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Emerging Trends

Emerging Trends in Global Payroll—APAC Noncompliance Risks

By Frank J. Mendelson and Charles H. Ferguson

1. What are the emerging trends or issues most important to Asia-Pacific APAC HR payroll leaders?

Global payroll leaders in Asia-Pacific (APAC) organizations cope daily with the implications of increased employee autonomy and the ramifications of noncompliance.

As employees work remotely, organizations have begun to pay them in real time based on their work contributions, such as reaching a project milestone. Payroll technology enables employers to manage dynamic payroll based on in-country regulations that match an employee’s work location. Integrated global payroll solutions also are overcoming the challenges of consolidating and cataloguing employee-related data.

Organizations also are beginning to take noncompliance-related risks more seriously. Over the past five years, companies in APAC have spent, on average, $1.24 million (USD) on compliance-related penalties. However, a recent ADP study titled Key Considerations in Payroll Management: The View from APAC shows that organizations have begun to rank management of payroll compliance higher on their list of priorities.

2. How can a global payroll department integrate on a strategic level with corporate finance, HR, and other departments to provide a competitive advantage?

The truly global nature of payroll functions means payroll practitioners need to build skills to manage organizations, systems, and technologies that support multiple cultures, regulatory environments, laws, and compliance frameworks.

Global payroll is not only about employee management, however. Today’s global payroll professional is the keeper of valuable data that provides the foundation for HR and strategic business decisions. Business leaders can use payroll data and analytics to inform decisions, such as where to allocate resources, where to invest, and potentially what markets they’re better poised to serve.

3. What are the biggest challenges for APAC payroll teams?

APAC payroll teams face two big challenges. The first is integrating global payroll data into a consolidated database that can be used for a broader scope of operational purposes. The second is a lack of local expertise in operating countries.

As compliance regulations change more frequently in countries across APAC, many businesses are struggling to stay informed about and comply with new laws. Businesses routinely deal with revised regulations, which are designed to address rapidly changing economic realities but can potentially expose companies to costly penalties.

4. How would you advise someone whose company is just beginning to expand to a global payroll system with regard to risk management and compliance?

As organizations evolve into global enterprises, proper planning for a multi-country payroll solution is a prerequisite. Today, many firms focus on technology as the sole driver behind expansion rather than investigating solutions that will help them support a global workforce.

But technology—even cloud-based technology—is not enough to ensure global payroll success. Today’s businesses need a combination of technology and expertise from a trusted partner who has the on-the-ground resources necessary to ensure compliance, data security, and scalability.

The ADP study findings support this. The study revealed that there have been more than 500 legislative changes in payroll across APAC in the past three years. It also showed companies put themselves at risk of being noncomplaint if they outsource their payroll to more than two vendors.

5. How is technology helping APAC payroll practitioners become more strategic?

Recently, developments in technology and its effective application for payroll and HR processes have converted global payroll analytics and reports into an asset for strategic decision-making.

Truly strategic payroll practitioners in APAC are using those resources to support effective resource management; to develop foresight in financial planning and productivity; to complement legislative knowledge about potential ventures; and to ensure a healthy relationship between each employee and the organization.

6. With technology and data-driven HR decision-making emerging, how do you see the role of the APAC payroll professional evolving?

Organizations are beginning to seek professionals who have strategic analysis, intercultural communication, in-depth knowledge of accounting, expertise on regulations across multiple countries, and an ability to build cross-functional relationships.

This increased focus on using analytics to drive strategic decisions that touch a number of matrixed areas within a business is positioning payroll professionals as analytical decision-makers more than process experts.

The demands on and value of global payroll professionals are evolving on multiple fronts as the nature of their work focuses more on effective risk mitigation.