Payroll has not kept pace with today’s globalized work landscape. many organizations tackle global payroll locally, dealing with overwhelming regional compliance requirements and unreliable payroll vendor support. This results in a complex and costly payroll ecosystem with inaccuracies, slower operational agility, and ultimately, frustrated employees.
Deel commissioned a study with leading research firm Forrester Consulting to delve into the pain points that 300+ payroll decision makers face, and what it would take to address their issues.
More Vendors Means More Complexity
As the world of work becomes more distributed, relying on a network of local payroll vendors isn’t sufficient anymore.
- 75% of respondents said that payroll complexity is driven by a perceived need to use a network of different payroll vendors for each region and country.
- On average, respondents’ organizations use six payroll tools.
- 86% of payroll leaders also noted that payroll is managed through a hybrid approach with some of it managed internally and other aspects managed externally by payroll vendors (often referred to as “middlemen”).
This means that there are too many vendors and resources dedicated to making payroll work. As a result, organizations are focusing the most on prioritizing streamlining workflows across these systems (63%), reducing errors (56%), improving payroll vendor support (54%), and consolidating the network of payroll vendors (49%) in the next 12 months.
Payroll Costs Are Only Increasing
85% percent of payroll leaders anticipate that their payroll costs on a per-employee basis will increase in the next year.
Most organizations aren’t realizing the full picture of total global payroll costs, many of which stem from an overly complex ecosystem with disparate systems in place per region.
On top of that, many experienced unexpected or hidden costs following implementation of their payroll system on:
- Ongoing maintenance and support costs: 47%
- Compliance costs: 45%
- Data management: 45%
- Support costs: 45%
Global Payroll Issues Negatively Impact Employee Experience
When asked about their top challenges, payroll leaders found that maintaining a consistent employee experience across geographies, inefficiencies from maintaining multiple systems, and adherence to regional compliance requirements rose to the top:
48% Increased payroll errors and inaccuracies
41% Delayed payment to employees
40% Limited ability to hire and retain top global talent
42% Limited ability to analyze employee data
40% Compliance problems
In fact, slow payroll vendor support and unmet service-level agreements (SLAs) have far-reaching consequences felt throughout the entire organization including delayed payment to employees, inaccurate calculation of wages, and loss of productivity.
54% Delayed payment to employees
53% Inaccurate calculation of wages
49% Frustration from employees
43% Loss of productivity
An overwhelming 97% of those surveyed said an all-in-one payroll solution would be extremely valuable
Nearly all payroll leaders agree that one common global payroll platform, with one view of a company’s workforce and systems, alleviates many of these challenges and enables their organizations to hire and maintain employees worldwide more easily.
A further 86% anticipated a positive impact to their organization’s ability to adhere to regional compliance requirements, a task that payroll leaders continually noted utilized significant cost, time, and effort from their team. Moving away from overly complex systems to just one
solution also leads to process improvements (88%) and lower payroll administrative costs (85%).
Expected Impact When Consolidating Global Payroll Into One Platform
Global hiring: 88%
Management of global payroll data: 88%
Process improvement and automation: 87%
Adherence to regional compliance: 86%
Payroll administrative costs: 85%
So, is global payroll truly global? The answer seems pretty clearly no at the moment, but newer technologies are enabling more widespread adoption of payroll systems that could make global payroll – and truly global coverage – a reality.
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