Thanks to the spread of globalization, the world is getting smaller and smaller. The days when a company was forced to rely on a local workforce are long gone. Thanks to developments of communications tools that allow workers to do many office jobs from anywhere in the world, more people are choosing to work as contractors or as full-time workers abroad.
At the same time, companies that want to hire workers abroad have new options. Once, only the biggest companies could afford a truly global workforce because the expense of opening an entity abroad was prohibitive to most companies. Today, there are a number of options that allow any company to hire anywhere in the world, with full legal compliance.
Keeping track of a global workforce, however, remains an ongoing challenge for a company of any size, especially when it comes to matters of global payroll and workforce management. Payroll is challenging in any company – collecting and processing data sheets for every worker, calculating a variety of salaries and benefits, staying in compliance with tax codes for workers of all different classifications – but with multi-national entities, the challenge is many times more difficult. There are numerous additional tax rules to follow, different currencies and languages, differences in pays slips from country to country.
Companies are tackling these issues of global payroll and workforce management, with the goal of automating as many process as possible. By leaving payroll managers free to oversee the process, a company can stay on top of the process and carry out its duty to all its workers properly.
Putting the Automation Engine to Work.
There are a number of advantages to automating payroll and human resource management:
1. No Human Error.
Payroll is not only a company’s biggest expense. It’s also an area that has absolutely no room for error. It must be done correctly every single time, or there could be consequences. Workers depend on their employers to provide the full pay owed to them each month (or every two weeks) on time, and with all of the proper tax withholdings. Any error in pay can wind up costing a company dearly, and also deteriorate trust that could spread to the entire workforce. An error in taxes could cause problems with tax authorities for both the company and the worker.
With manual payroll, however, it is inevitable that human error will enter the equation at some point. The more complex the payroll, the more data sheets to reconcile, the more languages to consider, the more country tax codes to check, the greater the chance for a mistake every now and then. Even a 99% success rate is not good enough. If a company has 500 employees, that one percent means 5 employees have mistakes in their payroll.
There is simply no tolerance for error, and with payroll automation, there is none. Unlike humans, software robots do not make mistakes. They carry out the process exactly the same way every time. They do not need down time, lunch breaks, or sleep. They can scale to any level without concern for overextending their attention.
Naturally, when dealing with processes as complex as global payroll with workers in many different regions, exceptions to standard procedures may occur that require human involvement. That’s why it’s still smart to keep a payroll manager in the loop. But overseeing the process and stepping in for rare and unusual cases is much different that carrying out the process from scratch and much less susceptible to error. The extra level of human involvement adds another level of protection against error.
2. Cost Efficiency.
The payroll process can be expensive, especially at a growing company. Much of the that expense can be attributed directly to the manual process. The hours spent going through time sheets, copying the data into a payroll spreadsheet, accounting for overtime pay, sick leave, tax withholdings, and then repeating the process for every country, add up. The costs are significant, whether the payroll is handled in-house or outsourced to another company.
As long as payroll and workforce management is processed manually, the cost will remain high. The process takes hours away from HR or Finance that could be spent helping the company in other, more strategic ways.
Automation software can eliminate a large chunk of that manual process and usually do it better. It is ideal for tasks that are repetitive, rule-based, and high in volume. If a description of the task can be written out on paper, step by step, it can be automated with robotic process automation (RPA), which is software that can mimic human action (but not human thought).
Eliminating automatable tasks from workers saves time, which has a direct impact on their overall efficiency. When it comes to payroll and human resource management, the tasks go from being a black hole for manpower to something that brings real benefit to the company.
3. Speed of Operation.
Alongside cost efficiency, automation allows companies to speed up operations dramatically, allowing much greater efficiency in the workforce. Automation can often handle their jobs 5-15 times faster than humans working manually in those same operations.
Speed becomes a major factor during a company’s growth period, when the number of employees could shoot up dramatically but the number of people responsible for global payroll remains the same. The ability to scale without costing significantly more manpower hours keeps the operation flowing efficiently.
It is important to understand that automation is focused on tasks, not jobs. The goal is not to replace people with software bots. It is to use software to make people more effective. If a task can be automated, it is usually a dull and repetitive task that does not bring out the best in the worker. Freeing that worker from the mundane task frees to worker to focus on tasks only a person can carry out, which carry more value to the company and more satisfaction for the worker.
With so much time saved by automation, the challenge for HR will not be how to get the work done on time, it will be about how to use the extra hours that are suddenly made available.