Employees receiving their pay promptly and correctly is undoubtedly a core component of
any payroll process - but it’s not the only one that needs to be considered. Changing
expectations from both the businesses and the employee means that payroll is shifting from
something traditionally regarded as a back-office function to becoming more of a strategic
business partner. In this blog, we will look at some of the common pain points that are
associated with the modern payroll process and consider how they can be addressed and
resolved with global payroll solutions.
For teams operating globally, payroll processes need to be able to scale efficiently in order
to keep up with business growth. Organisations don’t want to lose their ability to remain
agile, and accessing data in real time remains central to obtaining, and responding to,
insights from all areas of the organisation. Challenges around harnessing data can often
arise when a system designed for a smaller business is used within a larger, or more
disparately located, business - and risks data being siloed.
In businesses today, centralising data and breaking down these siloed barriers is a critical
task when it comes to payroll, without it, manual checks can lead to human errors, and
ultimately add to the risk that employees won’t be paid on time - eroding trust - or that tax or
compliance rules are overlooked or missed entirely.
Managing payroll on a global scale is complex and the greater the number of countries
involved then the greater the level of complexity and room for error is. For rapidly expanding
businesses, payroll becomes an increasingly resource-demanding task.
Using a payroll partner who can navigate these challenges gives an organisation increased
confidence that their people can be paid on time, every time. This is also true when it comes
to considering talent management challenges and retention, as a study by UKG reveals that
nearly 50% of employees will seek a new job after only two payroll errors - and that one
payroll error can cost an average of $3,200 and 29 hours to resolve (source Eyquest).
There are also generational differences to consider in each workforce, with younger
employees being much less willing to stay with their employer should mistakes happen, even
if errors are corrected right away. And it is not just concerns around employees being paid
on time that worries employers, regulatory and tax issues can also stem from a mismanaged
payroll process.
Legislation is always evolving and it can be more of a challenge to stay ahead of changing
policies whilst central business resources get to grips with numerous, new legislative
regimes. Tax legislation is notoriously complex, and there can be several levels of rules and
regulations to follow in a single country, let alone what comes with expanding across
borders.
Compliance issues now go to the very top of organisations, with Chief Compliance Officers
responsible for both ensuring compliance is achieved, and working with management teams
to monitor the importance of payroll growth. Interestingly, KPMG’s 2023 CCO Survey found
that new regulatory requirements are the greatest compliance challenge - therefore we
argue that a good payroll solution can help to alleviate such associated headaches.
Some larger companies have multiple payroll experts but many organisations looking to
expand their international operations lack the necessary expertise required. It is costly to hire
an internal specialist each time one is needed, so outsourcing the job to external specialists
in the form of Multi-Country Payroll providers (MCP) allows for flexibility and increased levels
of cost efficiencies for businesses.
MCP providers can help to consolidate solutions regardless of location, using centralised
control and standard procedures. Using multiple providers means multiple processes, so it's
not easy to manage how a payroll process is operating, so using one provider ensures
consistency when it comes to the processing of information, regardless of varying country
requirements. If the fundamental processing of data is not managed effectively then the rest
of the process will not function efficiently, which leads to more problems.
Globalisation is here to stay and over the coming years, the need for local expertise will
increase as organisations will continue to expand internationally, explore new markets and
connect with an ever evolving customer base. Successful future payroll systems will depend
on the ability to harness local expertise within global businesses, which is not an area that AI
has the ability to solve.
A good payroll process comes down to the partnership that exists between the client and
their chosen provider. Change takes time, and businesses need partners who can manage
them long term, who are reliable and can support them in the challenges that they could
face. This means taking on the heavy lifting when it comes to managing payroll, payments,
global mobility and HR. Partners should become an extension of their clients, helping their
varying needs and offloading many of their critical payroll and HR tasks to make the process
more seamless.
For even the most experienced of payroll professionals, the administrative burden can be
enormous due to the sheer amount of data being processed and, as a result, human error is
likely to be an unavoidable consequence of time-pressured individuals. Technology can
greatly reduce room for error, but it is only one part of the puzzle. What complements
technology perfectly is adding the human expertise to overcome the hurdles that are
associated with multi-country operations.
Addressing payroll pain points is more about having the right people, processes and
technology in place to navigate potential complexities and meet the needs of all stakeholders
- something that we pride ourselves on here at activpayroll.
Organisations can spend years trying to figure out how best to manage global payroll
operations, but sometimes, the right partner is all you need. You can request a demo to find
out more about the activpayroll difference, our partnership approach and how we can help
you on the journey to a better payroll here.