictate what we do, how we do it, and when we should do it. But these are merely the boundaries of the playing field we operate in. And we can maneuver creatively within these boundaries. Moreover, these regulations change, often! And in adapting to changes in our environment, we get to devise inventive and innovative ways to affirm our strategic value to the business.
Payroll is an extremely important function in any business. The biggest expense for most businesses today is their salaries and wages bill. Every business needs a payroll to pay their employees. Whether the payroll processing is insourced or outsourced, as long as there are companies who employ people, those people will have to be paid. Even more importantly though, the payroll department manages one of the most sensitive topics within the business: people’s pay. Pay is the culmination of the numerous strategies to attract top talent in the labor market. The result of a multitude of reward policies is pay.
Playbooks aimed at enhancing the employee value proposition and employee experience result in simple numbers on pay slips. When processing your payroll, remember that these numbers are people’s livelihoods. These numbers represent people’s budgets, and grocery bills, and school fees, and health care expenses. These numbers represent the very reason why most people get up in the morning and go to work. This is the awesome responsibility of payroll. And this responsibility is universal, across continents and countries.
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Frank J. Mendelson is Acquisitions Editor for the Global Payroll Management Institute (GPMI) and the American Payroll Association (APA).