Payroll’s climb up the strategy ladder
Payroll’s climb up the strategy ladder
Insight

Payroll’s climb up the strategy ladder

Globalization, increasing legislative complexity, rapid developments in digital technology, and changes to global data privacy are creating opportunities to build payroll into a strategic entity.

If you take payroll at face value, it isn’t a strategic process. But if you peel back a few layers of the onion, you quickly realize that globalization, increasing legislative complexity, rapid developments in digital technology, and changes to global data privacy are creating opportunities to build payroll into a strategic entity going far beyond data entry and transactional processing.

Indeed, today’s payroll professionals and the function itself must operate as strategic partners to other parts of their organization, including human resources, finance, IT, and risk and compliance. Key to making strategic partnerships a reality is the uptake of digital technology to drive self-audits, data mining, data integrity, data reporting, and metrics which both aid executive decision making around issues such as legislative compliance and future staffing costs as well as enhance the employee experience and levels of engagement through increased accuracy, efficiency, and self-service.

Increasing pressure for global payroll solutions

Although research indicates that the level of payroll standardization is less now than five years ago, there is significant and increasing pressure for global standardization based on advances in technology. With global HR and finance ERP deployments becoming commonplace, it is becoming increasingly important for companies to move to a global payroll solution that gives them the ability to stay current with tax and compliance issues globally, delivers process standardization and efficiency, and provides reliable and effective data for decision making. The increased pace of advances in digital technology is critical to the reimagining of payroll operations and the achievement of an effective global payroll service and we are seeing growth in confidence from payroll professionals that global payroll solutions can be applied successfully and will derive significant benefits to companies.

Using the right insights to transform your payroll operations can help you achieve a more strategic, powerful, and scalable function.

Making global payroll work

The very first step to take before embracing a global payroll solution is to look at your overall payroll delivery strategy. Decisions to be made on that delivery strategy include:

  • What data you really need to run payroll, support business decision making, and enhance the employee experience
  • The type of service delivery model you’ll be using to deliver the work—i.e., via shared services, locally, through a center of excellence or through using a vendor to deliver all or part of the service. For example, 60 percent of multinational companies use a hybrid approach, outsourcing some payroll solutions but keeping ownership in-house
  • The digital technology solution required for global payroll delivery and data management, including blockchain and RPA
  • The partner required to support you though the implementation of your technology solution and, potentially, in payroll service delivery
  • The flexibility and scalability of your solution to meet unknowns in the future, including changing business dynamics and regulatory requirements.

Once you know what the strategy portion of your global payroll framework looks like, following practical tips will help ensure global payroll success:

  1. Take time to understand the company’s corporate strategy and business model to develop the compelling business case which “sells itself” to the C-suite.
  2. Take time to define your data requirements, matching them to business goals so that you don’t get swamped by an avalanche of payroll data and be defeated by sheer volume.
  3. Define and agree core metrics and accountabilities at all levels in the payroll environment.
  4.  Work with technology and delivery partners to agree the service delivery model and supporting digital technologies that suit the company’s organizational form and structure.
  5. Don’t leave the employees who use the system until last! Sell the change to employees so that they understand the impact of self-service approaches, seeing the benefits and increasing the rate of adoption.

Digital technology, improved vendor service delivery models, and global capabilities all make delivery of global payroll both possible and attractive to the transnational business. As ever, the key to success for the future payroll function lies in the ability of HR and Finance, the “payroll owners,” to make the argument for strategic payroll, be clear on how they will benefit the business and the employee experience, and embrace the digital technologies that help it happen. By taking on board these practical steps, a strategic global payroll function can become a successful reality.

To learn more on KPMG’s global payroll services and HR Advisory services, click here.