Payroll Operating Models - Why are they so important ?
Businesses of all sizes are currently reassessing their operating models and structures across multiple functions. This shift is driven by a range of factors such as operational rationalisation, cost reductions, technological efficiencies, and the need to right-size in response to current economic conditions.
Payroll teams, in particular, often struggle with designing operating models that maximise the efficiency of each role and responsibility. As a result, key individuals can become overloaded, leading to inefficiencies.
It's essential to reassess the capacity, capability, and role fit of team members not only before but also during and after any major transformation project. We often see payroll software that, while implemented smoothly, eventually falter because the technology doesn’t align with the team’s operating model or because of a skills gap that hasn't been addressed.
How can you establish an efficient and effective payroll operating model in your business?
Conduct a skills audit of all current team members, and analyse their roles and responsibilities.
Assess payroll technology and the roles involved in managing it, including master data handling and error ha.
Determine if compliance and audit roles should be embedded within the payroll function or managed separately.
Review transformation projects and their alignment with broader company initiatives.
Evaluate major organisational changes and new enterprise agreement (EA) timelines.
Consider system end-of-life impacts, as these are increasingly common.
Examine your payroll operating budget, including both technology and resource costs, and assess the percentage of cost ratios.
Assess operational efficiency. Is your current model the most effective it can be?
Evaluate business continuity planning. Does your model adequately cover contingencies?
Measure the value of your payroll technology. Are you realising the benefits you expected, or has it become a significant pain point?
If you encounter challenges in understanding or implementing any of these elements, it might be the right time to seek an external assessment of your payroll operating model.