A guide to integrating global payroll software with HR systems

Payroll integration holds several benefits for businesses, including enhanced payroll accuracy, increased data transparency, and fewer manual processes that could potentially lead to errors. When integrating payroll and HR systems on a global scale, these benefits become even more pronounced, since the effects are multiplied in every single payroll location.

Despite the advantages of payroll and HR integration, there are several challenges that businesses must overcome and requirements they need to fulfill in order to achieve a fully integrated global payroll and HR system.

Here is the full guide on integrating global payroll software with HR systems. Read on to learn more about the benefits and challenges of international HR and payroll integration and get some hands-on tips and best practices to help you succeed.

In tech, integration is the process of successfully merging two or more systems or applications to enable seamless data transfers and allow for streamlined functionalities and processes. The integration is typically established using an API (application programming interface).

Integrating global payroll software with HR systems is hence the process of connecting a business’s payroll system to other software applications they use for managing HR. For global HR and payroll integration, the process is applied to all the systems that are used by the organization across all geographies.

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Integrating their global payroll software with their HR systems allows businesses to harvest a number of benefits. Here is an overview of the advantages of working with integrated global HR and payroll systems.

• Single source of truth: By connecting their HR and payroll systems, businesses can create a single source of information for their HR and payroll data, avoid double-data entry and maintenance, and ensure that their data is up to date and synchronized across all systems.

• Comprehensive global analytics: Having all HR- and payroll-related data in one place makes global analytics more comprehensive and provides more reliable insights that can be used to inform business decisions.

• Mitigation of compliance risks: Integrating global payroll software with HR systems enables the automation and standardization of workflows and processes. This reduces the need for manual intervention, prevents costly errors, and hence enhances the overall HR and payroll compliance.

• Improved employee experience: Payroll and HR integration streamlines workflows which leads to shorter processing times and fewer errors. This, in turn, helps HR and payroll professionals work towards a better employee experience. Also, integrated HR and payroll systems are often combined with employee self-service functions which enhance the digital experience at an organization.

• Automation of tasks: Integration allows businesses to automate HR and payroll processes. This not only saves time, but also puts a stop to boring repetitive tasks in payroll and HR.

• Better process control: Connected HR and payroll systems allow for better process control. If systems are integrated, there is no need to log into and monitor two or more separate systems. This makes it easier to keep a global view of processes.

• Enhanced global reporting: Getting comprehensive global workforce reports is much easier if payroll and HR systems are connected and share up-to-date, high-quality data.

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Integrating HR and payroll systems always requires a well-structured approach that covers all eventualities, but even more so when attempting to achieve global payroll and HR integration.

• Complexity: The complexity of global payroll and HR systems poses additional challenges for system integration. After years and years of global expansion activity paired with mergers and acquisitions, multinational organizations often end up with a highly complex international payroll set-up that is composed of several legacy systems. This makes it hard to integrate these systems with HR tools to unify the infrastructure.

• Different data: Payroll is subject to local rules and requirements, which means that payroll components vary from one country to the next. Different payroll components lead to different data sets. Combined with the different data formats that result from the different systems, this leads to significant data differences which require additional consideration during the integration set-up phase.

• Amount of data and different formats: Global payroll integration is a totally different operation than integrating payroll and HR systems to streamline a single-country payroll. That’s not only because of the sheer amount of data that needs to be provisioned, but also because of the varying data formats and country-specific pay elements.

• Data protection requirements: Another challenge of integrating global payroll software with HR systems is the fact that there might be different data protection regulations that need to be taken into account. In Europe, the main legal framework is the GDPR. However, as soon as they have payroll locations on different continents, businesses need to check for specific requirements for those geographies.

Given the additional challenges organizations need to overcome when integrating their global HR and payroll systems, it is evident that there are certain requirements that must be met before the launch of the integration project. Here is an overview of the key prerequisites for successful payroll and HR integration on a global scale.

• Expertise: Without people who know how to approach an integration project, the project is set up for failure right from the beginning.

• Clean data: Having all their HR and payroll data in order is a key requirement for businesses that want to integrate payroll and HR systems across geographies.

• Clear goals: Reaching a goal that is not clearly defined is hard, if not impossible. Clear targets and milestones are therefore key for global payroll integration success.

• Open API: The basic technical requirement that needs to be fulfilled if a business wants to streamline its global HR and payroll processes through integration is the existence of an API. In other words, the systems must be designed in a way that they can be connected to enable automated data flows.

There are several indicators that it’s time for a business to consider integrating their global payroll software with their HR system. These indicators include:

• Low visibility of data: If multinationals have no global oversight of their data, it’s time to start thinking about global payroll and HR integration. Data transparency is a key requirement for efficient workflows and processes and for spotting inconsistencies at an early stage.

• High error frequency in payroll: Frequent payroll errors are another indicator for a growing need to integrate payroll and HR systems.

• Tedious reporting: If the payroll team needs to spend several hours to extract data needed for reporting purposes because data is stored in different systems and in different formats, there is a strong need to enable system integration.

• Growing number of payroll countries: The more countries are added to an organization’s international payroll, the more systems there are to manage and the more complex the entire operation becomes. Businesses that are in the middle of global expansion and are looking to scale their international payroll set-up should consider integrating their global payroll software with their HR systems to enable growth.

Integrating global payroll software with HR systems requires careful planning and consideration. Here are a few best practices businesses should follow if they want to make their integration project a success.

• Defining a clear goal: Every payroll and HR integration project should start with a desired-outcomes brainstorming session. Knowing what the final goal is helps the project team stay on track throughout the process.

• Analyzing the status quo: Defining project goals goes hand in hand with an in-depth analysis of the present situation. This involves looking at systems, processes, data flows, and more.

• Appointing a project team: Integrating payroll and HR systems on a global level requires a dedicated task force consisting of specialists from different fields, including IT, payroll, HR, and project management.

• Preparing the data: Clean, well-structured data is a crucial prerequisite for integrating a global payroll software with HR systems. Before any data mapping and integration can happen, the data needs to be prepared by deleting outdated data entries and duplicates and structuring data in a way that makes it suitable for mapping.

• Ensuring expert support: Global payroll and HR integration projects are not a walk in the park. Before starting the project, businesses should ensure they have the necessary internal and/or external expertise at hand.

• Taking it step by step: Integrating HR and payroll systems across countries needs to be done in different steps. Rather than overhauling the whole infrastructure in one go, businesses should start with one or two countries and then roll out the integration in different phases.

• Allowing sufficient time for testing: Payroll is a crucial business process which cannot go wrong. Businesses should therefore make sure that the system integration is set up properly and working as it should be. This requires extensive testing.

• Starting with a unified global payroll solution: The easiest way to set up for success is to start by investing in a global payroll solution that streamlines processes and harmonizes data across geographies. Once that’s achieved, integrating the centralized global payroll solution with the HCM system is pretty straightforward. Lano’s global payroll services and consolidation platform offers a broad range of integrations to help you streamline your international processes. Book a demo with one of our experts to learn more.