I hope you’ve enjoyed a nice summer break and had some time to step away and relax. I’ll be on vacation when you read this, so fingers crossed for nice weather!
This month my focus is on changes in the way people get paid. Let’s be honest, payroll was always a bit of a stuffy area, without a lot of excitement.
But now that a permanent contract is no longer the norm and people are exploring alternative work arrangements, the way people get paid changes too. And when they receive their pay in a different way that is more convenient to them, that raises expectations and they start to ask questions.
Other factors play a role as well: new technologies make it easy to disrupt a process. Young companies are not restricted by legacy systems or approaches and they take full advantage of that. And for the first time in many years, outside vendors are taking an interest in payroll.
Companies in the fintech space are eyeing payroll as an adjacent area that they can add to their service catalogue. They already run the technology behind neobanks, and control people’s outgoing money streams. The data gives them great insights that they can monetize and apply in different ways.
Fintechs have revolutionized making payments to the extent that we can quickly send micro-payments to anyone with a mobile phone anywhere in the world. Paying someone has become easy, convenient and cheap. So why is payroll still such a black box?
A couple of companies bring the learnings from the fintech space over to payroll. They build new engines on open standards with full integration through APIs as a basic functionality.
Another group focuses on payroll results. While they don’t touch the engine itself, they go after the value of data that is locked away in payroll systems. Imagine what insights these companies could create with that data, especially when they combine it with what they know about how people spend their money.
It’s early days and employers are understandably wary. Disruption is always painful, and there will be casualties along the way. Ultimately, we’ll see a tug of war between the employer’s need to uphold privacy laws and control, and the desire from workers for a more convenient way to manage their financials.
I wrote two articles this month:
People at the center of payroll? Why payroll must change! takes a look at how people’s pay expectations are changing. And I offer some ideas for the future of payroll.
In The new kids on the payroll block you’ll learn more about young companies that offer new solutions. I selected companies that received a funding round between June and September 2021. And I included a few incumbents that are making interesting moves.
Who knew that payroll could be this exciting?
Have a great day, Anita
PS: you might have seen on LinkedIn that I’ve become Partner at Strategic Management Centre. My focus will be on Strategy, People and Technology. Take a look at the interview for details.
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Insights & Ideas on Payroll
To underpin that fintechs are coming for your payroll: Revolut Bank just released Payday, its new salary-advance feature. At the moment it’s only available to customers in the UK, but there are plans to roll it out in the EU and US next.
To activate it, Revolut integrates with an employer’s payroll, so they know how much an employee earns. The employee can withdraw up to 50% of their earnings ahead of time. Even if you’re not using the salary-advance feature, the App still shows how much you’ve earned so far this month.
And while they brand it as a financial well-being solution, don’t be mistaken: there is a reason they only charge a small flat fee per withdrawal. Imagine what they can do with all that data. But because this offering helps workers to stay away from payday lenders, they do fill a need and there will be takers.
I was intrigued by this article from Brian Sommer:
While lots of HR vendors have ‘fast’ implementation methodologies, there’s still one area that takes a lot of work and often gets shortchanged in the implementation: payroll’s interface/integration with the financial applications.
And he’s right: getting interfaces and tax filings right is often bespoke, complex, and there are few people who understand how to do this right. The article includes a quick look at the global payroll space and mentions some of the emerging companies.
And while many of them offer solutions that take some of the friction out of paying people, the vast majority relies on a selection of incumbent, local payrolls to deliver results. Who’s going to tackle this problem holistically and disrupt the space with a global engine?
What if there were no more jobs? Before you dismiss that idea, think about your own job: is what you do today in line with what you were hired for? Is it in line with your job description?
As we move into the Age of Intelligence, work is changing so fast, that we have to rethink the job construct of the Industrial Age. To explore this topic, watch my keynote for Innovate 2021. And if you want to know more, I also offer this keynote as in-company workshop to start a conversation about the future of work.
When work is personal..
While I’m not a fan of taking a generational approach in workforce strategies, the latest TalentTech report makes an important observation:
The value Millennials and Post-Millennials place on personalization, speed of communication, variability within projects, and roles is not necessarily the same as the older generations that have made up the majority of the market before 2016
I agree that employers that want to be attractive will have to focus on delivering a personalized experience. I’m also happy that the report gets the data on the size of the millennial workforce right. It contains charts that will help you understand what you’ll need to prepare for.
…will there still be a role for HR?…
When pre-defined career paths no longer match the needs and aspirations of employees, greater personalization allows them to customize their own professional journey.
And if that’s the case, is there still a role for HR in 2025? KennedyFitch interviewed HR Practioners, CHRO and thoughtleaders about the relevancy of the people function and the future focus of these professionals.
This report could have been more edgy and thought provoking if they had included non-HR staff in the conversation. Let's hope there will be a follow up.
..especially when we all work from home?
We're 18 months into the pandemic and generated enough data for a scientific investigation into the effects of remote work. In this report, researchers studied he effects of remote work on collaboration among information workers.
They received access to the emails, calendars, instant messages, video/audio calls and workweek hours of 61,182 US Microsoft employees over the first six months of 2020.
The results show that remote work caused the collaboration network of workers to become more static and siloed, with fewer bridges between disparate parts.
The researchers note that these effects may make it harder for employees to acquire and share new information across the network.
Don't read the outcomes as an argument against remote work. Instead, use the findings as input for countermeasures that foster collaboration and communication.
Movers and shakers
The latest funding rounds and company updates:
Check out all announcements.
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See you next month!
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