Is Integration with HCMs the Future of Global Payroll?

November 5, 2020
4 mins read

Before I answer this, let’s talk about where global payroll is today. When asked at a recent webinar how many of those in attendance were currently using a globally consolidated cloud-based platform for payroll, 42% said yes, and 40% said no. The EY 2019 Global  Payroll Survey Report reveals that when talking about payroll challenges, those working in the professional list management reporting, finding the right payroll talent, and handling late submissions or corrections as the top hurdles apart from legislative requirements. Other problems include access to a real-time dashboard and exceptionally low standardization across the global payroll process.

Solving the payroll problem

From our research, we know that on average, companies currently use at least 7 different payroll providers. This proliferation of services brings several issues. Complaints range from a poor level of service, a delay in the response time to queries to a lack of integrations. So, recognizing that there are issues, it’s time to talk about solutions. Again, EY’s 2019 survey offers some insight – 60% agreed that a truly global payroll delivery model would significantly benefit their organization. Apart from a growing trend in moving payroll to the cloud, there is a movement to leverage robotic process automation. Plus, a greater awareness that the employee experience is inextricably linked to payroll, with 49% of employees starting a new job search after experiencing just 2 problems with their paycheck.

How innovation in HR is acting as a catalyst for change in payroll

HCMs have undergone massive transformations with a drive towards centralization at the heart of much of this change. What is still missing is the connection between HCM and payroll, a relationship that is invaluable in terms of the wealth of data and strategic insights that organizations can glean from such a synchronization. For those still working manually, just think of the possibilities available to you if you had this incredible mine of data all in one place?

What an integrated model looks like

Entering data by hand and using Excel leaves an organization open to errors, inaccurate reporting, poor employee experience, and critically, a multitude of security and compliance issues. Plus, it is time-consuming. This element becomes an even bigger issue as you grow, and suddenly, you are faced with more inputs, shorter cut-offs, and tight deadlines. There is also the fact that managing multiple payroll cycle times is difficult.

However, when payroll is integrated with your HCM, we can start painting a new picture. Now organizations are looking at reducing payroll errors, having access to reporting and real-time data, offering an improved employee experience, compliance, and data protection. Dave Muldoon’s blog, Why the Key to a Modern Global Payroll Platform is Integration with HCM and Finance Systems, explores this topic in greater detail.

What process automation means for organizations

One of the key benefits of integration is that it facilitates the automation of payroll processes. As a direct result, companies go from requiring an early cut-off date (P-16) to a much shorter one (P-6), which instantly frees up time and minimizes the change file during the cut off period. In addition, the data entered is validated at each stage of the journey, thereby identifying anomalies far earlier in the run. For example, if a new starter is missing some information, Payroll is notified in advance of the run, allowing them to provide the required information, thereby ensuring the employee gets paid.

Automation also facilitates integration with banking systems and payments services with multi-rail access. This makes it easier for you to ensure that your employees, regardless of their location or transaction currency, will receive their salary on time.

The combined forces of integration and automation can reassure organizations that they are following local and national legislation. Having this confidence in compliance is critical, especially since compliance is a huge challenge, and the consequences for non-compliance are severe.

In short, automation and integration mean:

  • time back
  • a later cut-off for payroll close leading to a reduction in change files
  • a reduction in effort through system validation of points
  • confidence in compliance
  • improved accuracy of information
  • reduction in payroll queries due to inaccuracies.

Where to next?

Integration with HCMs is not the final stop. With it, payroll is elevated and can become a true strategic business partner. It will allow payroll to have a seat at the table and provide the business with actionable insights on salary costs, global locations, and much more.

However, I see it going even further. Our mission is to shift global payroll to a truly touchless experience. Already part of this goal is coming to fruition as we can currently integrate into some of our in-country engines. This is huge because it means no more manual pulling down information. Everything- inputting, updating, changing- is completed automatically. You will hear more about this in an upcoming blog from one of our partners.

I also see a greater emphasis being placed on financial planning and analysis. CFOs and CHROs will expect to have access to financial modeling based on salary costs and people.

What else do you envision? Let’s look to the future so we can start planning and prepare for it now.

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