Improving Your Global Payroll Approach

Running payroll, delivering timely and accurate paychecks to all employees, keeping up with local and global compliance changes, and hiring qualified resources are major challenges for all domestic and global payroll organizations. Companies not only have to learn and understand changes in compliance, but also have to react to these changes to adjust internal processes, educate resources and implement technology changes to manage operations.

To combat these challenges, organizations have begun to work with outsourced payroll services vendors. Through this model, external subject matter experts manage pain points to deliver the required technology and resources to comply with domestic and global compliance changes.

According to various estimates, the global payroll and HR solutions market is expected to exceed $50B by the end of 2030, while exhibiting a compound annual growth rate (CAGR) of 7.7% from 2022 to 2032. But, what does this growth mean? Is it purely organic, as more and more companies outsource HR and payroll services? In short: yes. This is one of several factors contributing to industry growth, in addition to fast paced transformation and organizations’ expanding appetite to manage payroll compliance and reporting and global HR.

Is the current way the right way?

Many payroll professionals describe their operations as a combination of in-house and outsourced resources with a preference for an in-country provider to manage local compliance. It’s also common for organizations to use multiple payroll providers to manage their global payroll. However, if the reason for continuing to approach payroll this way is because “this is the way we’ve always done it,” it might be time to revisit the current model.

Payroll system, compliance, automation and flexibility are key components of effective global payroll management. Whether an organization chooses to outsource payroll, processes it in-house or use a combination of approaches (as discussed here), it is essential to establish a clear strategy, define roles and responsibilities for internal resources and create a detailed statement of work for any involved vendors.

If your current model checks any of the following boxes, you may want to consider a new process:

• Lacks automation
• Does not provide for a plan for the future
• Does not challenge how HR and payroll teams operate
• No standardization of processes
• Lacks multiple integrated technologies
• Inability to keep up with rapid global compliance changes
• Absence of governance across global operations
• Devoid of proper integrations
• Reliance on manual efforts

These challenges are widespread and serve as the motivating factors for implementing changes with people, process and technology to better manage streamlined payroll operations.

Looking towards the future

Apart from lacking automation, compliance and organizational consistency, some challenges remain the same for payroll professionals: people, process and technology.

When making decisions to manage global payroll operations, payroll professionals should consider the following:

• Global payroll strategy
• Global payroll governance
• Operating model
• Global payroll operations

At Sikich, we have professional resources that can help organizations define, design and implement robust global payroll strategies. Please contact us to learn more.