Once seen as a ‘back office’ function, payroll is becoming an increasing focus for business strategy and success. Having been central to coping with dispersed workforces and fluctuating employee working patterns in recent years, leaders are now looking to payroll to influence other business-critical areas.

Cybersecurity, scaling operations, legislation and driving strategy are the biggest priorities for payroll senior leaders, reveals research conducted by online payroll services and workforce management software provider, Automatic Data Processing (ADP).

The Potential of Payroll report, which surveyed over 1,463 business leaders responsible for payroll to identify the factors that will drive global payroll in the next two to three years, shows that almost half (44%) are planning to improve data security, followed by the accuracy of employee pay (36%) and reporting capabilities (32%).

These concerns mirror those of payroll leaders in India, says Rahul Goyal, MD at ADP. “According to our data, organisations in India and the Asia Pacific region are gearing up to address similar opportunities and challenges in the near future. However, this could lead to increased strain on the existing shortages of cybersecurity, human resources, and operational skills, as companies compete to attract top talent on a global scale." 

Cyber secure payroll 

Following high-profile data breaches by global companies such as Twitter and Uber, as well as Indian organisations, it’s not surprising that data security topped the list of planned payroll improvements in the next two to three years at 44%.

Protecting payroll is an urgent and present danger for businesses, with 61% of global respondents reporting that their payroll operation had been impacted by a cybersecurity breach at least once in the last 24 months.

“According to our survey of senior payroll leaders, almost all of them (98%) believe that data security has become more crucial in the past year, and failing to protect data can lead to severe consequences. However, it is concerning to note that less than half of these leaders reported having a comprehensive contingency plan in place across all their territories.

The recent data breaches suffered by major global brands highlight the advanced techniques used by hackers. This underscores the importance of partnering with specialised experts who have the expertise to safeguard payroll data,” says Goyal .

Futureproof payroll

Despite global skills shortages, a looming recession and other challenges, many businesses are looking to scale up their operations. For most organisations, that means more people, which is why 36% of businesses are planning to increase the accuracy of employee pay reporting. Additionally, 31% plan to increase the timeliness of employee pay.

These efforts will help to address current issues, with more than half of respondents (56%) reporting that they currently don’t have full visibility of payroll performance, accuracy and other data across all their international locations.

“The outsourcing of payroll can lead to a significant reduction in errors, which can save time spent on addressing employee concerns regarding the accuracy of their pay. The pandemic has resulted in more complex and variable working patterns, which has led to almost half (45%) of respondents reporting an increase in payroll queries from employees,” adds Goyal.

Working with payroll experts will also help businesses address the current skills shortage, with 48% saying they have difficulty finding payroll skills from outside the business. Additionally, 64% have resorted to training non-payroll staff to fill this need.

Payroll that can scale

Global businesses, or those with global ambitions are being hindered by inaccurate and inconsistent payroll practices. Nearly a third (30%) of finance and HR leaders reported that they are not confident that their payroll systems could support their plans for growth, or geographic expansion.

Two in five (40%) payroll leaders reported that each country has different methods of tracking compliance performance, which has led to a focus on planned regulatory compliance (22%). Additionally, almost a quarter (23%) of respondents would like to transform their operations to deliver standardised multi-country payroll processes.

“It can be tempting to opt for the quickest solution when setting up payroll in new markets. But this can be a false economy. Outsourcing to payroll experts who offer consistent and integrated systems, while also accommodating regional differences, provides businesses with a global perspective of their payroll,” says Goyal.

Data-driven strategy 

Payroll is influencing strategy at the top level with nearly half (45%) of respondents reporting an increase for relevant data from senior management. These metrics are being used to inform cost management, growth, and diversity, equity and inclusion (DEI) strategies.

Currently, many businesses lack the right tools and big data to inform insights, with only 40% implementing global dashboards and just 29% using real-time analytics. This has contributed to 32% of payroll leaders’ desire to improve reporting capabilities.

Additionally, the opportunity to drive efficiencies and other opportunities across business units is a focus for 25% of respondents, who are looking to increase integration with payroll and other business critical systems.