Payroll systems have not kept pace with the globalization of work, study finds
Payroll leaders said their organizations use, on average, six different payroll management tools.
While organizations have become increasingly globalized, payroll systems remain highly localized resulting in inaccuracies and frustration.
A new study by Forrester and HR and Payroll company, Deel, found that 75% of payroll decision makers surveyed said payroll complexity is driven by a perceived need to use a network of different vendors for each region and country. Respondents said their organizations use, on average, 6 different payroll management tools.
Oftentimes, payroll is not only managed across multiple tools, but also involves the work of multiple people, leaving room for oversight. The study found that 86% of payroll leaders use a hybrid method, managing some aspects of payroll internally and other aspects through external vendors or “middlemen.”
In addition to these concerns, the costs of payroll are on the rise. According to the study, 85% of payroll leaders anticipate that their payroll costs on a per-employee basis will increase in the next year. Over 45% of payroll leaders said they also encountered unexpected or hidden costs such as ongoing maintenance and support, compliance, data management and support costs.
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These payroll difficulties often result in negative impacts to employee experience. When asked about their top challenges, 48% of payroll leaders said they deal with increased payroll errors and inaccuracies. Other issues faced by payroll leaders included delayed payment to employees, limited ability to analyze employee data, limited ability to hire and retain top global talent and compliance problems.
According to the study, 97% of payroll leaders surveyed believe the solution to alleviate many of these concerns will be an all-in-one payroll platform. The majority of payroll leaders said an all-in-one platform could have the ability to impact global hiring, management of global payroll data, process improvement and automation, adherence to regional compliance as well as payroll administrative costs.