How To Build a Strong Payroll Foundation Across Borders?

Although payroll varies from country to country, with different legal compliance, regulations, laws, unions, and bargaining agreements, the overall process of managing payroll is fairly similar across regions. Many organizations use a single finance system and require consolidated financial reporting, which includes payroll reporting, to help them effectively manage their business. It becomes quite challenging, unless you are running a single global system for your finance, payroll, and even time management, since you need to have the technology to support those processes.   

However, by going global, you will achieve a new level of operational efficiency. Modern systems that can manage payroll and time management globally enable more efficient processes and provide a more integrated system. This helps with consolidated reporting and having more accurate data, which can be accessed on a timelier basis. It means you work with one single vendor and one single system, making it easier to support the payroll process, resolve issues, and handle maintenance. 

It's well known that some large international payroll service providers don't always have the best level of service. Using multiple vendors can become really challenging. Running payroll is sensitive, especially for employees that are expecting to get paid correctly and on time. Consolidation – bringing multiple systems together – streamlines the way you manage these systems and run payroll. It's easier to use one single system instead of multiple systems or a mix of systems and service providers. Being able to fully control the end-to-end payroll cycle puts the power of getting it right into your hands, instead of relying on a provider that has to support thousands of other customers. 

There's also a new level of automation available. For example, there's the whole pre-payroll process in continuous payroll and new AI features, like chatbots and the ability to ask questions to understand your pay. These all affect how you manage payroll, making things more efficient, saving time, and ultimately saving money. 

It's clear there are strong drivers for change. But why is there this status quo where companies know all this but still don't set things in motion? 

There are a few different reasons. Some get stuck in the cycle of "we've always done it this way," so they just keep doing what they've always been doing, despite there being better and improved ways of operating their processes. Often, there are misconceptions around the effort required to make a change, the cost of making the change, or the return on investment. More often than not, there's a fairly strong return on investment for implementing a new global payroll system. If there wasn't a return on investment, thousands of companies wouldn't be making this type of change every single year. 

Sometimes, the latest capabilities of leading software solutions on the market are not always known to an organization. They don't always realize that there are new ways of working that can create additional value or efficiencies that weren't previously available. That's understandable—not every organization spends time keeping an eye on what software vendors are doing with their products. Everyone's busy with their day-to-day work, especially in payroll, so it's easy to miss the release of the newest capabilities. What some payroll vendors, particularly SAP, are doing right now with payroll is quite exciting in terms of new features, functionalities, and capabilities that can help companies improve their payroll and time functions, among other areas. 

One example is in the area of employee retention. In the SD Worx Payroll Navigator Study from last year, where we asked roughly 20,000 employees and managers about the impact of payroll, one interesting finding was that roughly 30% of employees who experienced delays in payouts or inaccurate calculations were 20% more likely to be looking for new job opportunities. From this data, we can confidently say that having a powerful payroll engine and getting the basics of payroll right will have a huge impact on employee retention.

There's been a lot of talk about AI, skills management, and some of these other newer, "cooler" technologies in the HR space right now. However, it's really important to go back to the basics and look at your HR foundation. Success begins with a strong foundation. Before you can start building a house, you need to have that foundation in place, one that is strong, stable, and can support your entire house. You can look at core HR, payroll, and time management as this strong foundation. Without a solid foundation, the house may crack or crumble under pressure, and similarly, a weak HR and payroll system can lead to errors, inefficiencies, and compliance risks that affect the entire HRIS. 

And when the foundation is strong, you can confidently build upward and outward—adding walls, rooms, and intricate designs. Think of this as processes and systems such as performance management, recruiting, onboarding, analytics and so on. Every layer depends on the stability and reliability of what's beneath it. 

Time management is also crucial because people need to be able to register their time, book their vacation, and see their vacation balances. All of those things—master data, time data, leave and absences, and payroll—are tied together. Let's say you want to extend your family and build an extension. You could look at this as extending payroll or time processes into new countries, for example. You need to have everything else in place before you can start to add that extension. You cannot add existing processes if your existing processes are not strong and stable. If you want to add that smart home system, in our case the AI features, you have to have a complete house in place to get the maximum value from it. 

Having a solid, well-run, well-defined core HR, payroll, and time management foundation is what you need to put in place before you can get the rest of the benefits from your HR system.