Payroll is king in times of crisis

The first peak of the coronavirus pandemic reshuffled the priorities of both large and small companies. The result: smooth, efficient payroll calculation and payment is now by far the top concern for HR departments in 8 out of 11 countries all over Europe, according to a survey run by SD Worx, a leading European payroll and HR services provider. Within that context, the vast majority prefer to keep their payroll in-house, and paying only fixed salaries remains the go-to option, despite an increasing demand for more flexibility.

Payroll and HR services provider SD Worx organized an extensive cross-country online survey in June 2020. A total of 3,000 companies of all sizes, spread over 11 European countries, shared their insights on the future of work and people. This showed that almost half of European companies (46.1%) are convinced that COVID-19 will have a lasting negative financial impact on their businesses. Needless to say, this urges them to also reprioritize HR strategies and objectives.

The survey proved that correct and on-time payroll is by far the top priority in today’s HR strategies. About 4 out of 10 (41%) survey participants stated that efficient payroll calculation and payment will be ‘very important’ going forward. Even more, payroll tops a list of 19 HR priorities in all countries, except for Austria (priority number 2), Switzerland (priority number 2) and Ireland (priority number 6). “Answering and processing HR questions from employees” was the number two priority. Remarkably, both top priorities are operational, administrative tasks – the basics of HR.

“In times of crisis, getting the basics right is key. If you don’t have smooth HR systems and processes, it is almost impossible to be nimble and agile – which would be a huge setback when change is the only constant”, comments Michael Custers, Chief Marketing Officer at SD Worx.

The importance of payroll means that companies are facing a crucial dilemma: do they outsource the whole payroll process, or do they manage everything in-house? The figures show that the last option is still the most popular – especially among smaller companies, with less than 250 employees. Change doesn’t appear to be on the horizon: following the coronavirus crisis, companies prefer to take on more HR projects themselves and outsource less. Despite this lower interest in outsourcing, however, payroll remains within the top 5 of most or entirely outsourced HR tasks.

When it comes to outsourcing also the preparatory tasks of payroll (i.e. the gathering and input of data such as absences, bonuses and allowances), Belgium leads the pack, with 26.1% of companies entirely or mostly making use of third-party services, while Switzerland is last (5.9%). Companies that make use of this type of outsourcing highlight these main benefits: reduced administrative burdens (36.9%), continuity of HR activities (29.7%) and enabling staff to focus on more value-adding tasks (27.3%).

“If someone in my team gets sick or leaves the company, that doesn’t affect our payroll handling. Everything is well documented and in the safe hands of SD Worx”, says Bart Van der Wee, Global Cost Management Director at Cleary Gottlieb Steen & Hamilton LLP

The SD Worx survey also shows that many companies only offer fixed salaries (49.4%) to their workforces. Employers that offer variable salaries and benefits mainly add premiums, bonuses and commissions (57.8%), refunds or expenses (43.1%) and mobility benefits (32.8%) to the package. Although about four out of ten (42.8%) of the (other) companies plan on making their remuneration policies more flexible.

It is remarkable that making the remuneration of employees more flexible is next to last on European companies’ priority lists. The result: employers that offer their personnel a reward menu that reflects life stages, preferences and personal needs is hardly the reality. Only 6.8% offer their staff a flexible budget to spend on benefits they value the most, such as technical devices or supplementary social security.

“There’s still a lot of unused ammunition in the war for talent, such as flexible rewards”, says Michael Custers, Chief Marketing Officer at SD Worx.

“We at SD Worx believe that fluid HR is the key to success. Corporate success and growth will be decided by a company’s capability to adapt quickly and smoothly whenever changes occur. Needless to say, HR departments will play a crucial role. They should introduce flexible, customized, continuous, and agile approaches to their way of working. Or in other words: they should become increasingly fluid.”

To take a leap, every HR department should resemble a Hula-Hoop shaker, combining both a solid base, including payroll, and creating fluid movements, such as flexible rewards, on top. The survey, however, indicates that we still have a long way to go. In the next couple of weeks and months, SD Worx will share more publications concerning fluidity in HR and payroll.