“Payroll holds the key to business success.” 2019 Global Payroll Complexity Index
In conversations with business leaders, regardless of the industry, the topic of global payroll always comes up. We all recognize that globalization and changing workforce trends result in most HR and payroll teams now managing multiple disparate payrolls. Add to this mix your examples of hypergrowth companies and recent M&A activity, and the picture it paints is that companies now have employees, and large numbers of them, in several different jurisdictions.
The problem is how best to manage this multifaceted project in a way that serves both the organization’s business needs and simultaneously the employee’s needs. How do you provide the CFO the data and insights into labor costs they need, that you are meeting statutory compliance legislation in every country while also ensuring the CHRO can deliver an employee experience that elevates your brand?
While this may seem difficult, it is achievable. The key, though is a global payroll solution. One that leverages technology, innovation, experience, and subject matter expertise to meet all the individual demands.
#1 Standardizes the global process
From EY’s 2019 Global Payroll Survey, we know that 28% of payroll professionals said they have very low standardization of processes. This lack of uniformity results in the duplication of services and a lack of consistency across the global landscape as you try to manage a plethora of different payroll processes. Research shows that some companies are working with as many as 7 different payroll providers. Plus, if there is manual operating involved, and according to the 2019 Global Payroll Complexity report, 11% of organizations still rely on manual input, there is a significant potential for a data breach. Even if there are no security issues, the problem is in the likelihood that you are paying for duplicate services, and moving to a single global payroll provider eliminates these redundancies.
Having consistency across the organization also means you can benefit from enhanced General Ledger and company-wide reporting. You can view high level Gross to Net, Employer Costs, and critical data points across your organization and customize reporting per country, region, and employee.
#2 Raises the value of your data
Trying to make a sound business decision based on disjointed and inconsistent reporting is not a good business strategy. A lack of uniform analytics and reports results in poor global oversight and difficulty identifying areas of concern. For example, one of the features of the Immedis Platform is variance analysis. Customers can easily identify their biggest risks quickly spot errors, reduce time spent on analysis, and get answers fast.
Having a single source of truth also allows you to consolidate data across all global payrolls into a single currency. You can view high level data such as Gross to Net, Employer Costs, and key data points across your organization.
In addition, consolidating all your data facilitates gender pay parity reporting. You no longer have to collate the data from multiple sources and spend time preparing different spreadsheets. With a single solution like Immedis, the report is generated automatically.
#3 Reduces the number of errors
Payroll errors account for roughly 1% – 8% of the total payroll each period. While at the same time, the average payroll mistake takes 15 minutes to correct. Apart from the legal and financial cost of late payments and missed deadlines, there is the damage to employer brand- just 2 problems with their payslip will make almost half of American workers looking for a new job- employees, and ultimately it could mean an employee misses a rent or mortgage payment.
Consolidating your multiple payrolls and leveraging technology like a global payroll solution drastically reduces the risk of error.
#4 Increases compliance
On average, HR and payroll departments spend approximately 36 hours per week on compliance-related activities ranging from tracking regulatory proposals to creating and communicating new policies – enough work for a dedicated full-time employee.
- Organizations with fewer than 500 employees spend on average 23 hours per week on compliance duties
- Organizations with 500-999 employees spend on average 31 hours per week
- Organizations with 1,000-2,499 employees spend on average 36 hours per week.
According to the 2019 Global Payroll Complexity report, growing regulatory complexity is one of the main areas of focus for payroll professionals. The average number of data fields needed to calculate a single employee’s payroll is now 19, up 2 from 2017.
However, transferring this immense workload to a global solution that provides this function within its platform not only reduces your payroll team’s workload but can also eliminate the risk of error and, therefore, any likelihood of fines for late payments.
For example, with Immedis, customers can run 100% accurate payrolls. We leverage our in-country partners to assure customers that their payrolls meet all statutory pay and legislative requirements. We take the compliance burden off your hands, freeing your payroll team to focus on other strategic aspects of payroll.
#5 Simplifies multi-currency payments
When you have employees in several different countries, the challenge is to pay each, comply with all local and employee laws, and, importantly pay in the local currency. Historically, this meant hiring more vendors, each responsible for paying the employees within their jurisdiction. As a result, there is little oversight, and the information for each area is siloed. There is also the potential for currency exchange fluctuations, which can increase the final pay out and make generating real-time and accurate reports challenging.
However, a global payroll solution can offer organizations choice around how local payments are made to ensure employees are paid on time and can oversee the currency exchanges to eliminate extra costs such as bank charges or currency exchange charges.
#6 Manages expat employees more efficiently
If you have employees in several different jurisdictions, you are dealing with multiple local laws and in all likelihood, employees on temporary assignments. Brexit has added further layers of complexity to this process, as has COVID-19, with many of these expat employees now either returning home before their assignment was completed or working remotely. Often companies opt to hire local experts to assist with this and, as a result, incur additional operating costs. A single global payroll solution eliminates the need for local experts as the vendor provides this service.
#7 Provides greater security protection and avoidance of breach penalties
Everyone wants a secure environment for the exchange of data, particularly highly sensitive data like employee bank details. Typically global payroll providers are cloud-based and according to the Guide to Global Payroll Management, include rigorous safeguards to maintain the highest security available. Not only is this good for your customers. It also reduces the likelihood of a data breach and the resulting fines. And remember, data breach fines are high.
Source: Data Privacy Manager
#8 Centralizes payments to avoid late fees
In the simplest of forms- one solution = one calendar.
A global payroll solution like Immedis offers a customized calendar of filing and reporting obligations per country, maintained and updated within the platform.
Again, this takes the burden off the payroll team and helps organizations reduce the likelihood of incurring fines.
#9 Reduces time demands on HR by offering employees self-service capabilities
From research, we know that 13% of payroll professionals reported that managing employee inquiries was one of their top concerns. However, a global payroll solution that provides employees with self-service capabilities such as access to payslips, year-end reports, and general queries frees up HR and payroll time to focus on more high value tasks.