CloudPay Global Payroll Efficiency Index 2022

CloudPay’s Global Payroll Efficiency Index report offers unrivaled insights into how payroll is really performing worldwide, by measuring key performance indicators across more than 130 countries across the globe.

It goes deeper than standard service level agreements (SLAs) to look at the underlying causes for operational efficiency (or lack thereof). The previous two editions of the PEI report have uncovered some fascinating insights and regional trends. This new edition, covering data generated throughout the 2021 calendar year, investigates how payroll is continuing to deal with both the direct and indirect effects of the COVID-19 pandemic.

In this blog, we’ll highlight some of the key insights from the new report, focusing on the most telling results on each of the five KPI metrics used:

• First-time approvals (FTA): the percentage of payroll runs approved without changes at the first review

• Data input issues (DII): the proportion of issues caused by data input mistakes that affect payroll

• Issues per 1000 payslips (I/1000): the number of payslips per cycle affected by issues of any type

• Calendar length: how long it takes to complete a payroll cycle end-to-end

• Supplemental impact: the proportion of total payroll runs completed outside of normal payroll cycles

Why the Great Resignation had a major impact

The biggest influence on the 2021 results compared to those in 2020 was the Great Resignation. Around the world, millions of employees have quit their jobs in search of alternatives that are more fulfilling, or that support a better work/life balance.

The impacts on payroll caused by the Great Resignation are twofold. The first is that human payroll talent has become scarce, meaning staffing levels and overall skill sets within organizations have declined. The second is the additional workload that smaller payroll operations and teams have had to deal with as the rate of new hires and leavers has increased. Both have led to poorer payroll performance, dissatisfied staff, and greater inefficiency.

Results across the five KPIs

Reading the full report will give you a detailed view of the current state of play within global payroll. But for each of our five KPIs, the following results stand out in particular:

• First-time approvals: while there has been an improvement globally in FTA rates by 0.55 percentage points, the rates have actually fallen in both the Europe/Middle East/Africa (EMEA) and Americas (AMER) regions, by 0.78% and 1.73% respectively. These have been more than counteracted by a huge 5.63% increase in the Asia-Pacific region
  
  

• Data input issues: the above rise in FTA for Asia-Pacific was expected to be accompanied by a corresponding reduction in data input issues, however this wasn’t the case. There was a rise of 2.7 percentage point across the region, largely due to many COVID regulations and unfamiliar red tape still being in place in many Asia-Pacific countries throughout 2021
  
  

• Issues per 1000 payslips: this metric dropped substantially in the previous year’s figures, and while similar progress hasn’t continued, the rate has largely stabilized with only minor increases and decreases across all three regions. This suggests that after the initial shock and turbulence of the pandemic, payroll teams around the world have become more used to the ‘new normal’ from their perspective
  
  

• Calendar length: this metric has continued to increase in both EMEA and AMER (0.6 and 0.3 days respective), while APAC has seen a slight contraction of 0.3 days. This is where the impact of the Great Resignation is perhaps being felt most keenly, as payroll teams have had far more to process in terms of employees joining or leaving. The decrease in APAC may correlate with the fact that the Great Resignation’s impact in that region has been limited in comparison
  
  

• Supplemental impact: encouragingly, rates in this metric have reduced this year after substantial rises in each of the previous two reports, decreasing by 3.4% in AMER, 1.59% in EMEA and 0.59% in APAC (2.34% globally). Interestingly, as was the case in both previous reports, South American companies have dominated the list of highest supplemental impact rates; in the context of their short calendar lengths, it suggests that their payroll processes are being rushed and that adequate checks aren’t being carried out

In summary

All five of the KPIs mentioned above shed important light on overall global payroll performance. Benchmarking individual vendor performance against these global levels can help better understand how well they’re performing, and uncover underlying issues that may require remediation.

Explore the full report to get a more detailed picture of global payroll performance, including the PEI Matrix that delivers valuable insight into how local conditions affect payroll efficiency.