In this article, we will lay out the key HR & Payroll trends for 2021.
2020 is over and many of us couldn’t wait for it to come to an end. It was a year filled with unprecedented changes and challenges for the global community at so many levels. COVID pandemic triggered a health emergency of unknown dimensions pushing many healthcare systems to the brink of collapse. It created previously unthinkable sociopolitical restrictions constraining our personal liberties and requiring many great sacrifices. It created a global economic crisis that has threatened the survival of many businesses and the livelihood of many workers.
Yet, the show must go on. Individual citizens, healthcare workers, public servants, political leaders, business leaders all have stepped up to the challenge to fight the pandemic and its fallout as best as possible with the ingenuity and adaptability that is unique to the human species. Over the last couple of months of 2020, several vaccines have become available that promise to help us overcome the crisis and get back to more normal lives in the foreseeable future. However, as the vaccines are being distributed across the global population most experts predicted that it will still take many months for us to overcome the crisis globally. And once we emerge from it, it remains to be seen what the new normal will look like. It is probably safe to say that it won’t be the same as we were used prior to the pandemic.
Hence entering into 2021 is a very interesting, pivotal moment. While we still need to deal with many of the obstacles that the pandemic has created, it also warrants us looking forward and reflecting on how to accelerate out of the crisis. Only those who plan ahead now will be able to emerge stronger and will have a competitive advantage over the rest of the pack.
So what are the payroll trends and predictions for 2021? Here are 6 key dynamics that we predict to shape the HR and Payroll world over the coming year:
1. More Flexible Workforce
One global and payroll trend for 2021 that we have seen as a result of the pandemic is that workforce has become more flexible both in terms of work location and hours of work. As a result of the pandemic, more people work remotely from home. Initially, remote work was driven as an immediate consequence out of the lockdowns and the mandates for social distancing. Over the past few months, as offices have remained closed for the foreseeable future at many companies this has translated into a more fundamental trend of people moving out of metropolitan areas into the suburbs and into the countryside, drawn by more space and more affordable living. In many countries and companies, the situation has created a debate over allowing employees to permanently work from home even beyond the pandemic.
In addition, for many workers, their schedules have shifted. Some countries such as Germany, Austria, Czech Republic and Romania have instituted short-time work where employees accept a reduction in work time and pay, with the state making up for part or all of the lost wages. And at a practical level, many employees have had to juggle family obligations – including the homeschooling of kids – with work, requiring more flexible work schedules.
Impact: Remote work and flexible work schedules where not all employees work during their normal hours require more deliberate communication and coordination across team members. Digital communication tools such as Zoom, Teams and Webex have obviously become a common practice by now, but even beyond those basic communication tools, HR teams must ensure that the staff stays well connected, coordinated and informed in executing their jobs, e.g. via the use of modern online collaboration and information exchange tools such as Slack, Trello, Asana, Dropbox, etc.
2. Accelerated Globalization
As remote work is an operating model that is here to stay, many companies have taken the opportunity to reevaluate where they set up certain roles for their business. If teams are not physically in the same office but working remotely, the next logical consequence is that roles can be moved not just from metropolitan areas to suburbs but across borders to lower-cost countries (barring potential language and time zone constraints, which depends on the specific function and role). Further motivated by the economic pressures that the global crisis has created there are a variety of examples of companies who have shifted entire teams from onshore to offshore locations, realizing significant cost savings in the process. While this hr and payroll trend started already during the first wave of the pandemic in 2020, we see it continuing and accelerating into 2021 and beyond.
Impact: HR teams suddenly have to figure out how to set up teams in remote offshore locations and ensuring that these teams are properly supported and administered (e.g. in terms of local payroll and tax treatments). They often require the support of outsourced HR and Payroll service providers to ensure that local staff is handled in a manner that is compliant with local laws and regulations. Hot tip: Given Payzaar’s open global Payroll & HR solution model, we can help you identify best-in-country partners to support your specific HR and Payroll needs around the world.
3. Continued Regulatory Changes
As the global economic crisis continues, governments around the world are defining additional relief programs to support struggling businesses. These relief programs often take on the form of specific employment subsidies and/or tax breaks for employers. As new programs continue to be launched – of different facets and flavors from country to country – it is challenging for companies to figure out the new regulatory environment and how these programs could or should be applied to their business. HR, Payroll and Tax teams across around the world have been busier than ever over the past months try to stay on top of the new regulations being put in place, often with minimal notice before the new rules go into effect.
Impact: In order to ensure compliance and correctly apply the latest regulatory updates, HR and Payroll teams may be well advised to seek the help of professional service firms who specialize in interpreting laws and regulations for their clients. Especially smaller businesses with limited inhouse resources should consider outsourcing some of the back-office responsibilities to local experts where their own staff is not equipped to stay on top of local changes.
4. More Focus on Digitization and Self-service
In many ways, the pandemic has been a wake-up call for many industries and organizations for the need to introduce more digitization into their operations. Relying on physical interactions and good old paper trail workflows is clearly not going to function very well in an environment where people have distanced themselves from each other and work remotely. Zoom, Teams and other communication tools have already become second nature to most of us by now. But the digitization of the work environment which is desperately needed in many roles and functions goes well beyond these basic communication tools. Purpose-built tools that support digital workflows for different functions and roles are needed to create a more efficient and secure work environment. Along with the digitization of workflows and process, employees will require more self-service tools. When you are not in the same office or you are working off-hour shifts due to other family obligations (e.g. home-schooling of kids), you cannot simply pop into your colleague’s office to ask a question or pick up some information. So you need more self-serviceability that allows you to access information and action things at your own time and place will be critical.
Impact: Investigate which workflow digitization or automation tools exist to support HR and Payroll professionals to get their jobs done efficiently and stay coordinated while working remotely in different locations and time zones. Hot tip: Payzaar can help your Payroll and HR teams to take advantage of this payroll trend for 2021, automate their processes and increase self-service for HR/Payroll professionals as well as employees.
5. Need to Do More With Less
The ongoing global economic crisis has hit many businesses hard. As a result, many companies have instituted stringent cost-saving measures to weather the storm and persevere funds. Especially functions like HR and Payroll who typically already rank fairly low on the budget allocation hierarchy have seen their budgets frozen or curtailed. At the same time, HR and Payroll departments are busier than ever trying to master all the changes that have been introduced by the crisis (e.g. new work situations and new regulatory requirements). So working in HR or Payroll, you have to figure out how to do more with less. Which means you have to find ways to get more efficient, otherwise you risk burnout in your HR and Payroll teams after a certain time (many teams have kept going based on their sheer dedication and will power, but that is not sustainable in the long run). So how do you get more efficient? By streamlining your processes and introducing smart tools that help to automate certain tasks and increase your team’s productivity.
Impact: While smart tools can increase your productivity and help you to achieve more with less, the challenge you will be facing is that any kind of larger investment will likely not get much support in an environment where budgets are tight. Therefore, you have to identify nimble, easy-to-implement tools that do not require significant upfront investments and are able to generate quick returns. The rollout of a big, new global HCM platform that costs millions of dollars and requires months of implementation is likely not going to make the budget cut.
6. Requirement for Stronger HR Analytics
Finally, in a time of crisis, it is more important than ever to really understand your business. Where are opportunities to create further efficiencies? How can you optimize your business in the context of the “new normal”? In order to identify cost-saving opportunities, you first have to understand and analyze your current employee structure and cost base in detail. For many organizations, that is a difficult exercise because HR data is spread across a variety of different systems (e.g. Core HR, Payroll, Time & Attendance, Benefits, Commission, Expense Admin, etc.) across different countries which makes it hard to create a cohesive, data-driven picture and to facilitate proper company-wide analytics. But your leadership teams require deep analyses in order to make the right decisions for the company and will call upon HR and Payroll teams to provide data insights to help them chart the path forward through these uncertain times.
Impact: In order to support your company in managing through the unprecedented crisis and make smart decisions to shape its future, HR and Payroll leaders need to provide their leadership teams with reliable, comprehensive analytics about their workforce and the associated labor costs. Given budget constraints, a big-bang solution like rolling out a new global HCM platform will likely not find strong support in many organizations in 2021. Hence you should focus on more nimble solutions that can leverage your existing systems and tools and help you to flexibly integrate and aggregate data from various data sources into powerful, cohesive reports and analytics. Such an HR & Payroll Data Integration approach also gives you the flexibility to continue to leverage best-of-breed solutions for specific functional needs (e.g. time & attendance tracking) which tend to be more functional and cost-effective than big, end-to-end HR suite solutions. Hot tip: Check out Payzaar’s Reporting & Analytics capabilities to see how you can benefit from comprehensive, consolidated reporting across different local systems for your global employee base.
As we enter in 2021, the world is facing many daunting sociopolitical and economic uncertainties. Undoubtedly it will be another challenging year for HR and Payroll teams around the world to help their organizations navigate through these troubled waters. But we can start to see the famous light at the end of the tunnel and those organizations that best anticipate the challenges ahead and prepare to take action accordingly will put themselves into a position to emerge stronger and more successful than their peers.
HR and Payroll trends for 2021 by Marc-Oliver Fiedler
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