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More Employers Embrace Global Payroll Strategy, Survey Says

June 4, 2020, 7:30 PM

An increasing number of employers have a global payroll strategy or are planning to develop one as part of a corporate initiative, a survey said June 4.

The payroll benchmark survey by Deloitte, which was presented at the annual American Payroll Association Congress, showed that 88% of companies have such a strategy, up from about 50% in 2018. About 12% of survey respondents did not have a global plan.

About 52% of employers with operations in multiple countries said they managed payroll from the U.S. as a central location, compared with 29% that were using a regional location to manage global payroll processes for an assigned country, said Brian Proctor, a principal in Deloitte’s payroll and workforce management solutions practice.

“As I look into the marketplace and I see organizations that are operating payroll for 20 or 30 countries, it is very common for people to have an American-based multinational hub, and a hub outside of North America as well to manage their full global footprint,” Proctor said.

Most companies operate one payroll platform for each county where they do business, the survey said. Time-tracking within a country was achieved by using multiple time-and-attendance solutions, it said.

Worldwide demographics showed that 73% of employers outsourced some aspect of payroll, though the need to retain in-house expertise remained high, the survey said. By region, payroll was outsourced by 81% of employers in Europe and the Middle East, 78% in Asia-Pacific, 69% in Latin America, and 63% in North America.

Among other survey highlights:

• There is a shift in having the payroll department report to the human resources department more than finance, with an increase in reporting to shared services. About 53% of payroll departments report to human resources, 44% to finance, and 3% to other departments.

• The average cost of preparing a pay slip was $4.43, which included labor, technical and vendor processing costs, bank fees, and paper stock for printing checks.

• The leading cause to print an off-cycle paycheck was termination, cited by about 30% of respondents. Other causes were updates from human resources, 20%; tax and accounting reasons, 17%; underpayments, 12%; bonuses or awards, 10%; retroactive payments, 8%, and overpayments, 2%.

• More than 30% of respondents said payroll processing took at least four days to complete. About 30% of the time was spent manually entering and loading payroll inputs, and 20% said entering adjustments was the most time-consuming task.

• For third-party payroll outsourcing contracts, 58% were established more than five years ago and 36% were contracted in the past three to five years. And while 82% were satisfied with the provider, 17% were not.

• About 7% of employers offer an on-demand payroll option. About 61% of those offering on-demand pay offer it through their existing payroll platform and 16% offer payroll-debit cards to their workers.

• The leading key performance indicators tracked by payroll department were payment errors, 89%; days to resolve payroll errors, 54%; average cost of producing a pay slip, 41%; untimely payroll payments, 38%; and timeliness of statutory returns, 36%.

• Cloud computing technology is used by 57% of employers to process payroll, 17% are in the process of adopting the technology, 10% plan to do so within three years, and 16% have no plans for cloud computing.

The global survey, conducted by Deloitte, received information from more than 750 organizations, 23% of which have more than 25,000 employees and 32% of which have fewer than 1,000 employees. About 1,400 responses were received for more than 100 questions. Seven industrial sectors were surveyed: consumer and industrial products; technology, media, and communications; financial services; life sciences and health care; professional services; public sector; and energy and resources.

The APA and the Global Payroll Management Institute sponsored the survey.

To contact the reporter on this story: Michael Trimarchi in Washington at mtrimarchi@bloombergindustry.com

To contact the editor on this story: Howard Perlman in Washington at hperlman@bloombergindustry.com

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