Understanding payroll performance across different countries and regions needs more detailed analysis than standard KPIs. It requires a deeper look at more insightful metrics, such as first-time approval rates and supplemental impact levels. And at a time when businesses have faced a huge shake-up in their operations because of the pandemic, these metrics can be vital in helping them make the right changes to their payroll processing.
The latest figures have recently been highlighted in CloudPay’s Global Payroll Efficiency Index report, and a new webinar has explored the findings in more detail. Within the webinar, three payroll experts from CloudPay - John Pearce (SVP, Payroll Operations and Payroll), Marlene Felisberto (Global Director, Consulting Solutions), and David Barak (Chief Marketing Officer) - give their expert takes on what the findings mean. You can listen to a full replay of the webinar here.
The panel explored the countries that are the most difficult to run payroll successfully, based on three particular parameters: the complexity of payroll, the maturity of the payroll software used there, and the level of availability to payroll talent within that country’s job market. While the spread of the ten most difficult countries for payroll was global, China and Japan stood out as the countries with the biggest issues.
“This wasn’t on a complexity scale: it was more to do with the maturity of the software and payroll talent access,” John said, explaining China and Japan’s results. “Surprisingly, China is also one of the most efficient in terms of getting first-time approvals through, and there are lots of underlying factors driving that efficiency in the other KPIs.”
For the first time, CloudPay’s report includes a PEI matrix, which cross-references the difficulty and efficiency scores of different countries to establish exactly where they stand, relative to each other. John highlighted a number of countries that generated unexpected results, including Brazil and Germany.
“I’m not surprised about Brazil’s difficulty score, but I am surprised about its high rate of first-time approvals,” he said. “With the amount of off-cycle runs because of holiday pay and other things going on, it’s surprising how they still find the time to get the calculations and validations right first-time. Germany is suffering a bit, in particular, because of shortened working hours because of COVID, which meant there had to be some rapid changes to calculations, and many of these had to be done manually.”
The panel went on to focus on the effects - both positive and negative - that COVID-19 has had on payroll operations. As well as demands on data input and processing, and payroll-related challenges prompted by remote working, John highlighted the fast pace of change as a particular issue that many payroll teams found difficult.
“There were lots of COVID relief schemes offered by local governments, to help both employers and employees,” he explained. “The result for the payroll team was that they were getting lots of changes in social security rates, delays in settlements, furlough regulations and so on, but it was really difficult for the software to keep up with those changes. That meant payroll teams had to manually cover those new calculations until the software could catch up.”
A close look at the payroll performance figures for 2020, compared to the previous report from 2018, showed some encouraging results given the challenges of the pandemic. At a global level, data input issues, and issues per 1000 payslips both fell, and supplemental impact rose by only 4.2%. Marlene emphasized the positivity of the results, while also uncovering some clear trends and links between findings, helping to uncover potential payroll issues that are country-specific.
“There was a lot happening in 2020 and payroll divisions had to pivot from their usual ways of working, so to see the reductions in data input issues and issues per 1000 payslips is really interesting,” she said. “But that is counterbalanced with the increase in supplemental impact, and there is a clear correlation between the countries with the highest supplemental impact and those with the shortest calendar length.
To get more detailed insights on payroll efficiency in 2022, and get a closer look at the PEI Matrix results, listen to a full replay of the webinar here.