Challenges that payroll service vendors face
Globalization has always been a challenge for the growth and success of businesses. As businesses keep on expanding, so do the funds, and investment keeps on becoming larger. While the bigger picture is necessary, the small things require equal attention. Workforce payment is one such issue. Paying a global workforce is one of the main unseen challenges that these global businesses face.#1 Value for people and their motivation levels
The biggest challenge that payroll faces are the accuracy-one thing that can increase the difficulty for businesses that operate with a rapidly growing workforce at a global level. The challenge of accuracy becomes even greater when it is at a global level, and any error can lead to demotivation for employees.
#2 Lack of compliance in payroll service provider companies
No matter how pressing the cost drives or any other motive, moving to a global system is one of the biggest challenges businesses face, and irrespective of how you do it, staying compliant is mandatory.
In 2018, more than 600 new labor work regulations were introduced worldwide.
Compliance concerns have traditionally been one of the main inhibitors creating resistance for businesses from moving to a global operation; the need of having local knowledge within the system has led many companies to maintain broad and bottom-heavy payroll organizations.
No matter how improved the technology is, increased familiarity with the shared service center concept, global outsourcing providers have become an eased way to compliance.
In the future, there is a possibility that businesses will face a strong need for real-time reporting. That will include not only the need to report on more data sets but the frequency at which reports are needed will also change.
Government agencies such as security agencies, tax authorities, and pension providers are increasing and demanding data be shared regularly. With markets changing swiftly and being in a state of flux, businesses need to ensure they can provide a "state of play."
#3 Getting the right balance between
global processes and local flexibility
By combining the two elements, organizations must attain a healthy balance between getting the global system optimized. There's no point in having software that may run a lean global payroll system and rapidly fluctuating employees.
At the other end of the scale is the single global system that can cater to every idiosyncrasy and particularly does not fit every employee.
Meanwhile, outsourcing has seen a rapid increase as a way to square a particular circle.
#4 keeping down technology and maintenance costs for a payroll service provider
Payroll comes at a cost. However, the cost-saving can materialize relatively quickly with the help of reduction in headcounts and by reducing the support required on an ongoing basis; this acts as an important factor since the technical cost is used to make up a large proportion of technical expenditure. Up-front costs are not just related to technical aspects, and they are further extended to new infrastructure, including one or more centers and training costs.
#5 Employee confidentiality-biggest challenge while working with the payroll service provider.
Data protection is always a critical issue, especially when it comes to payroll factors where employee protection is a crucial criterion. While the idea of moving to a global system tends to set alarm bells ringing.
Outsourcing global payroll doesn't ensure that these concerns will be resolved. However, they help to control matters. However, data protection issues must be high on the agenda from the beginning, and a balance needs to be put in place to ensure that providers handling employee data are doing so by the norms of security.
#6 Getting the right KPIs
Global payroll service providers' operations do not vary from the ones that measure the success of payroll on a smaller scale; what they particularly do is of global operation, the ability through which they analyze metrics on country-by-country or through region-by-region metrics.
Payroll KPIs are measurable regardless of their location, and they aim to always pay on time and with accuracy.
The five key performance indicators for payroll are
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- Quality
- Timeliness
- Compliance
- Cost
- Customer satisfaction
- Over and above these, one can even look for optional indicators.
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#7 Getting real-time reporting
The need for global-standard reporting is one of the main drivers behind the global payroll system. Organizations can keep track of crucial data much quicker and involve fewer humans; it can lead up to compliance and adult issues and headcount reduction.
Furthermore, the only source and format of data mean that analysis is simpler by order.
Comparison between companies can be made effectively on a ground-level basis. While comparing factors like cost and compensation. The ability to perform these analyses contributes towards agility which in difficult times can pass the test.
Organizations that have in-house payroll management need to ensure that the system they're putting in place allows the kind of reporting where moving to global operation ensures a system.
#8 Prioritizing geographical transition
Moving to a global payroll service provider system from a fragmented geographical one can be done at once, but it is a risky affair phasing various geographies into the system, while it may increase the duration of the transition and conveys several significant advantages. Instead of employing a large number of transitions to cope with, a smaller team can be trained. A phased approach allows companies to avoid the inevitable challenges, and as a result, some countries can introduce smaller, less critical country operations.
There is no such thing as one operation fits all since every organization has different priorities. The decision of which area gets brought into the system depends on external factors, or it can also be decided by internal political, structural, or financial factors, which means one area can take over another. However, what is important is that a timeline of these phases is set significantly before the transitional phase.
#9 Deciding on the right structure
The precise structure of an organization's global payroll depends on various factors. First of which is a shared service-type operation. There are major risks associated with putting all organizational risks in one operation. It is also important to take this call for safety purposes. However, having at least two operational centers, each capable of taking over the other one in case the situation gets a little difficult. Too many centers on the other end of the spectrum mean insufficiency, lack of competitiveness, and a reduction in many of the gains that have moved them to a global system.
As a result of this local compliance requirement and the value for retaining local knowledge as mentioned earlier, there is some degree of payroll present in each country of operation, which is unavoidable, hence whatever may be the global structure completely shifting towards centralization is a little difficult thing to achieve.
The ideal goal would be to achieve a centrally managed global payroll, split on a regional level with one subject matter expert in each region.
The central global offices manage the whole process and provide data analysis to organizations, with video conferencing, Web-tex, and other technical facilities that are proven over the past to be not much of a challenge.
Dotted-line management at remote sites helps the local payroll service provider feel supported.
It can be a problem in those circumstances where there is a need for disaster management.
There is always secondary support at remote sites, and technical disaster recovery depends on different technological methods and exploration.
