by Peter Bouten
With the focus on transforming HR, migrating to cloud HR platforms, and enhancing organizational decision making with analytics, the requirement to have a mature global payroll solution has become critically important. The maturity of the global payroll service used by your business and your happiness with its current level of maturity is dependent on many factors including business structure, budget control, historical technology investments, business vision, and awareness of the impact of an immature global payroll service.
The ideal mature global payroll service does differ for organizations. It may include all payroll outsourced to a global vendor, all major payrolls managed in-house with the smaller payrolls outsourced to one vendor or even processing all payrolls internally.
Regardless of the operating model the maturity of the payroll processing is still very relevant. The current state of your global payroll can be measured across five specific areas:
This is the obvious starting point to measure maturity levels. Key areas to consider include Payroll Platform(s), Integration, Self Service tools, and the availability of a ‘Single Source of Truth’. Maturity of the Payroll Platform(s) can be measured from the least mature solution of using different payroll solutions from different vendors in each country processed by in-house payroll teams to the most mature of partnering with a single vendor to provide a global solution in all countries of operation. This maturity scale then follows through to using disparate Self Service systems in each country to a single global Self Service platform and whether all payroll tools are (genuinely) integrated (bidirectionally and automatically) for real-time data sharing with the cloud HR platform.
The maturity of the payroll process starts with the review of whether you have a set of standard global payroll processes, documented per country and optimized for business use; or whether you have no real idea of what happens in payroll in each country in which you operate. Are there countries where you rely on just one person? You then need to look at the Service Model and Staffing levels within payroll. How are your ratios? Are they running at an optimized level of between 1:750 to 1:1500 or are you running at 1:200? The focus needs to be on eliminating manual processes via automation of timesheets, deployment of a Time & Attendance tool, adoption of robotic tools, and increased adoption of Self Service or optimized payroll business processes.
It is time to be honest with yourself! How compliant are your global payroll services? Of course, by now you are fully adhering to GDPR, and you know exactly what to do when an employee asks to be ‘forgotten’. Do you have an annual global audit? Have you received any warning notices or fines from government or taxation authorities? Is your payroll team fully trained and are all salary changes they make authorized by someone else, so you apply a 4-eye principle? When did you last detect payroll fraud? Never have? Well, maybe that is a worry.
Is payroll simply a service, or does it actually deliver strategic advantage to your business? Do you know what it costs to run payroll and how does this compare to established benchmarks, or an outsourced provider? Does payroll add to employee satisfaction, or is it a barrier to hiring and should you improve this key measure of success? It’s important to understand what percentage is actually payroll costs, and what you pay on top in taxes and social security, especially when you’re making hiring decisions. Finally, would the benefit be greater if some of the payroll resources were redirected to strategic initiatives such as advanced reporting and analytics’ rather than payroll administration?
Without the ability to make a global enforceable decision to invest in payroll transformation and to deliver a global project, the aspiration to increase the maturity of global payroll will remain just that. Equally there is a very good chance your new cloud HR vision will fail. Is your organization willing to invest the time and money in the decidedly un-sexy (yet critically important) concept of a payroll project? Is each country operation willing to consider giving up payroll processing, adopt new business processes and support the project?
These five measurements all contribute to the overall maturity of global payroll – current and aspirational. They should be used to enhance the overall business case for change in global payroll. The business case must address the financial costs and benefits, however if it also addresses Payroll Technology, Payroll Processes, Payroll Compliance, Payroll Business Value, and your organizations ability to execute a global payroll program, then the likelihood of both approvals to proceed with the project and the likelihood of the project actually delivering on its promise is much, much greater.