How easy would a payroll professional’s life be if only all countries would adopt the same tax regulations and employment laws?
Unfortunately, it’s not likely to happen. And even if it did, most organisations have their own complications: different systems, decentralised processes, market conditions and compensation varying from region to region…Then there are the cultural differences, language problems…
But thinking about all the individual challenges is not helpful. Simplifying the payroll experience starts with breaking down the problems into four main challenges.
1. Limited ability to know if payroll is accurate and complete
That sense of relief when another run is completed is something that every payroll professional looks forward to.
But some don’t get that feeling. Setting up different payroll solutions to meet the challenges of different countries or areas can solve the problem of finding local expertise, but it results in fragmentation and can make overall visibility difficult.
Whether payroll is managed in-house locally or by local service providers, communication problems and delays are likely to occur at some time.
The organisation has to accept a lack of control. Different payroll solutions and lack of complete integration put data at increased risk and create more room for error. Lack of visibility can make it even more difficult and time-consuming to correct any errors. The company is at increased risk of facing penalties for non-compliance.
The individual in charge of global payroll will just have to feel anxious for a bit longer. He or she is unlikely to be able to see for themselves that everything’s complete. Your organisation could find itself looking for another person to take charge of global payroll.
Solution: Find an outsourced, managed payroll provider with solutions for global businesses and local expertise for each market you’re in.
The right provider will guarantee you 100% compliance with relevant legislation, provide complete visibility and give you access to up-to-the-minute information.
2. Constantly shifting regional or local labour laws and tax codes
According to Thomson Reuters, in 2019 alone there were 56,624 legislative changes impacting payroll and HR globally. ADP’s own records show that in March and April 2020, as governments sought to mitigate the economic effects of COVID-19, the world witnessed a fourfold increase in regulatory changes in just 30 days compared with the previous year.
You could employ different payroll providers in each country you employ people in, but this creates the problem of lack of visibility and integration.
The spectre of mistakes, expensive corrections and non-compliance is still there.
Solution: As with the previous challenge, finding an outsourced, managed payroll provider with solutions for global businesses and local expertise for each market will automatically take care of shifting labour laws and tax codes, so you don’t have to worry.
3. Disjointed payroll processes due to multiple concurrent payroll systems
ADP found that the average multinational organisation has more than 60 different HR and payroll systems. Obviously, connecting data from anything like this number of systems would be a major headache, but companies often find themselves with different legacy systems due to growth or acquisition.
As long as these systems work, companies are often reluctant to move something as vital as payroll to a new system due to a perceived threat that the process will be disrupted and that a new system will involve a lengthy and expensive implementation period.
These systems will, however, consume a considerable amount of time, tying up staff who could be better employed elsewhere.
Trying to integrate and maintain outdated systems will also be expensive and could lead to errors.
Solution: Bite the bullet and accept the need for a single unified system. Implementation is likely to be nowhere near as painful as trying to cope with disparate systems and the benefits will be apparent from the start.
4. Lack of knowledge from consolidated reporting and analysis
There’s not much time to think about reporting and analytics when the payroll run consumes most of your time.
Decentralised payroll processes make it difficult to share and use data. Just getting the right information in place before each pay day is difficult enough.
This can put companies at a competitive disadvantage compared to those who have a comprehensive view of their workforce and can take positive action on productivity and engagement,
According to Bernard Marr, author of Data-Driven HR, information on recruitment, career progression, training, absenteeism, productivity, development reviews, competency and staff satisfaction is “…Probably the greatest asset the HR team has. Why? Because when HR data is used to improve decisions, make employees happier, and optimize processes, it adds value to the company.”
Lack of the right tools to use this data can be a serious drawback.
Solution: Linking global payroll software to your Human Resource Information System (HRIS) gives you a wealth of usable data for anything from gender pay gap reporting to strategy development. Just being able to view and share this collected information will make a difference, but modern HR systems can include HR analytics software to help you make the most of this asset.
Addressing these four challenges will not only secure and simplify your payroll experience, it will help make your organisation more efficient and competitive.