Understanding Payroll Maturity: How Does Your Organization Stack Up?
Mar 9, 2017 | Topic: Strategy
In conversation, payroll practitioners may describe their companies’ global payroll operations using many different terms – ranging from inefficient and error-prone all the way to streamlined and data-driven.
Those descriptors are more than just adjectives. They’re clues into the features, form, flaws, and overall “maturity” of an organization’s global payroll function.
What do we mean by maturity? At a fundamental level, every multinational company’s payroll department adheres to an established set of expectations around its processes, technology, and performance. Those expectations (and their associated workflows, standards, and activities) tend to exist on a spectrum scaling from Immature to Strategic. To understand the maturity of your organization’s payroll, click here.
Why Payroll Maturity Matters
For every maturity phase shy of Strategic, global payroll functions can be transformed to drive enhanced cost savings, efficiency improvements, and stronger rates of productivity and accuracy. The first step toward transformation is understanding where an organization’s payroll function falls on the maturity scale.
In fact, since Payroll interfaces with every administrative department of a multinational corporation, understanding a global company’s payroll maturity is vital to the overall success of its enterprise operations. As an organization sets and defines its cross-functional business goals and strategic plans, the scalability of its payroll model plays a key role in the execution of enterprise objectives.
Without a highly mature, strategic approach, an organization’s payroll resources can easily become overburdened in times of change – such as expansion to new international locations, office closures, mergers/acquisitions, restructuring, or otherwise. Productivity can become especially compromised if the payroll team is understaffed, equipped with insufficient technology, or struggling to meet existing deadlines… which is true of many organizations in the sub-optimal maturity phases.
What’s Your Payroll Maturity Level?
Before an organization’s global payroll function can set departmental objectives, establish key performance indicators, or monitor its payroll processes, operations, and performance for improvement over time, it must understand its starting point.
Though every individual payroll function possesses a unique country scope, demographic composition, and staffing makeup, many qualities and characteristics apply universally across each maturity level.
Over thousands of conversations with global payroll stakeholders, CloudPay and NelsonHall have determined the 13 primary qualities of each of the four distinct maturity phases. Just a few of the key characteristics of each maturity phase are outlined below.
IMMATURE: Lacking the standardization and visibility necessary for any strategic initiatives or informed error resolution, Immature payroll functions experience frequent issues and operate with a siloed, tactical focus on executing the payroll process.
- Payroll largely decentralized by country or business unit
- High error rates and high-touch processes
- Limited or no employee or manager self-service capabilities
- Limited reporting capabilities and no data standards
REACTIVE: Though they apply some of their resources into addressing issues, mitigating risks, and preventing major failures, Reactive global payroll functions largely respond to issues ad-hoc due to their highly-limited visibility of payroll processes and errors.
- Mixture of country-specific and regional payroll systems
- Predictable but long payroll execution timelines
- One-way integration to key administrative systems
- Moderate intervention required in processing
CONTROLLED: With a focus on improving payroll execution, boosting technical expertise, and achieving administrative excellence, Controlled departments can align global payroll with broader business objectives and cross-functional priorities.
- Payroll largely centralized at the regional level
- Fully integrated employee and manager self-service
- Minimal intervention required during payroll processing
- Global reporting, but with some inconsistent data standards
STRATEGIC: By using value added activities, analytics, and reporting to proactively improve performance, Strategic payroll teams are cultivating high-value intelligence and shaping the future of their organizations by influencing other key functions.
- Single global payroll system & full centralization
- Full two-way integration with key administrative systems
- Exception-based manual transactions only
- High employee experience & satisfaction rates
The above is a non-exhaustive list. To access far more detailed and comprehensive information on payroll maturity, HR leaders, CFOs, and global payroll professionals are
encouraged to visit www.payrollassessment.com to obtain a free and customized maturity assessment from CloudPay and NelsonHall.
The five-minute assessment tool guides stakeholders through a series of questions to establish the maturity of their payroll function. From there, it provides a scorecard outlining the characteristics, challenges, and opportunities of an organization’s maturity phase, as well as a list of resources to help organizations advance their operations and accelerate global payroll transformation.
Ultimately, no matter the ‘clues’ into an organization’s global payroll performance, transformation is the key unlocking lower processing timelines, higher quality payroll data, and more efficient, productive payroll around the globe. With a more holistic understanding of their functional maturity, multinational organizations can establish new expectations (and better ‘terms’) for their global payroll operations at large.