The payroll landscape is becoming increasingly complex. Over the last few years, global companies have cited determining tax withholding obligations, reporting taxable compensation to local agencies, and year-end processing procedures as their top payroll challenges.
Today, the pandemic has amplified existing challenges and introduced new ones. As workforces around the world rapidly moved to different work arrangements, organizations needed to ensure their people were paid accurately, on time, and in line with rapidly changing local or regional initiatives. Prior to COVID-19, companies were less than prepared with only 39% using cloud-based technologies for payroll functions.
As well, the regulatory landscape has been changing in various regions as the pandemic lingers, making it difficult for organizations to remain compliant and participate in the relief programs that are available. Poor economic conditions have also been putting prolonged financial stress on the workforce. The crisis has forced organizations worldwide to reevaluate their current approach to global payroll and consider moving away from antiquated processes and systems.
Many companies address each country’s payroll individually. Over time, this approach results in a fragmented payroll landscape with multiple technologies, external vendors, and internal teams delivering widely varied services and experiences in different countries.
With little standardization, efficiency suffers, and costs start creeping up. Leadership struggles to understand, compare, and improve key metrics. Deteriorating visibility into payroll operations heightens the risk of non-compliance with external regulatory requirements and internal policies. As well, threats to the continuity of business operations – such as a health crisis – can impact different regions as payroll teams work remotely or become ill. Employee experience, in turn, can take a hit.
Times of crisis are when a single, cloud-based approach to global payroll or multi-country payroll becomes attractive. A global payroll operation enables companies to standardize and centralize common payroll processes at the global level while providing flexibility to manage country-specific requirements at the local level.
Typically, a robust global payroll strategy provides companies with the following benefits:
Lower risk exposure: A single solution for global payroll can help you stay on top of changing legislation in multiple regions and avoid costly fines and penalties. As well, it can help lessen reliance on hard-to-understand customized processes at the country level.
For instance, a unified global payroll platform can help companies conduct global audits that help administrators identify and resolve issues proactively.
Improved efficiency and cost control: A global payroll strategy generally helps companies move away from expensive customizations, consolidate interfaces and vendors, and leverage economies of scale, therefore resulting in lower overall costs.
Companies can further control costs by exploring outsourcing services. If a company chooses to run payroll in any country in-house, they must have the expertise and technology to manage the entire process themselves, which can translate to a notable investment even for countries with relatively low employee populations. The appeal of such services is reflected in the fact that multi-country payroll is growing at nearly two times the rate of the overall payroll market.
Better reporting: Deloitte’s Payroll Benchmarking Survey found that many organizations do not have complete visibility into their global payroll operations, but are looking to gain a better understanding of holistic operations. A global payroll platform can provide companies consolidated reporting that reveals insights at local and regional as well as global levels. With the unified platform acting as the single source of truth, reporting becomes easier and more seamless. Leaders can track and compare key metrics such as payroll accuracy and timeliness, either globally or by country/region, to inform key decisions on payroll operations, workforce composition, etc.
Enhanced employee experience: Prior to the pandemic, organizations were beginning to view payroll as a more integral component of the overall employee value proposition. A unified global payroll platform makes it easier for innovations on self-service, mobility, helpdesk support, etc. to reach employees in all countries. It helps offer employees consistent service standards across the world while also providing them a localized user interface that reflects local norms in terms of time, currency, language etc. Organizations can leverage a single solution that allows for customization and fulfillment of geography-specific HR requirements.
As well, employees are experiencing acute levels of financial stress due to the pandemic and over half of U.S. workers have struggled to cover their expenses between pay periods over the past six months. A robust global payroll strategy can help organizations pay their entire workforce accurately and on time, regardless of where they’re located.
In this new reality, organizations need to approach payroll differently to make smarter business decisions. Leading global organizations are turning to more reliable global partners with innovative technologies to help them adjust to the growing number of complexities, lack of resources, and ever-evolving legislative changes. Learn how Dayforce can help your organization better manage global payroll in an ever-changing world of work.