For several years, businesses worldwide have been challenged with the difficult feat of navigating economic uncertainty, creating one of the most disruptive moments in recent memory. For many, this meant making improvements to the way we work.
IRIS FMP, in conjunction with the Global Payroll Management institute (GPMI), conducted a survey to examine the current state of payroll and assess how its landscape has changed. By measuring how the future of payroll could look, the data tells a compelling story of how many businesses understand their payroll service now and what they expect to change.
This survey asked subscribers to reflect on how they use, review, and understand payroll within their unique business context. This included operations on different scales, from those employing less than 50 staff members to firms with more than 10,000 employees, which then captured a unique insight across a spectrum of industries.
The results discovered about the state of global payroll were as follows:
1. No Consensus When a Business Should Review Their Payroll Service
Despite the waves of disruption that have reshaped the nature of the global workforce, particularly with many early adopters of remote employees turning to hybrid working arrangements, there remains no overwhelming consensus about reviewing payroll as a critical business function.
According to our survey, only 32.3% of respondents reviewed their global payroll supplier in the last 12 months, while 24.2% said they reviewed their payroll suppliers between one and two years. This demonstrates no clear certainty on when this service should be reviewed.
The data from IRIS FMP’s survey not only suggests that many businesses are likely to remain committed to their existing payroll provision for up to two years, but uncertainty about when a business should be reviewing their payroll supplier. For example, 21% of businesses felt “unsure” about reviewing their supplier, whereas nearly a quarter of respondents maintain a long-term commitment to their payroll provider—between three and 10 years.
The missing consensus on benchmarking payroll against time frames could be, as our survey later suggests, a hopeful opportunity for suppliers to refocus on the kinds of business advantages their services offer to clients.
2. Are Payroll Suppliers in a Long-Term Relationship With their Clients?
Similar to the data we collected about the last time payroll was reviewed within a business setting, we asked respondents to reflect on the next time they expect to review this service.
While 14.5% of respondents are willing to review their payroll within the next 12 months, and an additional 9.7% said they were looking to review immediately. There’s strength in numbers around those businesses that either have no immediate plans to review or those feeling uncertain about reviewing.
Over half the respondents surveyed revealed no plans to review payroll suppliers or felt “unsure” about when they would next look into it. This data suggests confidence in the existing state of global payroll provision.
3. COVID-19 Hasn’t Dispelled Payroll Commitments
Despite the influences of the COVID-19 pandemic, which has led to global disruptions in the workplace, many respondents suggest that this has not affected their decisions to review payroll suppliers.
According to the survey, 67.7% of respondents said that the pandemic had not influenced decisions to review suppliers. This suggests that, regardless of workplace disruption resulting from the global pandemic, many businesses benchmark their payroll outside the context of the pandemic.
4. Accuracy, Service Are Amongst Highest Concerns
If the global pandemic is not the major force answerable for causing businesses to review their payroll suppliers, then what other prompts could become the catalyst for change?
Our survey asked respondents to judge what would likely cause a change, or review, of a payroll supplier? The survey provided a series of “prompts” scaling from quality levels of customer service, to cost management issues, down to limitations in the service. With three choices eligible, IRIS FMP could assess some of the critical priorities, or must-haves, that a payroll supplier should meet when providing a service to a business.
We understand that payroll is often a complex function within a business. Therefore, pin-pointing the exact pain points are not always as simple as any single issue with cost, functionality, or service. But often these overlap and cause frustration for the end-user or employer, if poorly supplied.
The top three reasons that would prompt a review of payroll, as selected by participants, includes:
- 50% of votes recognised “poor payroll accuracy”
- 44.6% of votes nominated “poor customer service”
- 37.5% of votes picked “limited functionality”
The data suggests that there’s a trend to preference service quality where suppliers can fortify their service by investing in this area of payroll. The urgency for an accurate payroll provision is nothing new as growing regulations and compliance, especially for businesses managing a global operation, can result in costly penalties and frustration. Accuracy and service levels remain critical to business relationships with a payroll supplier.
Payroll functionality is one to watch, as early adopters of new technologies are eager to see how payroll can flex a different set of muscles to impress business success. Functionality can be interpreted as a blank canvas, allowing payroll professionals to introduce and design a payroll service that’s easy to use, modern, and compatible with this higher expectation for even greater functionality.
5. Compliance, Reliability, Support Still Matter
When quizzed about considering a new supplier, respondents were asked to nominate three areas they would find most important.
The top three areas outlined by the data are as follows:
- 50% of votes recognised “improving compliance” as a reason
- 42.6% of votes recognised “improved service and support” as a reason
- 40.7% of votes recognised “improved payroll reliability” as a reason
The priorities of compliance, reliability, and support, which has long been the foundations of an effective payroll service, are still just as relevant in 2021. Whether in response to the changing workplace demands or shifts in broader regulation, businesses would largely be tempted to change supplier if they saw benefit in how compliant and dependable their service became.
6. A Central Payroll Database Is Highly Desirable
When choosing important service offerings in modern payroll, the most desirable feature was a “single, centralized database for payroll data,” according to 59.6% of respondents. This suggests, especially for larger corporates, a desire to centralize or consolidate payroll data.
Approximately 46.2% of respondents recognised the importance of automated processing, while 42.1% leaned toward advanced analytics and reporting. Interestingly, when conceiving ideas about “modern” payroll, many businesses prioritise their payroll data and how it is being stored, collected, and analysed. Even beyond this survey, payroll automation has been a rising area of interest, but seems to be graduating in significance.
7. Employee Self-Service Is Sought After
When the employee is considered in the payroll function, what features would most benefit a workforce? Our survey investigated employee use cases, and we noticed three “enhancements” were most popular amongst businesses, including:
- Employee self-service (63.5% of votes)
- Accessibility via mobile applications (61.5% of votes)
- Interactive payslips (50%)
Where employees could benefit from a payroll service, many respondents noticed how a user-friendly, easy, and mobile application of payroll could be used advantageously in a business setting. Features such as interactivity are interesting, but this becomes a more compelling case when contextualised against “self-service” or where the employee is given greater autonomy in the process. Could the future of payroll become defined by greater employee independence in the process?
8. Can Global Payroll Ever Be Managed Under a Single Vendor?
Whether it is owed to the complexity of individual business needs, or it is how challenging a global operation can be to match strict compliancy in different markets, many businesses (46.2% of votes) suggest that payroll as a global service is capable of being handled by a single vendor.
But the other half of votes suggest a lacking confidence in how effectively a single supplier can handle the execution of global payroll services. Respondents either felt certain in this belief or unsure about it.
We followed this question by asking respondents to reveal how many vendors they contract to handle payroll-related services. The survey indicated that 64% showed a consensus to consolidate these services, using between one and two suppliers to deliver global payroll. This might suggest that even though global payroll operations can be challenging, consolidating services is desirable even if businesses struggle to find the right solution in any single vendor.
Takeaways
This survey presented an opportunity to understand the state of payroll, which sits on a fascinating and changing landscape. When considering the future of payroll, there’s a promising horizon if only suppliers listen carefully to the growing interests to understand how businesses and their employees can benefit from payroll.
Payroll partnerships with businesses can extract even more value when suppliers work closely to understand the different needs of this service. But this relationship works both ways. By consolidating and unifying all payroll services under one roof, businesses can feel empowered to make the most out of payroll wherever they operate across the globe.
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