As the largest cost center for most businesses and an increasingly key strategic driver, the payroll function ranks comfortably near the top of business areas in which visibility is essential. Sensitive and highly regulated data concerning your entire workforce is continually processed through your payroll system, the security of which is paramount. Managing those costs, data records, and outcomes would be next to impossible without a clear view of your payroll workflows and the issues that affect them.
All of which you know already. That’s why it's likely that your domestic payroll uses centralized cloud storage, standardized processing workflows, an integrated HCM system, and real-time dashboards that let you see and monitor every aspect of the operation.
The confusion comes when it’s time to take your payroll function global, a prospect that makes even experienced professionals balk. However, the inherent complexity of multi-country payroll is precisely why process transparency is so important — and why business leaders need to stop selling themselves short when it comes to visibility in international payroll.
The Murky Truth About International Payroll
For many enterprises, the need to expand payroll into new countries translates into a need for an outsourced solution. While outsourcing your global payroll function can yield important benefits, ensuring a minimum standard of process transparency with the new solution is key. The majority of multi-country payroll vendors still operate an aggregator model, in which disparate local providers run individual country payrolls on their own systems and send the resulting data to the main vendor, who then presents the information in a single customer-facing dashboard, as if it was all the same.
While this method may succeed in delivering payroll in the countries you need, it directly limits process transparency. You have no visibility into the system actually processing your data, only the results in your provider’s dashboard. With today’s evolving compliance requirements around data protection and statutory obligations, multinational companies need more.
A Clear Need For Transparency
The 2018 Payroll Operations Survey from Deloitte named two of the top three areas for improvement as compliance and controls, and payroll accuracy — two areas that benefit directly from greater payroll transparency. What you can see, you can control, and that includes identifying opportunities for process improvements that enable better management of data, cost, and risk.
Payroll transparency will reveal where data standardization can help compliance efforts across countries, both by improving accuracy and enhancing auditability of your processing. With a better understanding of how data is managed and used, payroll teams and stakeholders can become aware of recurring issues and identify any weaknesses in the system that could be a security risk.
All of this translates into greater cost management. Process visibility helps payroll leaders better assess the needs of their system and plan resources accordingly. They can take steps to improve workflows to speed processing times and enhance efficiency — and to improve data accuracy at key points within the process, such as when data is input from the HCM.
A poorly designed payroll process with limited transparency can cost a company 1.5% of payroll spend each year, and organizations regularly overpay as much as 1.2% due to payroll errors. For multinationals trading in billions, it’s critical to take control of those costs. But regardless of the size of your company, even small efforts to increase transparency in payroll can yield significant savings.
Changing Your Expectations
The path to greater payroll transparency is paved with visible workflows and real-time data access. For the majority of global companies, the ability to directly see and manage payroll data and processes depends on the solution they use.
Transparency is not a feature of a fragmented multi-country network of local vendors, regardless of what the aggregate dashboard shows. Global payroll solutions that use standardized data and processes in all countries are intrinsically designed to support payroll transparency. Centralized, record-based data management and the ability to integrate with your HCM and other key systems will boost that visibility.
The first step to a multi-country payroll organization that supports your workforce and business goals is to assess the level of accuracy, service, and efficiency you expect in your domestic payroll, and apply that to every country you run payroll in. The technology available today enables that level of performance, and the evolving workforce and regulatory requirements facing multinationals demand it.