Originally published in the October 2017 edition Global Payroll magazine by Bob Foster with Frank J. Mendelson
Today’s payroll professionals are stretched thin. They’re asked to perform a wide assortment of tasks, often with disparate technology and limited resources. If you’re a global payroll professional, there’s another level of difficulty involved. You’re forced to keep up with payroll laws and regulations in multiple countries—not just here in the United States.
The demands on today’s payroll professionals require direct interaction with human resources (HR). It has become more expected that they be certified in the field. The standards have been raised, which is a good thing. It ensures competency and credibility.
It’s interesting that payroll professionals were among the first to use a computer, but they’ve been the last to go to the cloud. They’re aware technology can smooth the process, but often get stuck with disparate systems because they’re too busy to learn new technology. We’re seeing a trend where those who make the change are able to produce better reporting, conduct more thorough data analysis, and plan more effectively.
I see four primary areas:
1. Robotics, also known as automation
Human error through manual input causes the most instances of failure in any HR process. Having an automated system with seamless integration takes away this common issue, reduces the risk of noncompliance, and ensures accuracy. It also frees up the payroll professional to take on tasks such as data analysis and planning.
2. Global Gross-to-Net
Every day is day one on the internet. It’s important to think like that. True innovation is always an ongoing process. There has been a need to challenge the current operating model of utilizing in-country providers to process the payrolls. Enhancements with gross-to-net technology are making innovative leaps and setting a mandate in the marketplace.
3. Cloud-Based Systems
Many businesses are moving their payroll to cloud-based services. This means they are run-on servers and can be accessed using any internet connection or on any web-enabled device. The primary benefits of a cloud-based system are: regular updates and back up of data, simplified data entry, and access from almost anywhere.
4. Data Security
Hackers infiltrating technology have become all too commonplace. We spend a significant amount of time focusing on this. Companies are more concerned than ever about the security of data and information, especially the payroll industry. Cloud-based systems that allow access on tablets and smartphones cause even greater concern. However, if companies go through due diligence in selecting their payroll service providers, they will find that most of the cloud-based systems carry very strict data security protocols. This is a good way for a company to ensure their information is secure. Is there a frequently asked question that will no longer be part of the conversation in payroll in the near future?
“Should we outsource our global payroll?” With the changing role of the payroll professional and the changes in technology, it will become integral that companies outsource global payroll to a provider that automates the process from beginning to end, consolidates data in one place, allows easy accessibility, and delivers support services with their cloud-based technology.
I prefer a proactive approach to remain current on the latest trends, as well as updates to laws, rules, and regulations around the world. It’s important to look at data, competitors, and processes of large companies—even outside the payroll industry. I enjoy staying up-to-date on what’s going on with disruptive companies, from General Electric to a company in Lithuania who is developing the first flying car.
In addition to integrating ourselves into the industry networks, my team works closely with our in-country affiliates to provide updates to our payroll services team, including training on new legislation and payroll processes.
As professionals utilize cloud-based services, it gives them more time to be a strategic partner to the rest of the business. Payroll departments need to focus on providing other departments with tangible data and reports that impact the business and provide a competitive advantage. As technology and automation free payroll professionals to think and act more strategically, they have the opportunity to showcase the skills and knowledge that make their roles invaluable.
This year has been interesting. We still don’t know all the ways that payroll will be impacted by major political decisions made in 2016. From the U.K. voting in favor of leaving the EU, to Donald Trump winning the U.S. presidential election, 2016 proved to be full of surprises, many of them having huge long-term impacts on businesses, including payroll departments. I suspect we will see companies moving from one country to another because they do, or don’t, like certain nationalistic approaches. I would say the most direct impact would be the change that South Africa and many U.S. states made to their minimum wage, increasing it to rates equal to or greater than many salaried workers earn. The change impacts wages, headcount, workload, overtime pay, and salaries.
I see three primary challenges for payroll teams:
1. Constant change
With evolving technology, new legislation, and shifting work hours, it becomes challenging for any business professional, but it’s especially important for payroll teams to remain flexible and adapt to (and embrace) change. It’s helpful to participate in training like webinars, workshops, and conferences to increase knowledge and stay in the know. Don’t be afraid of change. Most of the time, the changes will also bring cost savings and improve efficiency.
2. Keeping up with payroll, tax laws, and remaining compliant
According to the Internal Revenue Service, about 33% of employers make payroll mistakes that cost billions of dollars in penalties each year—and that’s just for the United States. When your company is global, that risk increases. There are varying tax laws by country, and even different mandates for correcting mistakes. It’s a lot to keep up with! That’s one reason more companies are outsourcing global payroll to organizations that can consolidate data, take responsibility for compliance with laws and regulations, and provide reportable data back to the company.
3. Getting accurate, real-time reporting
The need for detailed, accurate, real-time reporting is one of the major reasons for moving to a global payroll system. With a single system in place, and the automation we discussed earlier, the company can view and retrieve data quickly and without the risk that human involvement carries. This also allows for simpler, more meaningful analysis of data.
First, realize it’s the smart thing for your business, and implementation isn’t as scary as you think. If your business is global, there are definite benefits to managing your employees on a global platform. If you don’t manage your business globally, reconsider and take a deeper look. With company growth, you will often find that work is being done on an international model even if it’s not discussed often.
Invest the time to create consistent standards for reporting and data management. Global data and consistent standards are the foundation of global payroll. There will still be variances due to country-specific differences, so make sure you include an allowance for that.
Make sure you get buy-in. The level of support by executive management can greatly impact a global payroll effort, for good or bad. The executive is accountable for the global business, so if you can get them to see the benefits, they will support the effort. Utilizing a single global system allows management to leverage the payroll professional’s skills and knowledge for more meaningful tasks, which can, in turn, make the company more competitive and profitable.
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