How to improve global payroll efficiency

Enhancing efficiency is a key objective across all business functions, but even more so in payroll. In the Deloitte Global Payroll Benchmarking Survey, 85% of organizations reported to internally track payroll accuracy and efficiency—and for good reasons.

A high level of efficiency in payroll means fewer errors, accurate and timely payments, and ultimately happy employees that will stay with the company. Also, the more efficient the payroll process, the lower the overall payroll cost your organization incurs.

What is an efficient payroll process? How to make payroll more efficient when paying employees across different locations? Read on as we dive deep into global payroll efficiency and performance.

The best approach to increasing payroll efficiency is to start by identifying what efficient global payroll actually means. Efficiency and performance are closely linked to global payroll maturity which can be measured based on a scale from immature to strategic—the latter being the payroll maturity level businesses should aim for.

Characteristics of a mature global payroll that are relevant for efficiency include:

• High level of standardization and automation,

• Low error-rate,

• Enhanced regulatory compliance,

• High level of integration with HR, accounting and finance systems,

• Use of payroll analytics for real-time insights and accurate reporting,

• Full operational control and high level of visibility, and

• System scalability.

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In order to make payroll processes more efficient, it’s important to understand what factors inhibit payroll efficiency. Causes for delays and disruptions in payroll include:

• Employee timesheet gathering,

• Inaccurate data input that leads to payroll errors that need to be corrected,

• Manual processes,

• Fragmented payroll data,

• Compliance issues, and

• Use of different systems that are not integrated.

With regard to global payroll, there are additional factors that can slow things down, including decentralization and lack of standardization. A decentralized global payroll often ends up costing businesses more money, one of the reasons being the lower level of efficiency compared to a centralized global payroll.

Decentralized global payroll systems are difficult to manage and oversee, require more manpower and resources due to the increased level of complexity, and offer fewer options for process standardization, which generally leads to poor payroll performance and efficiency.

Now that we know what efficient global payroll looks like and what factors can cause disruptions and delays, it’s time to focus on the most important question: How to improve payroll efficiency when operating across different geographies? Here are seven ultimate tips for enhancing your global payroll performance.

1. Create a global payroll and compliance calendar

One way of improving global payroll efficiency is to establish a centralized payroll and compliance calendar for all your payroll locations. Here are some bits of information to include for each geography:

• Start and end date of each pay period,

• Pay dates for each month,

• Business-specific key dates,

• Deadlines for reporting, filing, and paying payroll taxes, and

• Submission deadlines for year-end payroll reports.

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2. Go paperless in payroll

Paper-based processes are too slow to allow for efficient payroll processes, which is why going paperless is an important step towards increased payroll efficiency. Going paperless in payroll includes digitizing payroll information and employee records, switching to digital payment methods, such as digital wallets, replacing paper timesheets with online time-tracking tools, and using electronic payslips.

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3. Invest in a global payroll solution

Outsourcing payroll is one of the easiest ways for improving global payroll efficiency. Payroll vendors can usually process payroll more efficiently than businesses themselves. However, since running a multi-country payroll typically involves several in-country payroll providers, this often means lower efficiency levels in payroll due to vendor management issues and unexploited potential to consolidate payroll. That’s where a centralized global payroll solution comes into play. 

A global payroll solution can either take on the form of a global payroll provider or a global payroll platform. Unified solutions solve the issues linked to decentralized global payroll management through process standardization, consolidated payroll reporting, and automated data flows.

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4. Define metrics to evaluate payroll performance and efficiency

Payroll performance and efficiency describe how accurately, timely, and effectively businesses process payroll for their employees. If you want to enhance the performance and efficiency of your global payroll, an important step is to define payroll efficiency metrics to measure and track process improvements. Relevant payroll KPIs in this context include:

• Number of payroll issues per 1,000 payslips,

• Frequency of off-cycle payments,

• Time needed to resolve payroll issues,

• First-time approval rate,

• Time to run payroll,

• Cost per payslip,

• Overall global payroll cost, and

• Time needed to process payroll changes.

5. Standardize processes and data formats

One aspect that is often the root cause for low efficiency in global payroll is a lack of standardization. If processes aren’t standardized across geographies, it’s difficult to get a holistic global view of your payroll. Standardized payroll operations across geographies, on the other hand, mean that global payroll managers need to spend less time on trying to get an overview of what is happening in payroll in different geographies and that processes can easily be picked up by other members of the payroll team.

Standardization is equally important with regard to payroll data. Standardizing payroll data across all your locations allows for simplified and faster global payroll reporting and prevents data input issues that take an eternity to sort out.

6. Automate payroll processes

Payroll automation is one of the key success factors when it comes to improving global payroll efficiency. Automating manual processes not only reduces the risk of payroll errors, but also saves your business a lot of time. Payroll processes that can be automated include:

• Payroll data input,

• Data input validation,

• Payroll calculation,

• Validation of payroll results,

• Payment processing,

• Payroll tax submission, and

• Preparation of payroll reporting.

7. Integrate payroll with other systems

30% of respondents in the Deloitte Global Payroll Benchmarking Survey say that manually entering payroll inputs into the system and manual adjustments are two of the most time-consuming aspects of payroll processing. In order to enhance the efficiency and performance of your global payroll, you hence need to replace manual data inputs with automated data transfers.

This can be done by integrating your payroll system with your HRIS, HCM or HRMS software. Other payroll software integrations that can save you a lot of time include time and attendance management, accounting, and expense reporting.

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The seven approaches we have outlined above will help you increase the efficiency of your global payroll. But there are even more things you can do if you really want to optimize payroll performance in your organization. Here are a few additional tips to consider:

• Add alternative payment methods for your global team: Direct deposit might work well as a salary payment method for local employees, but for globally distributed teams, bank transfers are simply too slow. Introducing alternative pay methods can help increase global payroll efficiency by reducing the time between payroll calculation and the moment funds hit employee bank accounts.

• Establish clear policies for running global payroll: Having clear and transparent global payroll policies can help you prevent confusion among employees that could lead to delays in payroll processing. If procedures are clear and well-defined, hold-ups resulting from confusion and uncertainty are less likely.

• Introduce payroll SLAs: Payroll SLAs are a great way of improving payroll efficiency. They clearly outline the expected service standards and define the responsibilities of both parties in the payroll partnership, which avoids misunderstandings and clears the way for efficient payroll processing and management.

• Establish strong global payroll governance: Payroll governance is a crucial part of payroll efficiency. It encompasses many different aspects, including the distribution of roles and responsibilities in global payroll to achieve flawless accountability and transparency in processes and reporting.

• Get your employees involved: Involving your employees is a promising approach to increasing payroll efficiency. Ask your payroll team and employees from other departments that are linked to payroll for feedback on how processes could be improved.

• Audit your payroll regularly: Regular payroll audits help you detect and resolve recurring errors in payroll and take measures to prevent similar issues in the future. This saves the payroll department time that would otherwise have to be spent on rectifying payroll errors.

If you want to achieve maximum efficiency in your global payroll, payroll outsourcing is your best option. In order to avoid multi-vendor management issues, you should opt for a unified global payroll solution that ensures all the processes run smoothly. With Lano’s Global Payroll Consolidation platform, running a multi-country payroll is frictionless.

Manage all your payrolls under one roof and put an end to disconnected processes, fragmented data, and spreadsheet chaos. Automate payroll changes, easily validate payroll outputs, and approve payroll cycles in one click. Thanks to consolidated global reporting, you can get access to detailed insights into your global payroll data in minutes.

No more manual processes, no more spreadsheets, no more disparate data. See how easy and efficient global payroll management can be with Lano. Book a demo today and find out more.