Global payroll processing and delivery has long been established as a business-critical service at multinational companies around the world. There is really no debating it, people simply have to get paid accurately and on time every month or the consequences can be genuinely severe.
So, the global payroll function plays a significant role in overall employee morale and company reputation. While in the past, it may have been viewed as a largely back-office human resources process or administrative function, that perception is now changing for a number of reasons. Firstly, the global pandemic has highlighted just how important global payroll stability is to an organization, a globally dispersed workforce still being paid on time was a reassuring presence in a period of intense turmoil. Secondly, the pandemic has resulted in a surge of requests for more comprehensive reporting and global payroll data analytics- there is now a much greater recognition of the value of information held inside the global payroll department and information system.
The result of all of this is something of a revised viewing of global payroll operations and the role this function plays in the wider strategic objectives at a multinational organization. In this article, we're going to take a look at the reasons why global payroll has the capacity to become a strategic partner and specifically, how the digitization of this business-critical service can accelerate its progress in becoming an important strategic advisor.
A growth enabler
Digitizing the global payroll department is now an essential part of any growth strategy- every organization wants to scale and grow at pace, move into new markets, countries and territories, establish a presence and create a profitable revenue stream-this is the nature of any business.
But, preparation is key, and to hit the ground running in a new country and be able to rapidly hire, on board and pay new employees, you must have your global payroll processing function and technology stack in order. Without these in place, companies run the risk of stagnating instead of moving at the speed they want to. HR leaders need employee onboarding to happen quickly for both talent acquisition, retention and talent management reasons.
New countries mean new local country payroll providers need to be engaged with and incorporated into whatever global payroll processing model is in place. A global payroll technology platform or stack will be needed to manage these new providers, so they work as part of a cohesive whole along with any existing payroll providers.
A digital infrastructure is essential to enabling this level of growth and scaling- a global payroll control platform is needed to manage all of the providers, maintain local and international compliance and ensure the new geo dispersed global workforce continues to get paid on time. If an organization fails to digitize, it will encounter a host of workforce management problems when looking to scale and grow. Slow and manual non-digital processes will continue to hamper growth, a lack of new technology will hamper visibility and control and put compliance at risk while global and consolidated reporting to monitor progress and activity will be extremely difficult to get.
Digitizing the global payroll function and moving to a cloud platform for global payroll control allows hr management at organizations to introduce automation and standardization to their global payroll and hr processes. This greatly speeds up the process of payroll delivery and improves overall operational efficiency- standardization and automation are essential components if an organization is growing. When you have more to manage in terms of people and payroll providers, you need assistance in the form of digitized processes and hr technology stacks that are designed specifically to meet the challenges presented by payroll in a growing organization.
A compliance partner
A digital global payroll technology stack or platform can also be viewed as a compliance partner. Compliance is complex and difficult when an organization is not growing, so naturally this level of complexity only increases as a company expands into a new country that they may not be familiar with.
After initial setup in this country, challenges they face will include local labor laws, taxation issues, social security as well as local country nuances and specific local laws. Compliance is a major challenge and visibility is absolutely essential.
Digitizing global payroll provides this visibility in the form of clear and transparent digital audit trails that identify who interacted with hugely sensitive global payroll data, when and for what reason. Both global payroll and compliance managers benefit from the reassurance that there is a digital trail proving that they have met all their local and international compliance obligations.
There can be no complacency when it comes to the subject of international compliance- financial penalties and reputational damage for failing to meet compliance can be severe and damaging. Manual processes are no longer fit for purpose and cannot match the scope and complexity involved when adhering to regularly changing legislation and compliance obligations. A digital payroll platform is needed to manage compliance with control and transparency.
Respond to reporting demands
Another reason to digitize the global payroll processing function is to meet the increasing demands around payroll data reporting. Understanding global payroll costs and being able to compare countries and pay elements has always been important but the technology needed to produce these reports has not always been available.
Many global payroll teams were forced to manually create these reports and drag in different data from a range of different systems-it was all very slow, cumbersome and time-consuming.
The requests for global payroll reporting have skyrocketed during the pandemic- sometimes this is due to cost management as organizations have found themselves in crisis times due to the fallout of the pandemic and need to get a real handle on the costs within their organization and it is no surprise that global payroll is one of the single largest costs that any organization can face.
Other organizations have successfully managed the disruption and are even thriving- in these companies, payroll reporting is more about strategic positioning and where best to locate employees in the future in order to take advantage of opportunities. Payroll data has a lot to say if released true smart analytics and tools that can only be found on a digitized global payroll platform. The requests for reporting will not be slowing down anytime soon so it is advisable for all organizations to have a digital reporting function in place to respond to these requests.
A strategic partner
We have outlined three key areas above why digitizing global payroll can be a major advantage to organizations, especially if they are looking to grow efficiently and quickly. If a company chooses to invest in a global payroll control platform and digitizes the overall function, then it will quickly find that the global payroll department will be transformed into a strategic partner.
It then becomes a department who can inform decision-making at the highest level, supplying the financial operations team and the office of the CFO with informative and helpful payroll cost reporting. It can also supply predictive analytics around the likely future cost of employment and advise on strategic hr decision-making around employee numbers, benefits administration and individual locations that may be advantageous from a cost control perspective.
There is a real opportunity here for global payroll departments to advance from a back-office processing function into a genuine business partner and strategic ally. Companies who understand the value of global payrolls data and have a vision of digitization for global payroll and interconnected departments such as finance and human resources are already investing in digital transformation technology stacks to ensure that their global payroll department is becoming a growth enabler as well as a business partner who can help carve out a competitive advantage.
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