Talking Payroll Data and AI With Cloudpay's Prodduct EVP Matt Hillier

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[00:00:19] From tracking to recruiting to onboarding and clients from payroll to benefits to time and labor management, transform your employee experience for a better today and a better tomorrow with I-Solved. For more information, go to isolvedhcm.com Welcome to PeopleTech, the podcast of workforceai.news.

[00:00:47] My guest today is Matt Hillier, Cloudpays Executive Vice President for Product. We're going to talk about how businesses can do more when they incorporate payroll into their strategic decision making.

[00:01:00] We'll look at what's going on in the area, what should be going on, and whether HR makes enough use of AI and payroll data in the first place. Where is it all going? We'll see on this edition of PeopleTech. Hey Matt, welcome.

[00:01:16] Now there was a report from Everest Group not too long ago. 80% of companies can't use payroll to inform their business decisions. And practically speaking, what does that mean?

[00:01:30] Yeah, I think for a lot of organizations, we've got to remember payroll is coming from a position of largely being a transactional function. So it's been focused for a very long time on being very tactical, making sure that employees get paid on a day-to-day basis.

[00:01:49] But ultimately that's really been a lot of the focus. And I think what we've seen in the last sort of four to five years, maybe started a little bit earlier than that, is a bit of a change in dynamic between organizations and their sort of payroll functions.

[00:02:13] That's, I think, been driven by a couple of things. Maybe 10 odd years ago we started to see the rise of things like global payroll leaders. So very specifically starting to put leadership roles in that we're looking after payroll.

[00:02:27] But then has been kind of emphasized and accelerated by a lot of the change in workforce. And so that's things like remote working, things like legislation changes happening all over the globe on a number of things.

[00:02:47] And obviously an environment where organizations are being asked to be more efficient, to be more specific, to be more data driven in how they operate, how they engage with their staff, how they run their businesses. And so a lot of those pressures have been rolling down into payroll.

[00:03:04] You know, that's created an environment I think where payroll leaders especially have been having to ask the question of what information do I have to be able to strategically manage my payroll function. So not just looking at on a day-to-day basis are people getting paid?

[00:03:23] But is that process of employees and workers getting paid functional? Is it accurate? Is it on time? On a regular ongoing basis?

[00:03:34] And what are the things that I need as a leader in payroll to be confident that I'm able to manage an ever-growing portfolio of organizations growing around the world spreading globalization and helping HR and organizations to manage their talent?

[00:03:56] You mentioned that payroll still is often regarded as tactical rather than strategic. I'm having some trouble picturing what strategic payroll looks like. How would an organization use their payroll, use payroll data to influence the business?

[00:04:20] So I think we find some really interesting ways that payroll is now getting engaged. That foundation of payroll, of being accurate beyond being on time, organizations are really starting to wake up to the fact that that is a big part of driving employee satisfaction.

[00:04:41] It's kind of the beginning of the social contract between an organization and their employees.

[00:04:47] And so I think as leaders are really looking at how payroll is integrated into their overall business, they're looking at it from an angle of how is payroll helping us to maintain and retain staff?

[00:05:04] How are our payroll organizations becoming more effective? They're growing with their organizations around the world. And in doing that, they're having to answer some of the same questions about scalability, about visibility into what's happening in their overall ecosystem.

[00:05:26] They're also having to answer questions around how can we support better remote working policies? How do we keep up with legislation and compliance? And so it's a lot of these angles that are now at the top of leadership minds that payroll needs now needs to have an opinion.

[00:05:48] Previously we would have thought of this as maybe sitting in the HR realm or sitting in the finance realm. And a lot of the information that those organizations are now needing to absorb is now getting into that next level of detail.

[00:06:10] So let me blow up an example here. I've seen one example from an organization that started using their payroll data to help inform their location strategy.

[00:06:27] So what they were doing was looking at where they had offices, where they were located and obviously feeding in the normal things that you would expect around visas, ease of operations, setting up in a particular location.

[00:06:43] But what they were then farming from their payroll information was more insights about what does it mean to operate into that jurisdiction? Where's the tax liabilities? But also then what would it mean for them for access for talent?

[00:07:03] And what does it cost to bring an employee in and to continue to pay someone in that environment? I think that particular example was looking at where they must place their HQ. And they ultimately chose Thailand for many great reasons, culturally, socially access to talent.

[00:07:23] But one of the key things that they identified through their payroll engagement was also that by putting themselves in the time market,

[00:07:37] they were also able to justify bringing in staff as expats and the cost of bringing in individuals, paying for their relocation, looking at that kind of over a long term period as a total cost of employment.

[00:07:58] And using that information to really identify that actually for them in comparison to all of the other locations that they had access to, that gave them a much stronger value proposition.

[00:08:13] And so it's insights and it's a lot more thinking now that I think goes on within the payroll realm as again, organizations are really pushing down into their leadership teams to be able to contribute into how can an organization become more efficient?

[00:08:33] How can we retain staff and ensure that we get them not only in the door, but that they stay and that they're happy? Where are our employees located? Both from an office perspective, but from a workroom, remote work perspective as well.

[00:08:51] And then how do we continue to navigate compliance and legislative challenges? And so there's this big universe now I think of factors that are showing up in the payroll space that only really payroll teams are equipped to answer.

[00:09:08] And this is putting those leaders now in a position where they are contributing more to their overall organization strategy. It sounds like this is about a layer of analysis being put over a payroll systems functionality basically.

[00:09:26] So it does stuff and then it gives you what you need to think about it. Are most payroll companies or are many payroll companies set up to do that? Or are they having to build whole new products or whole new utilities?

[00:09:41] I think we're finding that a lot of vendors are having to build systems. One of the big challenges that we've seen and we saw some of this coming out of the report as well is there's still a lot of fragmentation in the way that payroll is implemented.

[00:10:00] So that looks like for an organization, that looks like they may have two, three, five, 15 different vendors working with them. In a variety of geographies and a variety of locations.

[00:10:15] And so, you know, for them that becomes very difficult because then you don't have the consistency of information and insight that you can generate across your entire payroll estate. You don't have consistency in process. You don't have consistency in controls.

[00:10:34] And that's making it very challenging, I think for, you know, for leaders to really get a handle on what is going on globally in their organizations. At a local level, everything may look fine.

[00:10:48] But, you know, as you then imagine that payroll leader sat at the global level trying to understand what's going on in their ecosystem. They're obviously faced with all of those challenges.

[00:11:03] So, you know, one of the key things I think that we're certainly seeing and then, you know, it's definitely kind of been a big driver in, you know, what's kind of kept me engaged in this problem for so long is that there's a real need I think for payroll specific functionality.

[00:11:20] If we think about, you know, we think about where this started as payroll as a transactional tactical item. It was generally a bolt on to maybe your ERP or your HHCM platform. And that has served a really good, you know, that's served a really good need.

[00:11:40] But that had then hasn't allowed organizations to go beyond just simply the tactical. All right, I want to talk to you for a moment about retaining and developing your workforce. It's hard recruiting is hard retaining top employees is hard.

[00:11:57] Then you've got onboarding payroll benefits time and labor management. You need to take care of your workforce and you can only do this successfully if you commit to transforming your employee experience. This is where I saw comes in they empower you to be successful.

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[00:12:26] And so, you know, I think I think that's created a very important environment where service providers and technologies have been coming along that have tried to look at that problem from a more holistic global perspective and to think from the perspective of what

[00:12:42] does an organization need to understand about their environment, the unification of their overall payroll estate, how they can get control and how they can get insight into that into that overall ecosystem. Can you give me an example of this?

[00:13:00] I mean, if you talk about payroll, we say payroll to me I understand it's about making sure each employee gets the amount of money they're due at the moment. They're due at the right time in a compliant way. Yeah.

[00:13:16] Okay, so if you say using payroll to help answer strategic questions or give you an idea of strategic idea of what's going on at the company. What's that look like? I mean, what kind of data point would people be looking for?

[00:13:37] So I think there's a, you know, we touched on a few of these a little bit earlier. But yeah, we see the organizations are one they're looking for our call it performance. So they're looking at their internal efficiency of their other overall payroll ecosystem.

[00:13:57] And if we break that down a lot of a lot of organizations are starting to want to dive into their processes in a much more granular level.

[00:14:06] So let's imagine, you know, a typical payroll cycle will include, you know, collecting and inputting data and making sure that that data is ready for calculating payroll. It will then move on to calculating results, making sure that we've got salaries and taxes.

[00:14:23] It'll then move on to paying employees and making sure that those the monies end up in the individual's accounts.

[00:14:31] Obviously, then paying on governments and tax bodies, and then ultimately returning all of that information back into the organization's ecosystem and ensuring that that entire process works and is consistent on a regular basis.

[00:14:47] So from a, you know, from an organization's perspective, a key thing that they're looking for and that they're driving now into is understanding where does that process work? Where do they perhaps have quality issues with data? Where do they perhaps have timeliness issues with getting information approved?

[00:15:07] And really allowing them to dive into that next level of detail so that they're able to continuously improve on their overall payroll organization.

[00:15:20] So that's really driving, I think, a lot of organizations into that space of being able to, as you kind of mentioned earlier, analyze, inspect, but also kind of it becomes a part of the continuous improvement engine. The organizations are really looking to leverage.

[00:15:36] I think one of the other areas that we see a lot more conversation around is then also the way that employees get paid. So, you know, we see around the world that there's a typical cyclical nature of how employees get paid.

[00:15:55] You know, in some regions it's once a week and employees end up with a paycheck in their bank every week. And a lot of places that's at a monthly level.

[00:16:06] And there's been a growing interest and momentum around organizations now trying to respond to the fact that workers are now looking for a lot more engagement and a lot more immediacy in their relationship with their employer.

[00:16:26] So that's been driving things like earned wage access where, you know, I've been working for five days. I now have an emergency perhaps I need to go and get my car fixed and I don't have access to the funds right now.

[00:16:41] But I know that I've already done that five days work. Can I access that? And so as an employee, that's also helping organizations to start to provide more of a benefit.

[00:16:51] It's very tied into their payroll to be able to access those funds and be able to, you know, be able to provide that back to the employee in a much, much quicker way than they have been doing in the past.

[00:17:08] And again, that's then playing into their overall employment engagement strategy and how they're thinking about where does payroll and the impacts on those individuals really, you know, really start to show up a different way of working.

[00:17:25] Then I think we've, you know, we've typically been looking at in the past. So with AI continuing to sort of like, I don't know steamroll down the, you know, down the HR tech roadway. How do you see AI being used by the industry, the payroll industry?

[00:17:48] How are you thinking of using it? What advantages or tools does it bring to the table, assuming that it does in the first place? That's a really good question.

[00:18:02] You know, I think one of the things to kind of note from the payroll industry is that a lot of the conversation I think around AI is very much leaning into its potential.

[00:18:14] You know, there's been a lot of imaginations have been stirred as you know, as individuals and as organizations have sort of seen the boom of the AI push across the world.

[00:18:26] So I think if I were to try and capture the main buckets that are showing up, you know, I think firstly there's obviously this efficiency bucket, you know, so it's that's talking to things like automating tasks. It's talking at kind of anomaly detection within payroll.

[00:18:45] You know, how can we identify very easily that something isn't as we as we expected it perhaps there's a really big bonus going through or somehow someone's salary on a month basis has changed.

[00:18:58] It's also playing into that scalability factor. So, you know, as you know, as organizations are trying to contain their costs and be more conscious on how many how many people they're hiring.

[00:19:09] Obviously, you know, there's a there's a really big link there with how can you know, how can we continue to grow organizations without, you know, we are exponentially increasing the sort of payroll overhead.

[00:19:24] Also things like answering queries. So from an employee's perspective, you know, one of the one of the one of the really interesting conversations that I've had is, you know, organizations asking well, hey, can we provide a way for an AI solution,

[00:19:43] for example, to help explain a pay stub to an employee. You know, it's not necessary. It's nothing. It's a thing that nobody gets trained how to do.

[00:19:53] You know, you don't come you don't come out of college understanding how your pay slope is pay stub is put together and the different elements on it. So it's, you know, really around, you know, looking at that from an efficiency perspective and from a scaling perspective.

[00:20:07] So I think the second bucket is really into that insight and sort of intelligence area. So again, what are the trends going on in your payroll? Where are you increasing? Are you spending more money or taxes increasing at a rate that you weren't expecting in a particular geography?

[00:20:25] I talked a little bit about, you know, kind of the strategic decision making from things like location perspective. One of the other areas and I think one of the ones that I found has been really interesting for us is that as we've been looking into the way that we're

[00:20:40] helping organizations to pay employees, so not just calculating payroll but actually making sure that that payment is fulfilled. One of the opportunities in that space that we're we've been looking at applying AI has been helping organizations to understand when should they fund their payroll.

[00:20:58] So, you know, that big movement of capital. What does that mean from a forex perspective? And so from a timing, you know, from a timing element, what is the right time for organizations to fund their payroll obligations?

[00:21:16] And I think, you know, the final category in there is called them the moonshots. This is where the light bulbs have really turned on for payroll organizations. And some of the, you know, some of the really interesting conversations in there and I think we're probably a fair ways off from this at this point has really been around can we predict payroll?

[00:21:36] You know, can we give in a particular population in a particular geography with a certain set of characteristics? Can we predict what payroll will look like next month in, you know, 12 months time in 36 months time so that organizations can have that level of detail at their fingertips to help them to help them plan.

[00:21:54] But that's also, you know, that question is also being applied to the lower level. You know, individuals coming along and asking if I enroll in this specific stock plan, for example, what would my tax taxes look like?

[00:22:07] All of these capabilities. Are they driving customers to sort of think of new solutions that they want?

[00:22:17] And at the same time, are they are they driving vendors, you know, companies like Cloud Pay to look for better ways to leverage the technology? So is this being market driven or is it being, you know, supply driven? I guess there's a way to ask.

[00:22:34] Yeah. No, that's a really good question. I think ultimately it's being market driven. You know, a lot of think the key thing I've kind of learned about payroll over my years has been accuracy is absolutely paramount.

[00:22:50] I think if we look at the one thing that the AI has done really well, it's allowed us to guess really quickly. But when you put it into a payroll context, you know, you're suddenly asking for a very specific accurate answer to a lot of questions.

[00:23:08] And so when we have, you know, when we're looking at the sort of conversations that are going on in payroll from an AI perspective, I think it's largely being driven by, you know, a.

[00:23:21] Organization is looking for help in these efficiency areas and then be, I think a lot of the wish lists of things that, you know, payrollers especially would like to have done but the technology hasn't caught up yet.

[00:23:35] So, you know, for example, all of that stuff around prediction and projection, for example, the really good example of, you know, I think customers and organizations have really been trying to find solutions to that for a long time. But the technology is just not there.

[00:23:51] So I would say for me it's very market driven, you know, we're really looking from the perspective of what's really going to help an organization to continue to operate better and be better, you know, be a better partner to the business rather than here's some cool tech and, you know, how can we how can we apply it.

[00:24:17] Matt, thanks very much for talking with me today. This has been fascinating and I hope we can do it again. Absolutely. It's been great being on today and thank you for having me.

[00:24:35] My guest today has been Matt Bellio, Cloud Pay's executive vice president for product. And this has been PeopleTech. The podcast of workforceai.news. We're also a part of the Work Defined Podcast Network. Find them at www.wrkdefined.com.

[00:25:00] And to keep up with AI technology and HR, subscribe to Workforce AI today. We're the most trusted source of news in the HR tech industry. Find us at www.workforceai.news. I'm Mark Dever.