Global payroll practices need improvement

The majority (85%) of multinational organisations surveyed want improvements to their current payroll practices, yet they are sceptical about whether payroll providers can deliver a comprehensive global solution, according to research by Ernst and Young.

Its Global payroll: myth or reality research, which surveyed 161 global senior payroll leaders, found that 70% of respondents are not confidant a global vendor currently exists that can provide a truly global payroll solution.

Respondents identified a wide range of issues as potential hurdles, including total cost of the overall solution (16%), vendor understanding and meeting specific requirements (14%), and legal and regulatory requirements (12%).

As a result, nearly half (41%) of respondents are not considering adjusting their payroll administration model, even though a third (35%) plan to expand into new global markets.

Only one in five (22%) currently have a global payroll model, but this applies mainly to organisations that operate in mature markets and are therefore more likely to be able to adopt a truly consistent model.

The research also found:

  • 15% of respondents believe that the effectiveness of their current payroll policies and practices are excellent and meeting best practice.
  • 54% of respondents regard their current payroll setup as good, with room for improvement.
  • The top three criteria for selecting a new global payroll vendor are cost (19%), geographical/global capability (18%) and the technology platform (10%).

Jeff Brown, principal, human capital at Ernst and Young, said: “Accepting the status quo in payroll solutions may have worked in the past, but it is no longer adequate for companies that need to compete and expand in the global marketplace.

“Organisations need global payroll data to make important business decisions. Managers can build the business case based on risk and compliance to improve payroll operations, but access to the payroll data is proving to be very value added.

“It’s time for organisations to begin viewing payroll as a critical business process that requires a global solution with local flexibility.”