- 43%: automate in/outbound data
- 28%: implement global standards
- 15%: digitise and scale processes
- 13%: attract and retain talent
The results are clear: automating inbound and outbound data in this day and age of advanced technology is still the top priority. Arguably, this has been a top priority ever since I started my own career in global payroll back in 2006. Let's explore why with a focus on inbound data as that in my experience counts for about 60% of the time spent in the payroll cycle, so a prime place for efficiency gains.
There are just too many inputs into payroll
In a poll I ran in October 2023, 65% of Global Payroll Managers indicated having 5 or more unique data sources flowing into their payroll process - per country. This is in line with my 17+ years of experience as a Global Payroll Manager.
As an example, I once managed over 10k employees in a single country, we had Workday in place and processed payroll in-house on SAP. This was all integrated using the Payroll Effective Change Interface (PECI) - but it did require additional coding, as Workday and SAP simply do not speak the same language.
Still, with this interface flowing daily I had at least 7 additional data sources flowing into payroll via direct spreadsheet uploads or data entries:
- Local tax information. This was not a record in Workday and required direct entry into SAP.
- Local car lease benefits. This could not be covered by Workday Benefits, and required an additional upload and manual data entry into SAP.
- Public transport. Fees for public transport could also not be supported by Workday Benefits, so this was a feed from a local benefit provider.
- Taxable invoices for expats. We had a lot of expats in our payrolls and we needed to treat additional benefits, paid by the company on an invoice basis, as taxable benefits in kinds. This were additional spreadsheet uploads.
- Income tax recalculations. Due to the expats having a more complex setup, we recalculated the wage tax manually to match income tax rates. Again, and additional spreadsheet upload.
- Bicycle Scheme. We had an additional bicycle scheme where you could purchase a bicycle and than salary sacrifice this against a bonus. This was also an additional spreadsheet upload.
- Equity. The taxable and reportable equity (e.g. PSP, RSU, NQ, ISO) came in large separate spreadsheets that were used for uploads directly into payroll for processing.
Just reflect on the above and your own global payroll environment. I bet you have additional sources flowing into your payrolls too - even within the high headcount countries with more sophisticated setups, and higher maintenance budgets.
What does this tell us?
Most (if not all!) payrolls will always have additional data sources flowing into payroll. Despite the large HCMs being introduced and further innovated over the past years (i.e. Workday, SAP SuccessFactors, hiBob, Oracle) they will never hold all information for global payroll. With the pre-qualified interfaces, APIs and partner programs in place you may get to automate a bulk of the data - but never all data required for payroll processing.
This calls for an end-to-end view on how to solve the inbound data challenge Global Payroll is still facing. How to approach this?
Choose a source-system-agnostic approach
You need to be able to process all those data sources in an efficient, effective and truly standardised way to balance integrations, APIs and practical uploads (those will just always be there, let's face reality here). I advocate a holistic approach towards managing your inbound data to overcome local complexity, which tends to drive the additional data input sources.
Get a sound data flow structure from your Core HCM to ensure the bulk of the data flows through correctly and on time. Important here is to ensure the data is validated and transformed to a format and data model consumable by the local payroll it in the end is processed in. Otherwise there will still be manual manipulation in in the end to to end process which inherently is prone to error.
Identify all the other data sources that flow into payroll:
- Global Data Sources. You will likely have additional data sources that are used for most if not all countries. Examples could be global benefits, equity and commissions. Make sure these can be seamlessly processed in payroll without a need to cut files or change codings in between getting the source file and processing it in local payroll.
- Local Data Sources. There will always be local data sources, such as time and attendance and various local benefits. Make sure these can also be seamlessly processed in payroll without a need to change the source files.
- Local Tax Information. Unless you customise and localise your Global HCM you will always need additional fields to capture local tax and social security information. This will need to be captured somewhere as it is mandatory for payroll process. As this tends to be local on a field level, I would still look for a global process to capture them and only localise the field variations.
So, what now?
We need to take a realistic approach in helping Global Payroll Managers in solving their data input processes, as this is their top priority for 2024. And I bet it will remain in the top 3 for many years to come.
At Payzaar we are committed to solving the real challenges my fellow Global Payroll Managers have. This is why we have introduced HR Connect early in 2023. This is a source system agnostic module to integrate, validate and transform ALL data input sources in a standardised way while allowing the user to complement data sets (i.e. with local tax information) for processing. Our customers love it - and I do too - and integrate from Workday, SAP SuccessFactors. And all other data sources, uploads.
I myself am still a payroll geek and therefore love playing around in our demo environment. Our platform has user experience and self service at the heart of all innovation: all users are able to make configuration changes if they need.
I configured HR Connect to mirror the 8 data sources I had given in my example. This took me under 2 hours to create with our seamless user experience - I am by no means an IT guy! Go check it out yourself.