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Innovation in Global Payroll Technology

By Paul Bartlett

Paul Bartlett is CEO of CloudPay, a global payroll solution for multinational organizations.

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With technology infiltrating nearly every aspect of work and life, today’s companies are thinking well beyond “business as usual” within their businesses. In the digital-first landscape of 2016, innovation is what differentiates an industry’s winners from its losers. As a consequence, many companies consider driving innovation and “disrupting” their markets to be as important as turning a profit (if not more so).

Global payroll, however, is a place where “disruption” isn’t a goal—it’s a dirty word. Payroll is and will always be about consistency and reliability. In our sector, “disruption” is more likely to bring to mind disrupted pay cycles and disruptions of service than to be associated with technological ingenuity.

Yet as a “legacy” sector long dominated by outdated technologies and inefficient and manual processes, payroll is more than ready for a strong dose of technological inspiration. Unlike many other areas of the enterprise, payroll continues to lack the data-driven tools and processes that can help it achieve strategic importance to clients’ businesses.

Inside our industry, we recognize payroll data as a high-value resource for the kind of “people intelligence” that is useful in business decision-making, especially with regard to capacity planning, cost-cutting, resource allocation, and productivity tracking. We know payroll is a unique data set that houses information no other enterprise application holds, and therefore has strategic value.

But many organizations aren’t making the same recognition: According to the Sierra-Cedar 2016-2017 HR Systems Survey, 66% of organizations are planning a major initiative concerning a “business process improvement effort” in the coming year, but only 8% of them intended to focus on payroll.

Helping payroll data seize greater significance among business customers will require an enhanced commitment to innovation across the global payroll technology industry. That innovation should be focused not on “disruption,” but on delivering greater integrity, more tangible value, and higher ROI to organizations.

Payroll’s Turn to Drive Value

Practically every department in a multinational corporation uses software to boost efficiency, decrease error rates, and provide useful, actionable data to stakeholders. These solutions haven’t just improved processes—they’ve redefined the roles, responsibilities, and expectations of different business functions.

For example, marketing automation technology has all but transformed the marketing discipline into a digital science. It has made it possible to measure and monitor marketing effectiveness at scale. Customer relationship management (CRM) technology has made the sales and account management functions trackable and measurable, increasing accountability across sectors and departments. Modern telecom technologies and human capital management (HCM) systems enable customer service and HR departments to gauge attendance trends, productivity, and per-employee ROI in a standardized way.

Then there’s global payroll.

Changing, much less “disrupting,” the norms of global payroll hasn’t been a high priority across the technology space, especially for organizations with large and globally distributed workforces. Bound as our industry is by a wealth of complex legal and regulatory requirements—differing across almost every locality, region, and country imaginable—global payroll is a moving target.

With accurate, on-time payments and statutory compliance the only global payroll goals most organizations aspire to, a reliance on outdated tools has proliferated for years. Excel spreadsheets are a mainstay, whether for loading and monitoring payroll calendars, logging headcount lists, or otherwise. A lack of automation in the space also means that externally housed spreadsheet data is rarely validated upon input to a given system, often leading to time-consuming errors and delays that require manual intervention to correct.

Even many of today’s leading global payroll solutions fail to use standardized, rules-based process flows that can help customers cultivate accurate information and establish audit trails across their global operations. This is particularly true of the payroll aggregator approaches to global payroll: They tend to send customers’ data to in-country partners and, more importantly, to the different software systems each of those in-country partners utilize. There, data is most often processed according to the local partner’s norms, with few mechanisms in place for tracking discrepancies, flagging issues, or even catching incorrect information. That’s what is sometimes referred to as the “black box” of global payroll.

In order for the global payroll operation to achieve greater significance as a strategic business function, it must advance to deliver value in ways that other tech-enabled business areas already have. We can look to the broader human resources (HR) technology space as an example: According to the aforementioned HR Systems Survey, mid-market and small-business organizations with “higher than average HR tech adoption” saw almost double the revenue per employee and earned a 12% increase in their overall HR, talent, and business outcome metrics.

Making global payroll technology more important to customers requires vendors to deliver value-adding tools and services that can drive that kind of measurable, attributable improvement and business impact. The following four core elements are key to the innovative, integrity-focused future of global payroll:
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  1. Access and Visibility—It’s time for the “black box” of global payroll to advance to transparency. Proving global payroll’s true value to customers requires real evidence: To earn clients’ trust, the next generation of payroll technologies needs to go beyond providing basic reports based on monthly, quarterly, or annual results to delivering full visibility into current progress and performance. Real-time analytics are the norm across almost every other area of today’s most sophisticated enterprises; it’s global payroll’s turn to provide the same.
  2. Automation and Validation—Due to its vast international complexity, global payroll will never be a fully automated space wherein clients or in-country agents can execute tasks entirely at the click of a button. But global payroll must embrace automation in a more standardized, process-oriented way in order to help clients realize improvements. Through stronger data validation for example, technologies can minimize delays by proactively catching potential errors before payroll is even processed—thus minimizing the need for reactive manual interventions, which tend to create more errors and lead to longer processing times.
  3. Accuracy and Veracity—Payroll represents an enormous percentage—sometimes the highest percentage—of the total expenses of an organization. As such, payroll should be the source of a vast amount of employee data and useful records, from which stakeholders can derive a wealth of historical information and strategic trend insights. Payroll intelligence can be exceedingly useful in underwriting well-informed decisions regarding costs, resource allocation, expansion planning, and strategic direction. That kind of intelligence can only come from an accurate, well-maintained system of record delivering a single version of the truth.
  4. Alignment and Value—As a rule, enterprise software customers demand ROI from their technology investments. As a necessary component to keeping the enterprise above-board, however, payroll is the exception. Payroll software typically isn’t held to an expectation of earning returns, but it should be. Vendors can achieve stronger partnerships with their clients by delivering high levels of service and by driving stronger strategic alignment between their offerings and their clients’ business objectives.

For enterprise or business-to-business customers, the true value of technological innovation is the greater accuracy, accountability, and integrity it can create in neglected or underserved areas of the business. The shift that has already modernized norms and expectations across sales, marketing, account management, and many other departments can and will create immense benefits in global payroll—benefits that will impact business functions well beyond payroll’s perceived limited scope.

Ultimately, advancing the global payroll space into a core source of data-driven intelligence will not only help payroll providers realize greater significance to their clients, it will also elevate the significance of global payroll well beyond business as usual.