How digitalization has changed the way we manage payroll and HR

Sadly, not all companies were keen on embracing such new technologies. Even though there were clear benefits to adopting digital systems, some not-so-tech-savvy HR managers saw them as mere gimmicks. Others were too intimidated at the prospect of learning, much less maintaining, said systems. Because of the lack of urgency, many didn’t find digitalization to be a compelling prospect and were happy to retain their traditional processes instead.
 
All of this changed during the Covid-19 pandemic. Only a few months into 2020, countries all over the world enforced lockdown restrictions to combat the spread of the virus. Suddenly, companies discouraged employees from reporting to the office. In an instant, workers had to start conducting all business-related tasks online.
 
This proved challenging for organizations that had become accustomed to on-premises work and paper-based record keeping. Fortunately, it was also a crucial turning point—the pandemic allowed them to finally experience the ease and convenience offered by HR digitization. It wasn’t long before companies soon realized all the other ways that updating their systems could benefit them.

That said, deciding to invest in a payroll system is one thing; choosing one is another. After all, no two payroll systems are exactly alike. There is also no shortage of options available on the market.
 
Because of all these considerations, it can be difficult for senior HR managers and directors to determine which system would work best for their company’s needs. In addition, they must find one that will continue working for them not only in the present, but also in a post-Covid world.
 
What factors should you take into consideration when choosing the right payroll system? Here are a few factors:

How large is your company?

Before anything else, determine how many employees you must process payroll for annually. Also, consider the nature of their employment. Are they working for you on a full-time, part-time, or freelance basis? Does your company have a mix of all employment types?
 
For instance, are you a micro-enterprise with fewer than 10 employees or a small enterprise with 10 to 25 employees? If so, hiring a bookkeeper may be more than enough to stay on top of your company’s finances.
 
A business with more than 25 employees, however, will likely need more than that. They’ll want to invest in on-premises servers, payroll software, and an in-house payroll team. Unlike a bookkeeper, an in-house team will know your company’s culture from the inside out. This will equip them with the necessary experience to scale with your company.
 
For businesses of any size, cloud-based software solutions and third-party partnerships may also be feasible options. They are typically more cost-effective, as there’s no need to purchase servers or IT support staff. Because the system is hosted over the Internet, data can be accessed anytime, anywhere, allowing for more flexible work arrangements without compromising security or productivity. Companies can also upgrade or downgrade their plan at will, allowing for easy scalability.

How often does your company pay its employees?

Next, consider your company’s payroll frequencies, and if your payroll system can let you set different payment profiles based on these factors:

• Are employees paid once every week, every other week, or every month?
• Are employees paid on a semi-monthly basis on specific dates, typically the 15th and the 30th of each month?
• Do all staff get paid with the same payment frequency, or does it differ per employee type?

You’ll also want to consider your organization’s payroll type, and whether the payroll system can cater to it:

• Does your company pay its employees a monthly rate based on an annual salary, or are they paid by the hour?
• Does your company have a mix of both payroll types?
• Will your company use any other payment types moving forward?

Lastly, factor in how your employees’ holidays and times off are calculated, and whether your payroll system of choice can account for these complexities:

• Are your employees given a set number of days off per year?
• Are your employees’ days off based on how many hours they’ve worked so far

Do you want to integrate the payroll system with your other software?

Your payroll solution won’t—and shouldn’t—exist in a vacuum. As such, you’ll want to choose one that can easily integrate with the rest of your organization’s existing system. For example, do you want to sync your biometric system’s employee timesheets with the payroll system? Will you need your payroll solution to integrate with bookkeeping, HR management, or any other type of software?
 
Importing and exporting information from this system to others should be a breeze. Additionally, it should allow for up-to-date syncing and consistent formatting between systems to prevent the creation of data silos. This will also make it easier to access and transfer data between departments while minimizing errors such as duplicates, inaccuracies, or outdated information.

With all of the above in mind, you’ll also want to look for a digital payroll solution that uses non-proprietary formats. Because these formats are not locked to a single piece of software, you should have no problems migrating data from your old system to your new one.
 
In case you want to link a different type of software with your payroll system, you won’t have to worry about data compatibility, either. This will also future-proof your data, ensuring it will always be accessible even years down the line.

Is the system compliant with your region’s laws and regulations?

Employment laws and regulations may vary from region to region. Hence, it’s crucial to check whether a payroll system is compliant with your country’s particular legislation. Failing to do so could put your business at risk of non-compliance, resulting in huge penalties and a hit to your company’s reputation.
 
In Singapore, for example, employer-employee relationships are primarily governed by the Employment Act. This law is fairly straightforward, outlining the basic terms and minimum working conditions for all employees regardless of nationality, with some exceptions.
 
There are also Tripartite Standards, which are non-statutory guidelines that supplement existing labor legislation. These standards dictate good employment practices that all employers are expected to implement. They cover various aspects of employment, such as the following:

• Age-friendly Workplace Practices
• Contracting with Self-employed Persons
• Employment of Term Contract Employees
• Flexible Work Arrangements
• Grievance Handling
• Procurement of Services from Media Freelancers
• Recruitment Practices
• Unpaid Leave for Unexpected Care Needs
• Work-life harmony practices

In addition to the Employment Act and the Tripartite Standards, there are also other related Acts to take into account, such as the:

•  Central Provident Fund Act
• Child Development Co-savings Act
• Employment Claims Tribunal Act
• Employment of Foreign Manpower Act
• Industrial Relations Act
• Retirement and Re-employment Act
• Trade Unions Act
• Work Injury Compensation Act
• Workplace Safety and Health Act

In Malaysia, employment laws and regulations are governed by the country’s own well-defined, comprehensive, and highly transparent Employment Act. In terms of statutory payments, employers will want to pay special attention to the following:
 

• The Employees Provident Fund (EPF), a retirement scheme for Malaysian citizens that is governed by the Employee Provident Fund Act of 1991.
• Social Security Organization (SOCSO) payments, which are schemes that provide coverage for employees in case of accident or injury. It also covers employees who may not be able to report to work due to illness.
• The Human Resources Development Fund (HRDF), a fund for employee training. This scheme is meant to help develop Malaysia’s human capital and workforce ability. This fund is governed by the Human Resources Development Act of 1992.

If the payroll system you’re considering has a host of useful features but cannot be modified for your country’s specific laws and regulations, it’s best to keep looking. Otherwise, your HR staff will be forced to come up with manual workarounds and adjustments just to stay compliant. In the end, settling for a less-than-perfect platform means spending more time, money, and energy that could have been allocated for more important work.

Transform your HR processes with digitalization today

Given the considerations above, choosing the right digital or online payroll is crucial for ensuring that your business continues to run smoothly, especially in a post-Covid world. Indeed, many Singaporean and Malaysian companies can benefit from a cloud-based solution that doesn’t require an on-premise server, such as that offered by Unit4 Prosoft.
 
Unit4’s highly flexible payroll system can be customized to account for various types of employment, wage calculations, taxes, payout types and frequencies, and more. Because of this, it can also be tailored to comply with the laws and regulations in your business’s region, greatly minimizing the risk of unintentional non-compliance.
 
Best of all, Unit4’s payroll system can be easily integrated with Unit4’s suite of HR solutions, such as its Talent Management software and its end-to-end HRMS platform. This can provide HR staff with better visibility and control when managing payroll systems, resulting in higher productivity and efficiency across the board.
 
By eliminating workflow bottlenecks typically associated with traditional processes, digitalizing payroll systems can save organizations a lot of time and money. It’s little wonder why more companies are now switching to integrated HR systems and digital-first systems. The sooner your company upgrades to a digital payroll platform, the better for your bottom line.