If your organization has an international presence, then it has a global strategy. Your C-suite executives have a growth roadmap that includes a map of cross-border competition. As more countries or regions are added to your firm, a network of regional headquarters likely appear. Yet, during the outbreak of COVID-19 a critical unit of analysis for global growth has been exposed: the process of getting everybody paid.
The payroll function goes under the radar in many companies, working quietly, doing its essential job. But the pandemic has replaced ordinary times with extraordinary times, acting as a catalyst for shaking up the payroll status quo.
As countries one by one have grappled with the crisis, a dangerous number of payroll weaknesses have come to light. Kelley Rousayne, Global Time to Pay Advisory Practice Leader, The Hackett Group, recently authored an article on this precise topic. Now she joins us for a two-part Payday podcast, "The Seven Payroll Weaknesses Exposed by COVID-19," where she shares her experiences from helping organizations with the payroll strategy process optimizations, performance studies, and research with CloudPay's David Barak.
The Payroll Perils in Brief
Kelley's resounding message is one of familiarity. COVID-19 exposed long-established flaws in payroll that were not new to her or her peers. The difference was, C-suite executives started to sit up and notice.
"We weren't surprised!" "We'd seen these things just by going through our transformation projects. But what we found was executive teams were now noticing. And so that's why we say they were exposed."
So, there's a chasm between the perception and reality of these flaws. Payroll weaknesses, such as poor business continuity plans, lack of digitization and automation, aren't born from crises. Leaders across the organization simply had insight into their ripple effect.
Find out why C-suite executives started taking notice to payroll weaknesses by listening to part one of the podcast here >>
1. Outdated Business Continuity Plans
The adage "people are your most important asset" means that the function of payroll is to protect intangible assets, and thus, shareholder value. What could be more important than that?
So, during the pandemic, business-as-usual plans shifted up a gear to business continuity plans. However, few payroll functions were truly prepared, according to Kelley. She cites organizations anticipating things like application or site outages, but not new tasks such as creating furlough codes and integrating this data with third-party systems. So, many companies scrambled to implement the hardware, software, and VPN bandwidth needed for virtual working and were plagued with poor execution.
When it comes to your business continuity plans, consider the following questions:
- What are the critical technical weaknesses?
- Are your HR and payroll systems remotely accessible?
- Is the IT infrastructure secure and robust?
- Can you receive payroll inputs on time?
2. No Global Payroll Strategy
During the crisis, when global teams needed speed, many experienced complexity layers – from the organizational structure to the processes and information flows. As Kelley puts it: "Typically, payroll organizations have not been very agile and have not had great standardized testing approaches to configuration changes. And during the pandemic, we saw country changes, state changes, and it was coming from everywhere." Ultimately she found that decision-making was slower when there was no single, global payroll process owner.
3. Low Level of Process Automation
The payroll organizations with manual processes found it most hard to transition to a work-from-anywhere environment. Kelley suggests you ask questions such as, "What are the risks of us not having automation, not having reporting, and not having the productivity that comes with it?" Companies with automated processes were better able to quickly adapt.
4. Lack of Digitization
COVID-19 created a hybrid model of work. Virtual working required new collaboration tools, software, and processes necessary for productivity. When the doors are closed, systems and data can’t be under lock and key, too. Every time a process has paper it's more costly to the business. Yet, Kelley's conversations revealed that many companies are "still pretty far behind." For example, many still required documents to be physically signed, or mailed to an office location, manually scanned or processed.
Dive deeper into the conversation about digitization by listening to part one of the podcast here >>
5. Slow Response to Compliance Changes
Tied to the global strategy, payroll in multiple countries is complex, and systems need to be compliant with local, state, and country regulations. Governments across the world have reacted with different and changing laws to existing policies to help people at work. Monitoring and testing these changing pay policies increased workloads, stress levels, and layers of complexity.
6. Poor Data Quality
Early into the pandemic, business leaders saw infected country numbers accelerate. What did they need to know? Kelley experienced their questions first-hand. "How many employees do we have? Where are the employees working? Are they working full time? Are they on sick leave?"
Poor data quality and a lack of analytics hampered fast decision-making. Companies on 20 to 40 different payroll systems couldn't turn this data around fast enough and with enough pinpoint accuracy.
Yet, Kelley reminds us, "Payroll has so much data. Take a look at the scheduling, the timekeeping, and marry that against your HR data and your financial data, you can make key decisions."
7. Single-Person Dependencies
Kelley experienced that many organizations are "lean" on skills and coverage for crucial processes. "They are working in a local environment where they may have one person who knows that process who has been doing it for several years. And there are no backups." And so, if that person gets sick? How do you turn around and complete payroll? Teams without cross-trained staff or automation struggled to keep up.
In the podcast, you'll also discover:
- What C-suite executives want to know from global payroll leaders or HR directors during crises
- How COVID-19 can be your catalyst for digital transformation
- Why on-demand pay is set to accelerate as an employer trend
- How payroll practitioners can make a business case to build more agility, automation and analytics into their payroll function
- Why if you're partnering with one global vendor, it makes it "easier to have consistent processes"
To discover all this and more, check out the podcast now at www.cloudpay.net/payday-global-payroll-podcast