The Three Biggest Challenges to Global Payroll in 2022

Brad Connor | Senior Business Development Manager, CloudPay

In a business world that is increasingly flexible and increasingly globalized, it’s become more important than ever for organizations to build efficient and effective global payroll functions. Doing so is vital to deliver on employee expectations, relieve the burden on payroll teams who often face huge amounts of data and administration to deal with, and ensure payroll operations are efficient to improve the performance of the overall business.

But in the current landscape, achieving effective global payroll is not without its challenges. In this blog, we’ll explore the three biggest barriers to global payroll success at present, and what you can do to solve those problems.


1. The complexity of payroll

Running payroll across multiple territories can be extremely complicated, and there are a number of reasons why this is the case. At a more tangible level, with different countries using different currencies, and having different laws and regulations in place, there is plenty to keep track of in order to ensure payroll runs efficiently and in full compliance.

But the difficulties can run much deeper than that: varying cultures in different parts of the world can also have an effect on payroll operations and employee expectations. For example, in Europe, trade unions are strong and collective bargaining agreements have a major bearing in deciding rates of pay and other benefits. In the United States, regulations vary substantially from state to state, and more than half of those states set their own minimum wage level above the mandated federal standard. And in Asia, many countries offer 13th-month and even 14th-month bonuses which can add to payroll processing headaches.


2. Payroll software maturity

A lot of the complexity mentioned in the previous point can be resolved through the implementation of an up-to-date, mature and comprehensive global payroll software solution. As well as helping to smooth out inefficiencies in payroll processing, it can also help keep sensitive payroll data secure. At a time when 60% of reported business data breaches were through HR functions, the importance of this can’t be overstated.

However, getting such an effective payroll system in place is easier said than done; mature payroll software that solves these issues is far more readily available in some countries than others. This is because in most Western countries, opportunities for integration with third-party HCM, Time and Attendance, and benefits systems are much wider than they are in the developing world. This makes payroll and associated functions far more automated than they are in developing countries, where the use of HR systems is rare and there is therefore far more work to be done within the payroll system itself.


3. Access to (and availability of) payroll talent

Human payroll skills are still of huge value to every business, for their experience and their country-specific expertise. However, multiple data points over the past year show that employers globally are facing the biggest talent shortages in years, leading to what many are calling “The Great Resignation.” This creates challenges for the Payroll function and has significant implications for wider HR strategy. It’s common for Payroll function employees to be in their roles for multiple years. Departures take with them significant institutional knowledge and are more difficult to replace.

And the difficulties in securing this talent aren’t consistent across the world. In some countries, the most talented payroll professionals know their worth and so are particularly tough to attract or to hang onto. Conversely, in other territories, there may be plentiful availability of junior-level staff, but a shortage in supply of experienced senior candidates.

One of the leading solutions to this is ensuring a competitive salary is offered with opportunity for progression, which will at least partially attract and retain the best payroll talent. However it doesn’t stop there; it’s increasingly important for companies to invest in training programs which will enable their payroll professions to build their skillset. In doing this, the talent understands that their company is interested in their development and career progression.


The PEI Matrix

To try and help businesses understand the scale of how these challenges vary from country to country, we have developed the PEI Matrix within our latest Payroll Efficiency Index report. It takes all three of the above challenges into account to measure the efficiency and difficulty of payroll in each individual country.

The matrix allows businesses to visualize the payroll challenges of a particular territory, and put that information in the context of the prevailing market and cultural conditions within that country. With this insight, businesses can take the right decisions of improving payroll efficiency by targeting specific countries in which they operate with targeted, focused measures.

You can view the PEI Matrix by accessing the full Payroll Efficiency Index report here.


In summary

Without solving the above challenges, businesses run the risk of falling behind in payments, making avoidable errors, leaving their talented employees dissatisfied, or leaving their payroll data vulnerable to cybercrime. It goes to show that a coordinated, standardized software solution, implemented at a global level, really can make a major positive difference to getting international payroll right.


Take a closer look at how payroll difficulty varies from country to country, and see what success looks like at a global level, by reading our Payroll Efficiency Index report.

Brad Connor | Senior Business Development Manager, CloudPay


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