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Putting people in the center of pay

Anita Lettink
Anita Lettink
I’ve worked in HR & payroll for the past 20 years, and payroll has always been a bit of a stuffy area, without a lot of excitement. Innovation happens in HR and Talent.
But now that a permanent contract is no longer the norm and people are exploring alternative work arrangements, the way people get paid also changes. And when they receive their pay in a different way, one that is more convenient to them, that raises expectations towards their other jobs.
We are slowly but surely moving to a situation where workers are in the center of pay, and not employers.
Other factors play a role as well: new technologies make it easy to disrupt the way we get paid. Young companies are not restricted by legacy systems or thinking and they take full advantage of that. And for the first time in many years, outside vendors are taking an interest.
Companies in the fintech space are eyeing payroll as an adjacent area that they can disrupt. 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 payments to the extent that we can now 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 few 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, go after the value of the data that is locked away in payroll systems. Imagine what insights these companies could create with that data, especially when they combine it with they already 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 the desire from workers for a more convenient way to manage their financials.
I wrote two articles this month about the future of pay:
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 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

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
Employers that want to be attractive will have to focus on delivering a personalized experience. I am exploring that topic in more detail, and will come back on it one of the next issues with some ideas how to better align with (future) workers on this topic.
I’m also happy that they got the data on the size of the millennial workforce right. The report contains nice charts that will help you understand what you’ll need to prepare for.
Will we still have HR in 2025?
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 when that’s the case, is there still a role for HR in 2025? KennedyFitch interviewed HR Practioners, CHRO and thoughtleaders about the relevance 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.
Are you hiring? You're doing it wrong
With the Great Resignation upon us, Harvard is busy looking at hiring practices. They published 2 articles this month that are worth reading.
The first one evaluates the way recruiters screen social media of candidates:
Much of what they dig up is information they are ethically discouraged or legally prohibited from taking into account when evaluating candidates—and little of it is predictive of performance.
A significant number of profiles contains details that companies may be legally prohibited from considering like religion, ethnicity, age etc. You discover information you are not allowed to consider.
I would be very cautious about that, and focus on the second finding: everything you do to evaluate a candidate that doesn’t help to determine their suitability is a waste of time.
Social media doesn’t tell you which behaviors are favorable within the work context. You are better off using your recruiting expertise to have a few in depth conversations to really assess the candidate. And you won’t break the law doing it.
If you use automated resume-scanning software to filter out the best candidates, you’ll have to rethink that practice too, according to a new report from Harvard Business School. In the study, the software was found to mistakenly reject millions of viable candidates.
It contributes to the problem of “hidden workers” — people who are able and willing to work, but can’t get a job. There are other contributing factors, but hiring software is one of the largest issues.
The main problem is the use of overly-simplistic criteria to distinguish between “good” and “bad” applicants. When your software doesn’t surface viable candidates, that exacerbates an already bad problem. You can’t fix this alone, but it doesn’t hurt to cast a wider net next time you use the ATS.
Stop Screening Job Candidates’ Social Media
What are the effects of remote work?
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 got 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.
They wanted to understand the effects of firm-wide remote work on collaboration and communication. 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.
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Anita Lettink
Anita Lettink @let_anita

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