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Five Global Payroll Trends to Watch

By Todd M. Horvath

1496505086_fg8g7qage9We recently invited 140 top-level executives from some of the world’s largest organizations to join us at our annual ADP® ReThink Global HCM Conference. The resounding takeaway from attendees: Regardless of the industry in which these HR leaders operate, many of them encounter the same challenges—growing and engaging talent, building their brand, having a solid data foundation, and managing local compliance requirements in multiple countries.

It was revealing to hear that at one point in time so many global firms were dealing with anywhere from 14 to more than 40 global payroll vendors. When companies use so many disparate systems, employees in various countries end up having different payroll experiences.

Here are five global payroll trends to consider as you work toward delivering a more personalized pay experience and staying aligned with ongoing global trends in 2017:

1. Tighter Regulations Are Here to Stay

Regulation is definitely not going out of fashion—in fact, regulations around the world are becoming stricter, more robust, and more pervasive. As companies face increasing data privacy challenges, we’re also seeing more data privacy laws, such as the General Data Protection Regulation (GDPR) expected to take effect in Europe on May 25, 2018.

This regulation was designed to harmonize data privacy laws across Europe, protect all EU citizens’ data privacy, and reshape the way organizations across the region approach data privacy. This complex regulatory landscape requires companies to constantly stay abreast of all of these changes in order to comply with regional, local, and country-specific laws. In the United States alone, some 21 states, plus the District of Columbia, have implemented minimum wage increases taking effect this year, and at least 21 localities in California alone have established their own minimum wage rates. To comply, employers need to consider federal, state, and local minimum wage laws and pay employees the highest applicable rate of the three. To keep up with this type of constantly evolving legislation, companies may want to consider looking for a partner that has the ability to provide multi-country payroll and multilingual compliance support across time zones while incorporating a local presence.

2. Global Payroll, HCM Solutions Need Tighter Integration

There’s a big transformation under way as an increasing number of large multinational companies invest in new, cloud-based human capital management (HCM) technologies. As companies implement these solutions, they are realizing that tight integration with their global payroll solution is vital. For a solid data foundation, payroll, HR, and time and labor data need to flow seamlessly from one solution to the next—with payroll serving as the “source of truth” for all employee information.

While each HCM system contains voluminous data that the other might want for analysis or process purposes, only your payroll data has recurring controls in place to alert you to inaccuracies. When people don’t get paid correctly,you can bet they will let you know! Having a trusted data foundation helps give HR professionals peace of mind knowing that their data is accurate and they can rely on it to make better informed workforce decisions. The more HR managers know about who they are managing, where they are based, and what their career goals are,the better they can develop their workforce, identifying everything from career advancement opportunities to flight risks. The ability to tie all of your HCM data together is really the next frontier. Point-to-point integrations are too hard to manage. A new shift that can take all the systems, manage and simplify the data and the processes, provide a clear understanding of what is going on, and provide a complete, accurate, and trusted data foundation for analysis is really the end goal.

3. The Face of the Global Payroll Professional Is Changing

The role of the global payroll professional is evolving. A job that used to require expertise in payroll calculation and payment laws now requires a leader who can manage processes and best practices across borders while leveraging the benefits of technology. As workforce management tasks become automated and artificial intelligence increases in popularity, payroll professionals will start to become data analysts rather than just data aggregators. Digital assistants similar to the Amazon, Alexa,or Apple Siri will be able to take on transactional payroll tasks so HR leaders will be able to focus more on driving decisions based on the analysis of big data.

According to McKinsey’s “A Future That Works” report, the number of occupations with the potential to become fully automated is very limited— less than 5% in the United States. Nevertheless, about 60% of occupations have at least 30% of activities that are likely to be automated in the short term.

4. Mobile Compatibility Is Key in the War for Talent

As Millennials become the largest population of the world’s workforce, companies need to embrace the way these workers want to engage with current and future employers — via their smart phones. The Deloitte® 2016 Global Mobile Consumer Survey found that Millennials look at their phones an average of 84 times a day. It’s where they want to apply for jobs and access their pay information, so employers need to make sure their career sites and pay statements are user-and mobile-friendly.

If you want to create a consistent, positive employee experience that embodies your company’s culture and brand, payroll is what touches them the most. Employees want a quick and easy snapshot of their pay so they can easily digest how it differs month to month, and they want to be alerted when their pay is deposited and when the amount differs from their previous paycheck. Compatibility is everything, and mobile solutions can help employees better interact with pay, understand their benefits, and communicate with HR.

5. How People Want to Be Paid Is Changing

Millennials, even those with high incomes, are extremely fond of prepaid cards. In fact, 60% of Millennials with household incomes of more than $100,000 report using prepaid cards. With that in mind, you may want to consider offering paycards in addition to direct deposit. Further, employers need to consider how the gig economy will impact pay. This labor market is characterized by the rise of freelancers and part-time workers who want more freedom over their own work lives. Payroll professionals will need to attune themselves to the standards and schedules of the part-time worker and determine how to best meet their payroll needs. Hourly workers usually interact with their pay more often than salaried workers, so you want to make it easy for them to clearly see all of the elements of their pay.

Also, while the nature of payroll is cyclical today (most employees get paid on a biweekly or weekly basis), this could change as the gig economy continues to make up a significant portion of the global workforce and gig workers want to get paid when they complete individual assignments and according to their own schedule.

As you consider all these trends, make sure to ask: “How is my company truly differentiating itself through payroll?” Are your employees in India having the same personalized and positive experience as employees in the United States? While most multinational companies are using fewer payroll systems today than they were five years ago, some are still burdened by systems that restrain HR professionals to the transactional, rather than the transformational.

To better capitalize on your people’s potential and empower HR leaders to become more strategic business partners, now is the time to enlist a single global payroll solution to help build a solid data foundation, meet compliance challenges, and improve employee engagement.