Global payroll is a strategic asset that can be incredibly powerful when fully unlocked. As both a business driver and a fundamental aspect of employee experience, payroll insights can help determine where to hire, where to cut costs and where to expand.
But spreading payroll data over multiple systems dilutes its value; its full potential is realized through an optimized experience for global users. Global transformation, in turn, requires the right buy-in from the many stakeholders involved. IT, finance, HR, and the C-suite all need to be on board, along with employees themselves and their representatives, all the way down to the local level.
“All payroll is ultimately local, in local currency, under local regulations,” ADP Vice President Product Management Tonya James said at the ADP ReThink 2024 event in London.
They key lies in helping these stakeholders understand that beyond the fundamentals of accuracy and compliance, payroll plays an increasingly strategic role. It aids decision-making, provides operational agility and supports business expansion. Done properly, it can enhance cybersecurity, reduce overhead costs, increase efficiency and promote employee well-being.
Global transformation is a process that requires a lot of effort, planning and investment, but the prize at the end is a unified, state-of-the-art payroll system that’s able to give global insights and help guide the strategy for the organization.
Business expansion and efficiency
Payroll data forms a critical part of business decision making, affecting questions of cost management, commercial growth, expansion and DEI. In ADP’s The potential of payroll in 2024 report, which surveys payroll professionals across global organizations, almost half of respondents said senior management was requesting more payroll data and asking more questions compared to last year, but most (56%) lacked full payroll visibility across locations. In fact, 65% reported being without a global insight dashboard. Payroll data can only fulfill its role effectively if teams collect and collate data within a unified global payroll experience.
“Global payroll leaders have the opportunity to help inform decisions about new markets and growth strategies by providing insights on workforce investments around the world,” James said. “Companies want a global unified experience with consolidated insights to help them understand workforce investments and trends for all their countries.”
A global dashboard is an especially key tool for modeling and informing workforce strategies in real time. The pandemic and geopolitical conflict have shown the importance of operational agility and quick decision making. Organizations that can’t access global data are effectively operating in the dark during high-stakes developments.
“This trend towards a global, more flexible workforce along with increased complexity and risk means that companies are looking for integrated HR and payroll systems, which scale with the organization and are adaptable to changing needs,” James said.
Getting legal on board
After finance, a key piece of the global transformation team is legal and compliance. Payroll and time and attendance have historically been separate entities, but as working time regulations have come into force in many jurisdictions — along with strict reporting requirements — combining or closely integrating the systems has become crucial. Complicated tax rules and reporting requirements that vary from country to country and city to city have also made accurate reporting time-consuming and expensive.
With one scalable solution for multicountry payroll, ADP provides optimal support for any global payroll transformation.
When these systems are provided as part of one package within a global payroll transformation, the data is transferred automatically, increasing compliance and saving time and money.
“Organizations are looking for a unified, best-in-class user experience across the globe, underpinned by global standards. However, this standardization cannot be to the detriment of local needs,” including local compliance, James said.
The potential of payroll study found that when organizations fail to put compliance standards in place, or when different countries have different methods for tracking compliance, the discrepancies lead to lower accuracy and performance. Organizations become exposed to expensive tax audits, regulatory penalties and other legal issues. Integrating this data as part of a global transformation saves time and money as organizations can confidently provide governments with accurate data.
Improving the employee experience
Paying employees accurately and on time is more critical than ever given the cost-of-living crisis. The combined effects of the Covid-19 pandemic, geopolitical conflicts, energy crisis, inflation and increases in commodities prices have pushed many workers to the brink. Accurate, timely and transparent payroll has become a social impact within the ESG framework, as it’s crucial to employees’ financial and mental well-being.
While payroll accuracy has improved from the lows seen during the pandemic, the overall mean accuracy worldwide is 78%, up slightly from 75% last year, according to ADP’s The potential of payroll survey. One-third of respondents said it takes two or more pay cycles to rectify mistakes. Global transformation improves pay accuracy and pay transparency, and can enhance the employee offering through new, easy-to-use technology and self-service functionality that integrates HR, time and attendance and benefits systems.
“Now is the time to be more human.”
ADP President and CEO Maria Black
The results are good for workers, good for HR, good for management and good for business.
“We’re listening to stakeholders on all sides of the equation,” ADP CEO Maria Black said at ReThink 2024. As business leaders aim to balance innovation with the need for stability, the key is respecting people, building processes and best practices, and then remaining agile enough to respond to the next wave of challenges, she added.
“Now is the time to be more human,” Black said. “We’re using the very best technology to get as much scale as possible, but tech is for scale. Humans are for value.”
Workers who believe their pay is fair are three times more likely to be fully engaged on the job, according to the 2022 ADP Research Institute Global Workplace Study. The potential of payroll in 2024 survey found that half of workers who are unhappy with the fairness of their pay are actively looking for alternative employment, and 76% would consider looking for another job if they discovered there was an unfair gender pay gap or their organization lacked a DEI policy. Accurate, timely pay also improves employees’ engagement and productivity.
The case for data security
IT leaders have become indispensable stakeholders in global payroll transformations, as they play a crucial role managing cybersecurity and minimizing the complexity of implementation and managing data flow.
ADP’s The potential of payroll in 2024 survey found that data security was the No. 1 aspect of worldwide payroll that respondents planned to improve, followed closely by data quality and integrity. For payroll, it’s not a question of “if” but “when” an organization will face a cybersecurity breach. Data security can be one of the primary factors influencing payroll implementation decisions.
At the same time, data security concerns and complexities with integration tend to be the top barriers to implementing global payroll, since many companies still manage payroll with numerous manual processes and unconnected systems. Breaking through these barriers would drive massive efficiency savings and mitigate risk, the potential of payroll study found.
“At ADP, we pride ourselves on our obsession with protecting the data of your organization, and the confidentiality of your colleagues’ information,” ADP Senior Vice President Global Payroll Jeff Phipps said at ReThink 2024.
That’s where IT stakeholders come into play. Without sufficient integration, on average IT resources are spending more than 20 hours per week per country managing data flows between payroll and other business systems — time that IT teams could be spending elsewhere, the survey found. Payroll increasingly requires IT, data security, analytical/ reporting and compliance resources, leading to a skills gap in many organizations. Adopting a global payroll transformation helps ease integration challenges and saves time and money. It also supports some of these skills requirements and frees up existing team members to focus on strategic areas.
Engaging IT managers further ensures payroll systems are future-proof, able to incorporate emerging technologies and cater to evolving business needs without requiring significant time for IT development. As generative AI tools come online, global payroll teams will become even more agile.
Read more
Sign up to keep up to date with ReThink Quarterly.