“Garbage in, garbage out.”
Chances are you’re familiar with this saying, and you appreciate its not-so-subtle message—focus on data quality. Unfortunately for payroll professionals, they’re the last stop for employee scheduling and time and attendance data. Once it arrives, there is little they can do but make the best of a bad situation.
While payroll professionals work hard to ensure that payroll matches received data with minimal errors, the unspoken reality is that the data payroll receives is often highly inconsistent in quality and presents an incomplete picture of how the business is performing.
This is especially true at global organizations, where the deployment of disparate workforce solutions in different regions and locations make it nearly impossible to gain an apples-to-apples view of true operational performance.
Global organizations are missing a golden opportunity to drive their businesses forward. A high-impact payroll organization can unlock the insights needed to improve organizational performance, mitigate compliance risk, and avoid inadvertently disengaging employees through payroll errors. To unlock this potential, payroll also needs high-quality data flowing into the payroll department or shared services center responsible for payroll processing.
Disparate Data, Disappointing Outcomes
Data is the lifeblood of any enterprise, yet many organizations settle for less-than-stellar data quality when it comes to feeding payroll. This is problematic for many reasons, but there are several problems that should alarm senior leadership and executives.
At the highest level, data is key to understanding the state of the workforce and the health of the business. Accurate and detailed data will help decision-makers be better informed. With disparate systems in different regions, and even paper-based timesheets still being used to collect employee time data, the best an organization can hope for is an estimated—and potentially deeply flawed—view of performance.
Another area of concern stems from the compliance issues posed by flimsy data. According to the 2017 Global Payroll Complexity Index released by NGA HR, 64% of the 48 countries surveyed must file reports with regulatory bodies a minimum of one to two times per month. The report finds a global average of 16 data items per employee, while European and South American nations average as many as 35. If the data being used to create reports is subpar, it’s impossible to attest to the accuracy of the information being shared with regulators.
Poor data being fed into payroll is a productivity killer. With inaccurate data fed by disparate or paper-based systems, payroll teams must dedicate huge chunks of time to correcting errors, fielding requests from employees for accurate information, and sifting through mountains of information to find the right data to build their reports.
Bonus Benefit: Payroll Supports Employee Engagement
Significant investments, both in terms of time and money, are being made to recruit, train, and retain employees. It’s all about employee engagement right now, and for good reason: a highly engaged workforce contributes to 22% greater productivity, according to a 2013 article from the Harvard Business Review. But, this conversation has generally centered on HR and operations. Payroll is often notably absent, which is a costly error.
Payroll—and the impact it can have on employee engagement—is an area that more organizations should emphasize. Ensuring that employees are accurately compensated for their time on the clock is the very foundation of trust between an employee and the employer.
The 2017 “Engaging Employees Through Payroll” study by Kronos revealed that payroll problems can undermine these investments. The U.S. survey found that nearly a quarter (24%) of employees will leave their jobs after just one payroll error, while about half (49%) will begin searching for new employment after two mistakes. On a more positive note, the study also uncovered that 45% of employees would feel more engaged with their employer if payroll could help them better understand the impact of taxes and deductions on their overall earnings to maximize their take-home pay.
With engagement in mind, timekeeping can be transformed from a routine task to an engagement activity. Timeclocks are no longer simply for punching in and punching out—they also allow employees to take ownership of their time through checking schedules, hours worked, and time-off accruals. More and more, organizations are empowering employees to attest to the accuracy of their time, providing trust and transparency into the timekeeping process.
Mobile applications also facilitate even higher levels of employee self-service. From the minute employees arrive at work to the day they receive their pay stub, accurate timekeeping, which leads directly to high-value payroll processing and reporting, becomes a positive experience.
A Global Solution for Global Business
Payroll and timekeeping go hand in hand. Yet many global organizations struggle with the data that is used to process payroll. One reason is simply pragmatic: as the business grows to new regions over time, it opts to implement a workforce solution that addresses the needs of a specific location, often because it specializes in local compliance and/or payroll, as opposed to the needs of the entire business (such as standardized data collection to facilitate in-depth reporting).
Another common reason is that many organizations become global entities through mergers and acquisitions. Once new business units are acquired, inheriting a host of grandfathered policies and systems, a complicated, tangled web of disparate technologies ends up bolted together through loose integrations. They function together, but hardly ever work together.
For organizations serious and committed to improving the quality of their payroll, including the data being used to process payroll and the quality of reports about the health of the business that payroll generates, moving to a centralized platform for all regions is critical.
While this may seem like a daunting, if not outright impossible, proposal, it’s important to remember that projects of this magnitude can (and should!) be rolled out in phases. For example, timekeeping is generally the first solution to house all employees together. The new solution can be introduced location by location, or region by region, in stages. When the project is complete, employees across the enterprise will be using the same technology to capture and report their time. This standardized approach will ensure higher quality data is being fed into the payroll department, allowing higher quality payroll and payroll reporting.
Four Strategies for Moving to a Centralized Workforce Solution
Whether an organization is seeking to set up shop in a foreign territory for the first time or has been operating multiple global locations for many years, there are four steps that can be taken to jump-start a global workforce management strategy that will improve payroll data quality:
- Embrace Global Standardization—Be prepared to eliminate the siloed business processes, disparate solutions, and inconsistent training and communication approaches that exist at different locations. By creating a standard approach regardless of region, organizations will be able to implement a consistent, effective, and repeatable system that focuses on collecting and feeding the same high-quality data throughout the entire organization.
- Target Processes With High Value, High Potential for Automation—Key workforce management areas such as time and attendance and scheduling are time-consuming and prone to errors. This leads to faulty data used for payroll processing and reporting. In addition to reducing payroll errors and mitigating compliance risk, automating basic work rules to match established policy and meet local labor laws will inject fairness and equitability for employees by placing everyone under a consistent set of guidelines.
- Build Consensus, Create Consistency, and Plan for Change—By its very nature of touching all corners of a global operation, any global workforce management strategy that lacks upfront planning and consensus-building between key stakeholders is bound for failure. Before beginning any project, assemble a cross-functional team lead by a strong executive sponsor. While there can be “too many cooks in the kitchen,” it’s important to involve support from the C-Suite, IT, operations, payroll, HR, global business analysts, management overseeing day-to-day activities at global locations, and even a select group of frontline employees. If the project is thoughtfully executed, these early stakeholders should serve as advocates to accelerate adoption. A strong change management strategy should be utilized, with communication taking place early and often.
- Empower the Team—Implementing new solutions is not enough to achieve true global standardization. Once the initial group of stakeholders is assembled, give them the ability to make key decisions about existing processes. What should stay and what should go? Where have extra steps been added over the years? Is there a business reason for certain activities, or is that just the way it has always been done? Technology itself is only part of the solution—the processes surrounding the technology must also be updated.
A New Competitive Advantage
So, how impactful is your payroll organization today? And how impactful do you believe it can be? For organizations that still rely on manual, paper-based processes, or deploy different time and attendance solutions in different parts of the world, odds are the data quality isn’t as high as you may want or expect it to be.
As opposed to settling for the status quo, global organizations should undertake a critical review of their global workforce management practices to evaluate the quality and accuracy of their workforce and timekeeping data. By refusing to settle for low-quality data to process and report payroll, organizations will set themselves on a path for global standardization that will improve operational efficiencies, provide newfound visibility to the health of the enterprise, support employee engagement initiatives, and mitigate compliance risk.
Toni Coon, CPP, is an industry expert within the payroll and compliance group practice at Kronos. Coon’s first passion is payroll, followed by process improvement and education. Having obtained her Certified Payroll Professional (CPP) designation in 2002, Coon has led a variety of payroll-focused onboarding classes in her professional roles, while keeping up to date with her own certification. In 2015, Coon brought her 20-plus years of operational experience to the Kronos team after being a Kronos customer for more than eight years. Leveraging her extensive industry knowledge and experience, Coon works closely with the Kronos sales team to understand market needs and direction and to create thought leadership content that supports company strategy and addresses the day-to-day workforce challenges facing businesses today.