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Having the right payroll system in a working climate where teams can be scattered all across the world is crucial for business. Therefore, the race to be the number one global payroll platform is a competitive one.
Payroll is that subject that falls in the “don’t know what you’ve got until it’s gone” category. No one ever wants to talk about payroll because it’s kind of boring, yet when you’re underpaid, paid late, or not paid at all, it suddenly becomes the most important thing in the world. That’s the power of payroll.
As the global workforce grows, the importance of global payroll systems becomes even more imperative. However, at this stage, there is no top dog in the market. There are, of course, a number of competitors vying for that spot, creating this mad scramble of a race that we are seeing today.
HR Leader recently spoke to Shannon Karaka, Deel’s country leader for ANZ, about the global payroll space and the importance of payroll in an ever-changing working landscape.
According to a Forrester study of 300 HR payroll professionals, most teams use an average of six payroll tools to manage global payroll, resulting in an overly complex payroll ecosystem that is prone to frequent inaccuracies, slower operational agility, which ultimately leads to frustrated employees.
The report highlighted that 75 per cent of respondents need to use a network of different payroll vendors for each region and country, which drives that payroll complexity. A total of 54 per cent dealt with delayed payments to employees, 50 per cent also added that they spent a majority of their time working to resolve these issues.
When you consider how monumental these inaccuracies, delays, and mistakes can be, especially with the important nature of payroll, it makes it clear why platforms are trying to become that number one reliable global payroll system.
No one has yet to do so, and that is because it’s a very complicated space with a wide range of constantly moving variables. Karaka dived into the intricate details of the global payroll system and why businesses are scrambling to get to the top of it.
“It’s really complicated. There are a few new entrants into the market that are all racing to the top. Who is going to be the first? There are a lot that are still stuck in the old times. Imagine you could provide a global solution to manage payroll in any country in the world, that has not been done,” Karaka said.
“[The main goal] is to continue building the payroll software to become a global payroll offering and solution. And when I talk about payroll, we’ve got the payroll software, which is different in every country and continues to evolve.”
That is the nature of the beast that is global payroll. Because it is operating in different countries all over the world, different legislation, tax elements, and awards must be considered, and payroll compliance must be adhered to. This becomes extremely difficult, considering that compliance laws are constantly changing and adapting in every country.
“Anything that pertains to payroll compliance in Australia comes into play; there are hundreds and hundreds of awards that dictate employment for the hospitality industry, and that’s just one example. In New Zealand, you’ve got the Family Holiday Act, which is super complex. And then you’ve got these different variations in every country,” Karaka said.
“So, it’s one thing building, it’s the second to maintain. It’s also a challenge because how are you meant to maintain a compliant platform when everything is changing day by day? And then how are you meant to do it across every country in the world.”
It’s an anomaly that payroll in itself is often slept on and disregarded by the masses, of course, until it fails in any capacity, as it is the biggest expense for any business in the world. The difference between a good payroll system and a great one can be huge when those mistakes do arise.
For example, Woolworths very recently was slapped with a $1.2 million fine after failing to pay Victorian employees their correct long-service leave entitlements. The mistake was put down to “human error” that occurred when updating its payroll systems over an 18-month period beginning in 2014.
“Payroll is the biggest expense for any business in the world. Paying your people is the number one business expenses. Whenever you talk to somebody, often people’s eyes glaze over payroll. So, it must be realised that payroll is possibly the single biggest thing. I mean, we all go to work to get payroll,” Karaka said.
“If you’re potentially managing it on a spreadsheet and then you’ve got to manage all these extra things like compliances, meetings and negotiations [it becomes extremely difficult]. And they only think about it when it goes wrong. But there’s been many examples [of it going wrong] just in Australia; there’s been a whole bunch of them lately.”
This is where the “who can adapt the fastest” comes into play. New digital technologies are a driver of this development, and the opportunity for AI in this space is huge.
“The opportunity for AI with the application to payroll is leveraging AI to control payroll compliance, to audit payroll compliance, to audit payroll calculation proactively and surface anomalies. That’s what I think the next wave of payroll will look like, is leveraging AI to analyse the data, to call out anomalies and variances and to surface those in a way where a company can future-proof payroll,” Karaka said.
“[In terms of the legislative changes], you need someone to adapt your platform to reflect those changes. All of it needs to work harmoniously together. It will happen. Over time, there will be a way in which AI can scrape legislation, interpret it, feed it into the process, and then feed it into the technological platform that you’re using. Then it’ll be an automated flow.”
Creating a system and process that can integrate these complexities harmoniously is the key to winning the global payroll race. However, that task is incredibly difficult; as time goes on, whoever can enhance the digital technology to give them that boost over the competition will seemingly conquer this terrain. It’s such an important space; therefore, the economic benefit for the platform that can be the number one global payroll system would be extraordinary.
Kace O'Neill
Kace O'Neill is a Graduate Journalist for HR Leader. Kace studied Media Communications and Maori studies at the University of Otago, he has a passion for sports and storytelling.
