Innovation in Global Payroll Technology

Where would we be without innovation? Thomas Edison didn’t invent the light bulb; he innovated something that had been invented (and failed) 80 years earlier into something that worked! Fast-forward to today and the light bulb has been innovated into more energy efficient versions, such as LEDs, and we even have smart devices that can turn them on and off for us. But, it doesn’t end there. In another few years, more innovations will come and only time will tell how we get our light.

Innovation is a continuous process. The same principle applies to global payroll technology. Let’s look at where that technology has been and where we are today.

Historical Challenges:

One of the biggest historical challenges with payroll technology involves manual processes related to client and third-party data (i.e., external data). These processes include: reviewing, re-requesting, reformatting, rekeying and uploading data. In addition to causing manual effort, incomplete and non-standard data can adversely affect quality and cycle time during the set-up of new payrolls and of any ongoing payroll cycles. Asking clients and third parties to improve the format and contents of their data cannot be a payroll provider’s only solution. Despite the best intentions of clients and third parties, their external data may not be easily changed. These changes may only be possible through the implementation of an IT project, which cannot be solely relied upon. As such, payroll providers must take matters into their own hands and provide technology that accepts, manages, and even automates the management of imperfect external data.

Once the external data is ready, it is marched through a set of predictable, repeatable steps, that are defined through a set of business rules (i.e., workflow and calculations) that are required in order to process payroll. Automating these repeatable steps is not difficult, but requires a well-defined standard process.

Ultimately, once a payroll provider has automated or semi-automated the management of external data and has automated the internal processing steps, “no-touch” or “low-touch” payroll can be achieved, which results in dramatically improved quality and cycle time. “No-touch” or “low-touch” payroll is achievable with existing technology. Well-managed data that is integrated with a payroll provider’s gross-to-net calculator is the key

Future enhancements:

Enhancements to existing technology can fill some of these payroll management gaps in several ways:

• Leverage the latest technology that helps in the handling of all types of data forms (e.g., Flat files, PDF’s, etc.) to decrease manual data management
• Enhancing and expanding the use of existing ETL (i.e., extract, transform, load) technology to also decrease manual data management in both set-up and ongoing operations
• Continuously improving upon automated data validation techniques to catch errors and ensure quality
• Expanding the use of collaboration tools to improve the management of requests and their related status

The future of payroll technology is moving toward Artificial Intelligence (AI or Robotics Process Automation), which will go beyond “no-touch” payroll and the operations teams and will drive significant changes the global payroll knowledge management process, including the automation of updating statutory rates and rules in each country. AI is also in play for employee self-service related to payslip questions. Specifically, chatbots (i.e., technology designed to understand human questions and respond with conversational answers) will become more commonly utilized to answer these types of questions. In addition, taxing authorities are rapidly going digital – and, in some countries, are already to the point where they will only accept digital feeds to satisfy their compliance reporting requirements. To evolve and remain relevant, payroll providers need to be digitally linked with these taxing authorities, which requires a dedicated effort to build these integration points, and in many cases, requires formal authority certification. Providers with proprietary software must invest in digital innovation, or they eventually won’t be able to do business in these digital countries.

Benefits of global payroll technology:

All companies struggle with managing global payroll. In other words, answering questions like:

• Do I have payroll compliance problems in any country, and what are they?
• What is my global payroll provider cost and how does it compare to budget?
• What are my global workforce costs for payroll taxes, and what should I budget for next year?
• How are we doing with our global gender equity program?

With a global payroll partner, getting answers to these types of questions shouldn’t result in a series of global surveys and projects; it should, and can be, available on an ongoing global payroll governance dashboard. The technology exists and the dashboards can be out-of-the-box or customized. Unfortunately, most human capital management systems cannot reliably answer most of these questions. Globalizing payroll data is the only way to get this type of critical workforce data. And, again, the technology exists. Making global payroll governance a priority and partnering with the right global payroll provider that manages and stores the underlying data are the keys to truly managing payroll on a global basis.

Back to the light bulb:

Innovation is a continual process. So, just like the light bulb, payroll technology needs to be a continuously improving innovative solution. If it’s not improving in creative, innovative ways, it will become irrelevant and unable to keep up with new regulations and requirements.