Looking ahead: Upcoming HR and Payroll trends for 2021

After a year of unprecedented upheavals in 2020, HR and payroll departments find themselves facing a number of challenges as the workplace trends that took hold during the pandemic become the new norm. Perhaps a look back at the major changes that took place in 2020 will allow us to get a clearer idea of what major trends will be impacting the industry in 2021.

A flexibility balancing act

While remote working was not a novel concept pre-COVID, multinational shutdowns gave employees across the world a unique opportunity to participate in this massive remote working experiment, testing their ability and readiness for it, as much as it probably tested all our patience occasionally. We also gained perspective into the natural flexibility that comes with working from the comfort of home.

Flexible work involves not just home-based work, which we are perhaps all too familiar with at this stage, but also things like flex time, part-time work, supporting extended leaves, job sharing, and others. Benefits of flexible work arrangements include an increased ability to attract and retain talent in a competitive marketplace, improved employee engagement, enabling diversity in the workplace, and more.

While remote working and flexibility in how work is organised are becoming central trends, there is great variation in how accepted flexible work is in different cultures. These cultural, social and attitudinal variations pose a challenge to multinational organisations – how much flexibility is adequate? How do we balance, for instance, the high value put on collectivism and being present that is traditionally prevalent in most of Asia, with concerns over health and wellbeing? How can we build trust in teams that transcends long-held principles and disrupts culture, while keeping our eye on productivity and results? In 2021, employers should be asking how these questions apply to their organisations, and building out bespoke flexible work arrangements that not only support work-life balance but also improve engagement and profit over time.

The continued journey to digital transformation 

Smart use of technology in support of the evolving digital transformation remains a key focus area for organisations in 2021. When the pandemic hit, the ultra-rapid shift to remote work and digitisation of services helped leapfrog many businesses far ahead on their digital journeys. McKinsey Digital estimated that five years of digital adoption occurred in just eight weeks in mid-2020. It is no wonder that we all felt so exhausted at times when we consider the rapid pace of change that hit us. 

Technology plays a key role in managing an increasingly distributed workforce in 2021 and beyond. For employers, continuous investment in online collaboration tools and video-conferencing software are central, and this must be supported by a reliable network infrastructure and an increased focus on cyber security, to maintain productivity and engagement.

With greater flexibility, famously, comes more responsibility. This goes both for the employees and the companies they work for. The diversity in work arrangements will make it difficult to write straightforward policies, which means employees will ultimately need to be empowered to make calls on what is best. HR and payroll teams can rely on advanced technology, such as Robotic Process Automation and AI, to streamline tasks that are data-heavy and prone to human errors, and set aside human time to deal with the more complex issues that are part of a more heterogeneous operating environment. Investment in Business Intelligence (BI) software and predictive analytics is on the rise, as businesses seek to facilitate more strategic decision-making with the help of workforce management data and insights, in order to further drive focus on things that really move the needle for them.

Job security over pay rises

Due to widespread economic uncertainty and low global inflation, it is expected that salaries and wages remain static in 2021. For employees, the main focus in 2020 was understandably job security. And, with governments across APAC potentially starting to scale back on business subsidies and initiatives, we expect job security to remain the key concern for most employees, although it is worth noting that the normalisation of, for instance, working from home, has changed cost structures for some families significantly, which means that perspectives may vary greatly. 

The current situation presents an opportunity for employers to restructure employee packages to match the flexibility of work that is also becoming a norm. Allowing employees to tailor total compensation packages almost like an à la carte model and putting more emphasis on mental and physical wellbeing are expected to be trending in 2021. As always, payroll teams need to closely monitor changes to any government employment subsidy schemes, as they may significantly impact both monetary and non-cash benefits and how employee packages might be reviewed to compensate for stagnant income.

Keeping up with legislation

In 2021 organisations operating in APAC need to be acutely aware of changing policies around travel, movement restrictions, lockdowns and financial subsidies and support schemes, in each country that they operate in. Singaporean employers should  prepare for a transition back to a subsidy-free operating environment when the final instalment in the Jobs Support Scheme (JSS) concludes in September 2021 for firms in key sectors. Starting in January 2021, Malaysia’s Employee Provident Fund contributions were reduced to 9% from 11% to provide employees with more ‘take home pay’. These are just a few highlights of the policy landscape employers must keep up with. 

In general employers would do well to build better awareness around payroll compliance. We have read more news about organizations (mostly inadvertently) underpaying employees in the last 12 months, which shows that even with continuous advances in technology, payroll remains an area with high risk of mistakes and miscalculations. Ascender’s own research shows that an alarming, 1 in 4 employees are unsure how their time is tracked and compensated for at work. This in turn suggests room for improvement in financial literacy of the workforce, that employers should also be aware of. Underpayment issues, and wage theft scandals can be financially and damaging for businesses, significantly impacting the bottom line and doing incorrigible damage to an organisation’s reputation. Finding the right balance and focus for your organisation in 2021 may seem like a daunting task, considering what is at stake. Whenever I am faced with a task that seems too big to handle, I am reminded about an old African proverb about how to eat an elephant (One bite at a time!). With something as daunting as this, it may help to break things up into components that you can digest.  Try it out, you may be surprised at what you can achieve!