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:
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