The Evolution of Payroll
From traditional bookkeeping to cloud-enabled automation, payroll has come a long way.
Payroll originally started as a way for businesses to keep track of incoming and outgoing payments.
Understandably, the processes involved in payroll have evolved which each wave of new technology.
One of the earliest recorded instances of payroll dates back to 7000BC, where records of payment details were kept by chiselling on stone tablets.
However, payroll as we know today really began at the turn of the Industrial Revolution of the 19th century, where mass employment drove a need for businesses to meticulously keep track of salaries and the associated taxes paid.
Payroll through the ages
One of the earliest recorded time card machines was patented in the 1890s by jeweller William Le Grand Bundy.
In this original design, Bundy in corporated time stamps into his invention to keep track of workers’ arrival and departure.
Each worker was even provided with a unique key to operate the machine when punching in or out to avoid mix-ups. Bundy’s machine was a precursor to the punch time cards that followed.
Payroll was carried out manually with employees physically submitting their time cards to a clerk who would manually tally hours in ledgers to calculate wages. In return, employees received cash packets or cheques containing the amount of money earned.
Errors were frequent and employees would sometimes receive back payments months late.
Computerisation of payroll became a reality in the 1950s with the inception of the Lyons Electronic Office (LEO), the world’s first business computer developed to handle clerical tasks.
Funded and developed by food and manufacturing company, J. Lyons and Co., the LEO not only handled payroll, but inventory an d labour cost management as well.
What initially started out as a venture looking for new business methods resulted in profitable business, and Lyons became one of the first companies to offer payroll outsourcing services. In fact, one of their most notable clients in 1956 was Ford UK.
By the 1980s, the IBM AS/400 became the computer of choice for managing payroll and other business administration tasks.
Further advancements in telecommunication also meant that employees did not have to submit their timesheets in person anymore.
Where in the past, employees needed to mail or personally submit their timesheets, the popularisation of fax machines allowed for the transfer of scanned documents over telephonic transmission.
The 1990s saw the rise of the smaller sized personal computer that actually fits on a desk. The introduction of email technology meant that employees could email timesheets electronically too. At the same time, the widespread adoption of the now ubiquitous Microsoft Excel also gave payroll administrators another powerful tool for undertaking payroll calculating and reporting.
Though technology had advanced to provide useful software for payroll administration, payroll data was still being manually entered into Excel documents, leading to human errors.
The 2000s saw a move away from paper-based time clock systems with the integration of magnetic stripe technology to keep track of time and attendance. Often, these forms of technology are linked to time and attendance software over intranet systems, allowing managers to keep track of when employees clock in and clock out.
Proximity card readers requiring users to simply wave or touch their cards to censors to access workspaces have also become commonplace. Using RFID technology, such time and attendance systems often double up as a security feature, ensuring that only authorised employees have access to a given workspace.
Fast forward to 2016 and the use of biometric technology is more prevalent than ever, with fingerprint scanners currently in use for time and attendance recording.
Not only is there a move towards smart data capture, companies like Affinity are also automating the payroll process after the information is captured. For many, HR and payroll processes used to be carried out on multiple disparate systems. However, businesses are opting to consolidate data and processes on a single cloud platform.
Affinity’s Zero module also detects errors through the use of Artificial Intelligence (AI) with machine learning capabilities to automatically track and remove payroll errors.
What Lies Beyond?
Technological advancements are only going to result in quicker payroll processing requiring less administrative effort. These include GPS enabled tracking for recording shift work, as well as the inevitable integration of chatbot technology as a HR and payroll user interface.
Non-invasive technology originally deployed for security and authentication purposes, such as retina scanning and vein reading, also have the potential to be utilised for time and attendance purposes.
One thing’s for certain though: just as payroll professionals adapted to each wave of new technology, they will undoubtedly adapt to the rapid technological developments reshaping the payroll industry.
The evolution of payroll