August/September 2023

Experts Discuss Improving Global Payroll Performance, Measuring Global Payroll Efficiency

By Bryan Kirk

During the on-demand webinar, “Global Payroll Efficiency in 2023: Everything You Need to Know,” sponsored by CloudPay, experts discussed the importance of global payroll efficiency, and the steps organizations must take to ensure a steady improvement in global payroll performance.

Katherine Doyle, Manager, Marketing Campaigns at CloudPay, and Thaisa Neves, Implementation Solutions Consultant at CloudPay, introduced webinar participants to the Global Payroll Efficiency Index (PEI) and defined how these processes analyze global payroll efficiency and performance.

Of course, this begins with the global PEI report, which identifies and measures metrics to payroll performance, such as key performance indicators (KPIs).

“The global PEI report sets a new standard for payroll efficiency,” Doyle said. “It’s an industry benchmarking report of payroll processing KPIs across the world, and in 130 countries. Now in its fourth edition, this report seeks to identify and measure the efficiency metrics that make a difference to payroll performance allowing us to monitor performance across every country and enable continuous process improvement.”

There are five KPIs needed to effectively understand and track payroll performance and efficiency, which are the following:

  1. First-time approvals: The percentage of gross-to-net calculations approved upon initial review.
  2. Data input issues: The percentage of data errors caused by incorrect or incomplete customer data.
  3. Issues per 1,000 payslips: The number of data issues identified for every 1,000 payslips processed.
  4. Calendar length: Number of days required to complete payroll processing.
  5. Supplemental impact: The percentage of payroll runs completed as supplemental runs.

Of course, performance has been impacted by what many in global payroll refer to as the cost-of-living crisis, and the war for talent, which have spurred the adoption of payroll innovation.

“This has put a huge strain on global business to come up with creative solutions to fight off these challenges,” Neves said. “The adoption of payroll innovation and efficiency have become hot topics.”

As a result, payroll options like earned wage access (EWA) have become something of the new normal for many global businesses, Neves said.

Then, there’s the question of global payroll efficiency. Neves said the best way to properly gauge payroll efficiency and how well a payroll function is working is to establish a consistent audit trail using the five KPIs previously discussed.

Based on the data using the five KPIs, Neves said the countries that are the most efficient at doing payroll, based on first-time approval rates, include the following:

  • China—95.98%
  • Cyprus—94.06%
  • Brazil—93.22%
  • Russia—92.35%
  • Greece—91.53%
  • Croatia—91.04%
  • Bolivia—90.48%
  • Chile—89.17%
  • Argentina—88.92%
  • Slovakia—88.89%

Many of these same countries were also the most difficult or complex, Neves said.

The complexity factor was based on legislation, compliance, and operational limitations, while the difficulty indexes were based on complexity, plus software maturity and talent availability.

By contrast, countries that have the least difficult or complex payroll, based on first-time approval rates, but are still considered efficient include Canada, Mexico, South Africa, and several others. Countries that have the least difficult and least efficient payroll include India, U.S., and U.K., along with others.

“It’s important to know that this is just our opinion on these countries and is based on our experience processing payroll across the globe,” Neves said.

Overall, the KPI analysis showed that the Americas region is the least efficient, compared with the EMEA and APAC regions, Neves said.

“This is likely due to a shorter payroll frequency in many countries, leading to rushed processing…, leading to less extensive validation and more errors,” Neves said.

You can download a free copy of the Global PEI Report.

Register for the on-demand webinar today.

Bryan Kirk is the Senior Writer and Editor of Membership Publications for PayrollOrg.
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