Now more than ever, it is imperative for employers to enact these three strategies to foster agility and bench strength on their payroll teams.

We have entered again an employees' market. Talent — in particular talent with specialized skills such as those involved in processing payroll — is in high demand. Consider the following statistics:

  • The latest data show a 1.81 percent unemployment rate for the payroll workforce, indicating high demand for professionals and difficulty in finding workers
  • Fifty-eight percent of payroll specialists stay in a job only two years or less, on average, signifying employers need to do a better job of engaging and retaining their current workforce
  • 74 percent of payroll specialists are more than 40 years old, representing an aging workforce

Now more than ever it is imperative for employers to "future proof" by ensuring that they have the appropriate plans in place to foster agility and bench strength on their teams.

How to "Future-Proof" Your Payroll Team

While 100 percent "future proofing" may not be possible, the following strategies are realistic and achievable, and will tremendously benefit those payroll teams who think ahead.

1. Plan for the immediate, mid-term and long-term staffing.

Smart payroll teams create plans for multiple staffing horizons.

A. Leverage job handoff documents.

The unexpected exit of a valued payroll staffer can not only be disheartening to coworkers, but also very disruptive to the business, and ideally managers are closely in tune with their employees so that these types of surprises are infrequent. However, when they do happen it is important for the team to have in place job hand off documents or similar to transfer the most critical knowledge of an exiting employee over the next few weeks.

Payroll teams should create a job handoff document for critical roles on the team. A job handoff document outlines the essential duties and tasks of a specific role, as well as the key files, documents, and other important knowledge, that a successor will need to get up to speed quickly. To prepare this document, you can ask each incumbent (who is already fully functional in the role) to document important tasks, inventory key files, and specify any other critical knowledge involved in both their day-to-day work and any essential reoccurring and/or ad hoc tasks. One way to "test" the hand off document is to have it peer reviewed to ensure that all important considerations are included. In addition, the hand off document should be updated annually as payroll roles continuously evolve with the adoption of new processes, tools, and technologies. An example template to get you started can be found online.

B. Ensure that the team has knowledge transfer plans in place for retirements.

It is important that payroll teams are proactively reviewing their team's demographics and the potential for retirement, especially given that the average age of specialists these days is headed toward half a century. Smart organizations plan for retirement of their payroll specialists and the associated knowledge transfer through several means, like mentoring and shadowing relationships with successors, expert and storytelling video interviews with payroll experts on how to do key tasks, and/or process mapping with these experts to capture their knowledge before it walks out the door. Department leaders may also consider future retirees for consulting during their transition, and/or engaging contract help.

C. Create succession plans to grow payroll talent over the longer term.

Succession plans prepare high-potential individual contributors, leaders, and/or critical talent for future roles within the organization. Succession planning is often tied into the performance management process and involves a structured talent review process for key talent, which may not only be the actual leader of the team, but also those in critical roles and with deep technical or system knowledge. Teams should engage in succession planning as part of a systematic process to build bench strength. Yet surprisingly, only 41 percent of respondents to recent research said that they engaged in succession planning for payroll, indicating a potential long-term talent risk for their organizations.

2. Build the skills of the future within your team.

As shown in the statistics at the beginning of this article, payroll talent is getting increasingly harder to find. Training and development have repeatedly been proven to be key engagement and retention levers, and it is important to keep an eye to the future when it comes to where skills are trending.

Some of the most important skills of the future for supporting a digital finance function are technical, such as fluency with payroll technology/automation, as well as a proficiency in analyzing employee data related to this area. But softer skills such as business partnering and collaboration are also important, because it does little good to be able to analyze data, and then not be able to effectively communicate insights and potential impact to your payroll team and other interested stakeholders both downstream and upstream of the process.

Furthermore, continuous improvement skills such as business process management (addressed in point #3 below) are important to both the current and future success of payroll. Business process management is a key tool in the quality toolkit for payroll professionals, and they should have at least a base level of fluency in designing and improving their own processes.

While the traditional 70/20/10 model (e.g., 70 percent on-the-job training, 20 percent coaching and mentoring, and 10 percent formal training and development) can be leveraged for the payroll team and has proven very effective over the years, developing skills of the future will also involve going above and beyond this model, such as ensuring that staff are certified through professional associations such as the American Payroll Association (APA) and SHRM, as well as taking advantage of vendor automation-specific certifications. More and more professional associations are catering to this need for skills of the future by offering sessions on topics such as people analytics, robotic process automation, and artificial intelligence.

While payroll professionals don't need to be software engineers, they will need a base level of competency in these emerging topics to keep up with the trends. Smart employers annually invest in their teams' skill development and include career development discussion and planning as part of their regular performance management process.

3. Capture and document critical knowledge.

A third element of "future proofing" the payroll team is capturing and documenting critical knowledge. This task often falls into the quadrant of not urgent, but important in Stephen Covey's scale, which is why it often doesn't get done. But few other activities make so much of a difference in the future proofing of the team than documenting and understanding current state processes/procedures. Without this in place, needless time will be spent recreating the wheel, and this documentation builds the scaffolding for future team members to build upon, refine, and improve.

Process mapping and documentation involve the key process owners and workers carefully mapping out what they do. This can be as simple as converting facilitated sticky note sessions into a PowerPoint file or leveraging tools such as Visio or a business process management solution.

A related exercise is a technique called knowledge mapping, whereby the team adds an extra layer to the process documentation by noting where key knowledge resides and whether it is documented or held in incumbents' heads. If the latter, and the knowledge is critical, it points out key risks of knowledge loss that should be captured to avoid unnecessary future payroll crises.

Planning for various staffing horizons, developing skills of the future, and process and knowledge mapping – these are three keys to "future proofing" your payroll team. If these activities haven't been done in the past, and/or are not on your radar currently because you are "too busy" fighting fires, ask yourself: "Do I always want to be fighting fires?" "How do we break this cycle?" Breaking the cycle involves building in the time to work on these activities. And the good news is that ADP offers resources to help you in your process improvement endeavors:

Explore how ADP can help your business with payroll solutions, HR outsourcing, managed services and more.

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