HRMS and Global Payroll: Why Is It so Difficult?
The topic of global payroll always attracts attention in the HRMS world, in conferences and online. While there have been various attempts at a global solution, unlike other areas such as HRMS talent management or training systems, HRMS payroll remains distinctly unique and standalone. How is it that one part of HRMS can be so separate and different from the rest?
Ultimately, the payroll data that needs to be captured and the processing that must occur often drives the need for different systems. Unlike recruitment needs or meeting country or business required training, HRMS payroll data is extremely country specific. Legislation imparts certain requirements as to the data that must be captured vs. the data not included. For example, German payroll systems will track religion, as employees have a certain percentage of tax withheld by the company and automatically transferred to religious authorities - dubbed the ‘church tax’. Asian countries often track religion too, but more from a pay reason, as certain religious holidays generate certain special payments. A US, Canadian or UK payroll system would never track religion, as to do so would be against the local laws and could result in discrimination charges against the company! With such a varied landscape of data collection, implementing a global HRMS that accommodates all of these needs can become a costly endeavor.
If It Ain't Broke, Don’t Fix It
Historically, payroll systems were one of the first areas of automation within HR. In some ways, it became a case of ‘if it ain't broke, don’t fix it’, as automation was applied to other areas of the HRMS market who were eager to embrace change while HRMS payroll remained slow and steady. For example, I know of companies who have chosen not to move off of their HR ERP system due to concerns over the effort of moving payroll. When their HRMS has gone out of support, niche consulting companies step in to provide tax updates for a small fee. The backbone of this particular system is COBOL for payroll processing, a programming language that has long since gone out of fashion but not in the HRMS world!
As well, HRMS payroll vendors themselves have contributed to this landscape through growing by acquisition rather than starting global systems from scratch. While it is possible to then achieve global contract savings, from a backend systems perspective, it’s still a patchwork of various systems and products developed in different technologies and implemented differently.
While global payroll may seem like a holy grail, all is not lost. There is a lot of development and change occurring in HRMS, primarily due to enhanced competition from newly emerging cloud HRMS vendors who are forcing innovation through new, global technology. As other areas of HR systems are being enhanced, payroll systems represent an opportunity that companies are noticing, as they try to fill this business need with their offerings. Need further details on options? Check out the latest HRMS vendor guide to find out what’s new in vendor solutions.
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