Recent industry studies have shown that many organizations are struggling with coming to terms with enterprise-wide payroll. With globalization continuing to be a critical component in the success of companies, global payroll has become an area with new performance demands. Multinational companies have used decentralized models to pay employees in different countries for some time, but the push for efficiency and sharing of resources means new approaches to paying employees are in demand. This shift to an enterprise-wide payroll approach raises new challenges that companies are learning to deal with.
Three challenges faced today in global payroll:
Organizations are finding that these issues must be addressed by new payroll technologies and processes. Because the old models of decentralized and localized payroll methods are not adequately delivering consistent efficiency the marketplace is demanding new global payroll technologies. Let’s look deeper at these challenges and see how they offer opportunities for process improvement.
Organizations need a comprehensive view of enterprise-wide payroll data. This allows HR leaders to analyze data such as compensation rates, benefits and paid time off (PTO) for the enterprise and compare across corporate offices in one report with minimal issues. When data is pulled on a global level, inconsistent formats across regions or multiple currencies complexities can hinder decision-making capabilities. It is estimated that only 39% of companies have enterprise-wide reporting capabilities, and the cross-regional data show that an even smaller fraction of global companies have enterprise reporting capabilities Payroll leaders need to work toward getting or maintaining this visibility as companies globalize and require more sophisticated analytical capabilities.
Organizations can suffer from data loss and excessive process complexity due to poor integration with other systems. System integration is not only a key enabler for the payroll process, it is necessary to guarantee adequate controls, data privacy and an appropriate set of checks and balances. However, industry analysis suggests that only a fraction of organizations have high levels of integration with other key systems. A lack of integration leads to data redundancy and integrity issues as well as additional effort and difficulty in reporting. Top-performing domestic payroll organizations have traditionally had high levels of integration between the payroll system and other key systems like HRIS, benefits and accounting. Local legislative requirements, cultural differences and a largely decentralized payroll environment have forced companies to step back and rethink their enterprise-wide payroll technology strategy. Even when a payroll supplier markets itself as “global,” it is probably using a combination of its own systems and those of other in-country solution providers. As a result, they become a consolidator of payroll data, pushing the data out to other systems like HRIS, time reporting and accounting.
Manual intervention is error-prone, raises costs and lowers productivity. A lack of automation can degrade data quality, reduce productivity and increase the risk of data loss, but only 20% of payroll organizations can currently provide enterprise-wide reports without manual intervention. Most have to pull data from multiple systems and then spend time ensuring that formatting is consistent. While clearly a plus for the overall company, globalization tends to hold back payroll improvement and automation efforts, as legislative requirements in each country or region may necessitate the use of particular payroll solutions. The importance of the integration and automation between the HRIS and payroll system is so important that most suppliers offer both under the umbrella of an HCM system. The lack of automation in the time reporting process has a direct impact on the overall quality and compliance of the payroll process.
Implementing successful global payroll technology is a challenging task. However, if it is done successfully, an organization can benefit from improved efficiency and sharing of resources, decision-makers can have better data to work with, and employee satisfaction can be increased. Well-integrated and automated payroll systems are a vital asset to a successful global organization.