The Evolution of Payroll

The first recorded usage of the term payroll dates back to 1740, where the compound noun described the total amount of money paid to a company’s employees over a set period. The evolution of payroll began with the Industrial Revolution when clerks would labor over the processes that have been completely automated today. 

The Industrial Revolution

The type of payroll that we are familiar with today came into being during the Industrial Revolution of the 18th and 19th centuries. The Industrial Revolution created a surge in employment and production, and the resulting need to keep accurate and up-to-date employee pay records. Without an official payroll system, factory owners risked financial ruin due to cash flow issues.

Computerization of Payroll 

The first modern computer is thought to have been built during World War II by Alan Turing and other cryptographers, and was used to decrypt the German ‘Enigma’ code. However, it was not until the early 1950s that computers were engineered to handle clerical tasks. The LEO (Lyons Electronic Office) was one of the earliest examples of a clerical computer. The LEO was used to manage valuations and some other clerical tasks including payroll. This technology was hugely influential, despite the fact that its usage remained limited as its price meant that only the most affluent companies could acquire it.

Taking Notice

It didn’t take long for people to notice the value of automating clerical processes. In the 1960s, American bankers realized that automation was vital in dealing with a vast amount of paper checks and that the adoption of automation technology would enable banks to gain a competitive advantage.

Public Accessibility of Computers

The 1970s was an important decade as it saw the boom of accessible computer technology. Computers were no longer confined to the offices of Fortune 500 businesses; hobbies or enthusiasts could now afford to buy and assemble computer kits known as ‘microcomputers.’

The Proliferation of Payroll Computers

By the 1980s outsourcing payroll to dedicated payroll companies became a common practice. This resulted in an increased interest in the computerization of payroll processes. The computers were focused on streamlining and making payroll processes simpler. The increased affordability of such technology meant that more businesses than ever could benefit from outsourcing payroll.

Payroll Today

If you had told clerks using the earliest payroll systems what these processes looked like today you would have likely been met with disbelief. The most popular form of payroll technology being used today is cloud payroll software, and for good reason.

Cloud payroll software can be accessed anywhere, at any time, by an authorized person from any internet-enabled device. Payroll apps allow employees to access portals that enable them to quickly and easily view and edit their work schedules, pay stubs, vacation accruals, and other information. Compliance with regulations and even payroll calculations are all handled through a simple software solution. This technology has proved itself invaluable in a time where more and more people are working from home.

The Future of Payroll

The future of payroll is set to use technology to increase the efficiencies of payroll software. It is also predicted that the trend of combining payroll software with other departmental software and information will grow in the coming years.

Photo by Ömer Haktan Bulut on Unsplash

Subscribe to our RSS-feed and  follow us on Twitter to stay in touch.