How do companies run their payroll?

How do companies run their payroll

Payroll is a vital function for businesses. Get it right, no one notices. Get it wrong, everyone notices. This is why it is important to run payroll correctly using the right solutions.

Our survey looked at the types of technologies companies employ to run payroll as well as some of the pain points they face in doing so.

Implementing a global payroll strategy enables business leaders to make informed decisions by having consistent data throughout.

Jan Pieter Janssen
Regional Lead, Central Europe
Strada

Technology employed

Over the past few years more and more companies have been moving their payroll processing to the cloud.

Despite this fact, our survey found that only 26% run their payroll wholly on the cloud with the vast majority using a mix of cloud with on-premise technology, spreadsheets and manual processes.

This mixed approach to managing payroll not only increases its complexity but magnifies the potential for human error. Yet these hybrid methods seem to be quite prevalent among many companies across the globe.

It is interesting to note that 51% of respondents reported using spreadsheets in some form or another to run their payroll with nearly one in five (19%) using manual or paper-based methods for at least part of their payroll processes.

What is used to process payroll?

Regarding drivers of moving to cloud, aside from the benefits derived from the technology, our survey seems to indicate that one of the biggest drivers is companies that operate in multiple countries.

We found those companies that have operations in several countries have a higher propensity to be on the cloud than companies who operate in only one or two.

Payroll governance

When looking at payroll governance, over half (57%) of companies in our study have a global payroll strategy that is managed at either a global, regional or local level.

Just over a quarter (26%) of companies cited having a regional payroll strategy managed at a regional or local level.

Clearly there is an appetite for a consistent and streamlined approach to global payroll management, at a global level. Our research demonstrates that businesses now recognise the benefits of a centralised payroll strategy notwithstanding where or how it is managed.

What best describes your payroll model?

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Performance metrics

Half of respondents (50%) in the study cited that they have metrics in place to measure the performance of their payroll function.

However, 36% do not use any metrics whatsoever, which implies that over a third of organisations have no way of knowing how their payroll function is performing.

Without stating the obvious this is a missed opportunity. It may be down to the fact that they don’t have the technical capability or aptitude to measure performance easily or there isn’t the appetite to do so.

Either way it makes it hard to gauge whether the payroll function’s performance is improving or deteriorating and hinders the potential to glean operational insights.

Do you use specific metrics to track the performance of your payroll?

Of those companies that do measure payroll performance, a third (33%) track payroll accuracy on its own. But many that do measure performance use a combination of indicators. When payroll accuracy is tracked alongside other measures like operational KPIs, this figure then leaps to 78%.

Clearly, most companies that measure payroll performance do so using more than one metric.

This holistic approach to payroll performance measurement helps to illustrate the full picture of the internal payroll landscape.