The Trouble with Fragmented Payroll
Jan 3, 2019
It’s a long-standing story in the payroll industry that one provider can’t satisfy all the payroll needs of a global company. With all the differing regulations and constantly changing requirements, the story goes, only local or regional providers have the expertise and access needed to properly process payroll across various locations.
The fault in this story is that it doesn’t account for the reality of today’s interconnected, digital, mobile working world, in which colleagues with highly specialized knowledge and experience across a variety of fields—or, in payroll’s case, locations—can work together seamlessly as part of a larger organization servicing the globe. The problem caused by this story is that it discourages multinational organizations from trusting what they have experienced in other areas of their business: namely, that centralized data and standardized processes deliver a more consistent experience, more comprehensive data, and more accurate outcomes than a fragmented collection of services can achieve.
While the myth persists, multinationals are learning the truth and seeking solutions that embrace the benefits of centralized data and unified platforms. And as the focus of regulators and employees alike remains set on data protection, it’s important for organizations to embrace systems that prioritize security and visibility—as well as the valuable insights that too often remain scattered across disparate datasets.
Using multiple vendors to process payroll in various locations means multiple software platforms, datasets, formats, processes, and reports—and not much standardization. With the experience of last year’s all-but-global regulatory overhaul, every multinational organization should understand the importance of data standardization as it plays into the security of their information.
Many payroll systems feign globality by designing a customer-facing dashboard that makes all the payroll data look the same, regardless of the source. However, when smart customers look for the deeper benefits of truly unified data, they’re not there. When it comes to data protection and compliance, that’s more than an inconvenience. It’s a problem.
Fragmented payroll data means limited traceability and poor auditability, because the data is managed and processed by different vendors using different systems, then transferred to the main provider (often the only vendor with which the customer has any contact), who might make it available in the dashboard. Who is responsible for securing the data throughout that process, and where does the customer turn if there’s a protection issue? Conversely, using one payroll platform across all locations provides customers with a comprehensive, standardized dataset that is fully traceable and auditable within a single system.
The theory that you can’t measure what you can’t see seems straightforward, yet plenty of payroll providers sell the opposite idea. Unfortunately even the sleekest aggregate dashboard can’t give users a clear view into how payroll data is being managed or how calculations are made across a collection of disconnected systems.
Visibility of your payroll data in real time is the key to improving both the process and the outcome. When you can see what is happening and identify how data is being processed in the moment, you can pinpoint problem areas and bottlenecks, or identify efficient workflows and analyze what’s working well. Good visibility empowers users with greater control over payroll operations and aids compliance efforts by making data processing transparent and consistent.
The visibility required for effective payroll across multiple locations is not possible with a aggregate network of regional providers. Only a unified platform ensures that all data, regardless of location, is available at once and in real time.
As business leaders gain a better understanding of the value of their global payroll data and its ability to inform important workforce decisions, they are looking more closely at analytics and how they can obtain insights from their data. Those leaders using an aggregator for their global payroll are likely to be disappointed. Because the various regional providers operate on different payroll systems, they often collect, process, and report different data points in different ways, meaning the aggregated data will be neither complete nor consistent. That makes any real analysis impossible and any analytics results unreliable. The best those stakeholders can hope for is comprehensive reporting, which gives a good snapshot of what happened but can’t enlighten you on how or why.
Because unified global payroll solutions are maturing in terms of advanced analytics offerings, organisations will soon be able to benchmark their performance against other companies in their region. This information will take insight a step further, enabling stakeholders to compare their operations directly with that of other organizations—and replacing hypotheses with proof of what is possible in global payroll.
Aggregator providers were once the best-case payroll scenario for multinational organizations. Today, that’s no longer true, and the persistent myth that one unified provider can’t manage all global payroll services for a company is a disservice to multinationals seeking to streamline operations, boost efficiency, and maintain compliance worldwide. The trouble with fragmented payroll is that rather than solving problems, it now creates them, which is the last thing any competitive organization needs in an increasingly global economy.