Lack of local knowledge ‘biggest challenge’ for global payroll departments

The lack of in-country knowledge surrounding local legislations is the biggest challenge posing global payroll today, according to research conducted by the Global Payroll Association.

Carried out with SD Worx, the leading provider in Payroll and HR services, research revealed that this lack of local knowledge leads to basic errors in payroll departments. The study investigated the challenges that senior payroll professionals from global businesses are facing and how they are addressing these problems.  

The lack of in-country knowledge around local legislation and tax & compliance, poses a big barrier for global and multi-country payroll departments. So much so, that 39% of respondents claim it is the biggest challenge for global payroll when recruiting payroll staff today. Another four of ten of the respondents state it is the biggest problem for organisations acquiring or divesting payrolls.

There is a skills gap that needs to be addressed as well: 30% of respondents claim that lack of payroll skills is another big challenge when recruiting staff. This is highlighted by the fact that 75% of respondents report an in-country contact with local language as important when recruiting.

This challenge in recruitment is one reason why organisations are looking elsewhere for support. The research shows a clear correlation between the rise of organisations using a mixture of in-house and outsourced support (an increase from just under 30% in 2016 to just under 50%) and the significant reduction of in-house payroll support (from 30% to just over 18%) over the same period of time.

“The globalisation of businesses brings new challenges for their payroll.”  says Jean-Luc Barbier, Vice President SD Worx Group and Managing Director SD Worx Global Solutions “If payroll professionals want to operate on a streamlined, accurate and efficient model, departments must depend on local insight, knowledge and expertise. Without this, payroll departments simply cannot guarantee a correct payroll, nor can they take a unified approach to their operations.”

Mastering the basics 

The knowledge gap is not just creating challenges when it comes to payroll recruitment, but is also manifesting itself in basic errors within payroll departments. In fact, the most common error in payroll teams is the lack of internal understanding of country legislation (24%) followed by internal compliance of processes and policies (21%). Therefore, there must be further training in payroll departments to ensure employees are equipped with the right knowledge and skills to produce correct and accurate results.

Jean-Luc Barbier continues:

“The root to a successful global payroll is to foster learning and development within your payroll department, to ensure people are up-do-date with the latest payroll developments and legislation in their region. Without providing these opportunities, payroll departments cannot expect to operate on a global scale.”