Tech Experience Requirements for Payroll Jobs
IndustryView | 2014
Payroll is a vital function in any company, and it often falls on a payroll specialist or officer to make sure that every employee is paid accurately and on time. Given software’s growing role in the payroll process, candidates’ familiarity with this technology can have a significant effect on their ability to perform their duties successfully.
This report will help hiring managers determine what level of software experience payroll candidates should have, based on an analysis of job listings for payroll positions in the United States, United Kingdom and Australia.
A payroll employee has many responsibilities, most notably managing employee salaries and tax information for an organization. Often reporting to a payroll manager, these math-oriented workers are entrenched in the minutiae of company compensation—an area that leaves little room for error, at least without financial penalty.
Last year alone, the U.S. Internal Revenue Service (IRS) issued $4.5 billion in penalties related to employee taxes. Similar penalties exist in the U.K. and Australia; in fact, the U.K. adopted a new policy just this year.
With a growing number of companies adopting software for their payroll needs, it is becoming increasingly important for those in a payroll position to know how to use the technology. As Don Phin, vice president of strategic business solutions at SyncHR, points out, this need for software experience is no longer only relevant to the largest companies.
“The cost of building these payroll [software] structures is so cheap now; it’s one-third the cost it was five to 10 years ago,” Phin says. “You’re seeing systems [now within reach for] 25- to 50-employee companies. So more and more, employers are asking candidates if they know how to run these technologies.”
With this in mind, we analyzed 300 job postings for payroll specialists and payroll officers in the U.S., U.K. and Australia to see how they compare in their technology experience requirements.
One of the biggest findings across these three countries is that software experience is essential. Overall, 83 percent of payroll job listings prefer or require that candidates have prior knowledge of one or more software programs, of any type.
When broken down by country, the U.S. is most likely to mention software experience (92 percent), followed by Australia (87 percent) and the U.K. (70 percent).
The ability to use technology is a desirable trait in all candidates, given the complex nature of the payroll process. However, hiring managers should look at an applicant’s adaptability with technology use to find out what sets them apart.
“The technology is constantly changing, so candidates have to be comfortable with [that] reality,” Phin says. “When there’s a change in the technology, there’s a lot that can go wrong with a lot of people, and the thing about payroll is that you can’t screw it up. I would ask candidates about the kind of technology changes they have gone through in their payroll career, and how they managed those changes.”
One reason U.K. job listings may not cite software experience as often could be a lag in adoption. According to a survey by security and risk firm WideAngle, U.K. companies have fallen behind in terms of moving data and services into the cloud. Twenty-two percent of WideAngle’s U.K. respondents have yet to adopt cloud-based technology, compared to the global average of 14 percent.
As to why the U.S. mentions software the most, Phin cites the U.S.’ status as “the world’s technology producer.” Indeed, according to the Forbes Global 2000, seven of the top 10 biggest public software and programming companies in the world are located in the U.S.
Experience with a payroll system can be a significant factor in whether a candidate is hired. Our findings reflect this—at least, in the U.S. and Australia. In sum, 67 percent of job listings say applicants are either required or preferred to have prior experience with specific payroll software systems.
Breaking the data down by country, Australia and the U.S. frequently seek candidates with payroll software experience (80 and 74 percent, respectively); while only 47 percent of U.K. job listings mention this.
The U.K. could again be mentioning software experience less often due to a lag in adoption.
According to a report by the Centre for Economic and Business Research in 2013, enterprise resource planning (ERP) software had much higher penetration rates in such countries as France and Holland than it did in the U.K. (in some cases, their rates were more than double the U.K.’s). Results were similar for customer relationship management (CRM) software. Although payroll software isn’t mentioned in the report, it’s possible that it has a similar adoption lag.
Moreover, in a direct comparison of the U.K. with the U.S. and Australia, Vanson Bourne found in a study that the U.K. lagged behind in terms of DevOps adoption—a process in application development that “increases efficiency, reduces errors and improves IT quality.”
Chris Jackson, CTO of DevOps Services at Rackspace, says in the study, “U.K. companies are compromising the ability to compete on a global level by not acknowledging the latest approaches to developing and deploying software.”
However, adoption in the U.K. could be picking up. According to a report by Siemer & Associates, software-as-a-service (SaaS) adoption rates in western Europe are rapidly increasing as more North American vendors enter the region, Internet infrastructures improve and local European SaaS vendors grow.
In a report titled “Hype Cycle for Human Capital Management Software, 2014,” Gartner witnesses “a significant shift in deployment patterns as SaaS vendors grow at the expense of on-premises offerings, even in administrative HCM.”
Looking at Australia, on the other hand, it seems that the prevalence of payroll software experience in job listings is likely due to a difference in payroll culture. For example, while the U.S. and Europe are increasingly outsourcing payroll, only 25 percent of Australian companies do the same, according to the Australian Payroll Association. The linked report from the Australian Payroll Association suggests this is due to Australian payroll being more complex, and the fact that outsourcing payroll to a third-party administrator doesn't free the client company from regulatory responsibilities.
Because the majority of payroll is done in-house, experience with this software is very important to Australian companies. In fact, David Zeman, director of Australian payroll recruitment agency Payroll Talent, estimates that about 80 percent of Australian clients put technology experience as their “first criteria.”
“Almost all companies have software that handles the actual processing of payroll,” Zeman says.
According to a recent Software Advice report on payroll software buyers, small businesses prefer to purchase these types of solutions as part of an integrated suite, in which several related applications are bundled together.
Core HR suites, like those that software buyers often request in which payroll, benefits administration and personnel tracking applications are bundled together, are becoming more and more popular, as companies seek to replace the HR systems they traditionally use with one unified, Web-based solution.
Because of this, payroll software is more and more being housed in a core HR suite. According to Phin, payroll functionality hasn’t changed that drastically in recent years—it’s just being packaged differently.
“It’s the technology wrapped around the payroll technology that has changed: the Human Resource Information Systems [HRISs],” he says.
Indeed, our results show that companies prefer that candidates have experience with payroll software as part of an integrated suite over a best-of-breed payroll solution. Overall, of the companies that mention specific software in their job listings, 61 percent prefer or require that applicants have experience with a payroll application that is part of an integrated HR suite. Conversely, 22 percent seek candidates experienced with a specific best-of-breed solution.
This preference holds true for all countries. The U.S. has the biggest disparity between suite and best-of-breed preferences (66 percent versus 21 percent), followed by Australia (67 percent versus 26 percent) and the U.K. (46 percent and 20 percent).
Whether the payroll applicant needs to have experience with the non-payroll applications in an integrated suite (for example, time and attendance or benefits administration) depends on a lot of factors particular to the company, Phin says. Most notably, it depends on the company’s size.
If the company is small and the payroll position is one of only a few in the HR department, the applicant may be asked to have their hands in multiple HR modules or applications. If the company is larger (or is a third-party payroll administrator), the applicant may only be working in payroll, albeit in a much deeper capacity. The position may even be focused on one certain type of payroll—such as payroll for non-exempt workers.
Culture also plays a role. For example, payroll positions often report to the HR department in the U.S. But according to the Australian Payroll Association’s previously referenced report, in Australia, they more often report to the finance department—meaning payroll employees there have less need to be acclimated with HR suites. Indeed, Zeman’s experience supports this.
“Even though Australian companies use HR suites a lot of the time, they only utilize the payroll module, even when they have all of the other modules,” Zeman says. “Most companies have not [invested], or are only now investing, in time and attendance, employee self-service etc.”
Although HR suites were mentioned the most often, a majority of job listings that mention specific software also mention basic software (53 percent). Experience with this type of software, such as Microsoft Office, was the most commonly mentioned type in the U.S. (77 percent) and the U.K. (56 percent), but was mentioned comparatively less often in Australia (24 percent). Zeman explains that a lot of companies simply don’t include this information in job listings.
“Half the companies we recruit for want intermediate Excel knowledge,” Zeman says. “The other half [don’t bother].”
No two payroll positions are the same. A payroll specialist for a small company in the U.S. may be working in a core HR suite and performing other tasks, such as managing employee leave—while a payroll specialist for a large company in Australia may only be concerned with processing payroll for non-exempt employees in the finance department. A payroll specialist in the U.K., meanwhile, might not even be using payroll software at all.
Whatever the case, companies should state clearly what they want from a payroll candidate in their job listing. If a payroll position is going to have a hand in HR, the applicant hired should be proactive in seeking problems and opportunities, be able to be discreet and ethical in their decision-making and communicate effectively. A payroll candidate hired for a strictly financial role should have tremendous analytical skills and be very math-oriented. If a payroll position is at a third-party administrator, that person should have customer service skills, as well.
In order to attract qualified candidates, companies should consider quantity versus quality when it comes to posting to job boards. For example, while sites like indeed.co.uk receive over 100 million unique visitors a month, job boards like payrolljobsboard will have a more targeted audience. Certain job boards can even allow companies to target only those with product-specific software knowledge.
Finally, if you’re going through a recruiter, it’s important that the recruiter understands the technology that candidates are required to have experience with. This will help them convey how important it is to your operation, and what applicants should expect if hired.
Ultimately, with payroll being as vital as it is, hiring mangers should take their time to find the right candidate with the level of software knowledge that is appropriate for their company. This can result in fewer errors, lower employee turnover and greater overall productivity.
This study was conducted by selecting a random sample of 100 U.S., 100 U.K. and 100 Australian job listings for payroll specialist and payroll officer positions posted on multiple job boards in November 2014. Random selections were then manually verified to ensure relevance before being included in the sample.
The job boards were selected because of their wide availability of relevant job postings; Software Advice has no financial relationship with any of the job boards. It should be noted that although some job listings did not list degree or certification requirements, job seekers may nonetheless find there is a competitive advantage to having these, or conversely, a disadvantage to lacking degrees and certifications.
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