Report

The Strategic Ascent of Global Payroll Four key insights to accelerate the transformation from back-office processor to strategic powerhouse.

The Strategic Ascent of Global Payroll | 2

Table of Contents

Time for Change 3

Insight: Global Payroll Faces a Serious Strategy Gap 5

Insight: Payroll Integration Still Has a Long Way to Go 9

Insight: Adaptability Is a Modern Payroll Imperative 13

Insight: Global Payroll Is Embracing AI—with Humans in the Loop 15

A New Playbook for Global Payroll 18

About the Research 20

About Workday 20

The Strategic Ascent of Global Payroll | 3

Time for change. As business evolves at an eye-popping pace, payroll has a major opportunity to step out of the back-office shadows and assume a more strategic stance. Think: elevating workforce planning, improving the employee experience, and nimbly navigating shifts in geographic regulations and workforce models—without ever sacrificing accuracy.

But as research from a new Workday and Vanson Bourne global payroll survey

shows, most organizations’ payroll simply isn’t at the level required to embrace

its rightful role as strategic partner. Instead, responses from 1,300 global

decision-makers suggest that many are tethered to clunky, complex payroll

systems powered by fragmented data and manual processes.

Business leaders know that change is needed, and that need grows more acute

as payroll complexity intensifies. By diving deeper into our research findings,

business leaders can create an action plan to elevate their payroll functions—

and harness the power of payroll data to drive informed decision-making and

business outcomes. Read on to learn more.

87% of respondents say the evolving complexity of payroll regulation is a

big challenge

39% of respondents are planning to invest more into payroll

over the next year

Definitions A fully integrated payroll system provides a single view into finance, HR, time, absence, and payroll data for payroll practitioners and serves as a single point

of entry to enable employees to view HR, time, and payroll information on any

device in a single experience. Modern, integrated payroll systems automate

the impact of HR transactions on payroll, use sophisticated bidirectional APIs

to exchange data needed for payroll processing across local payrolls, include

flexible frameworks to adapt processes to new requirements, and provide

reliable and granular data and reporting for informed decision-making—

enabling a strategic payroll organization.

A strategic payroll organization actively collaborates with business partners to develop a pay strategy aligned to business objectives and talent

management philosophy, actively analyzing and interpreting workforce,

pay, tax, and compliance data to inform workforce plans. A strategic payroll

organization ensures a consistent and engaging payroll experience that guides

workers, provides visibility, and supports unique and changing workforce and

pay scenarios. Workers monitor the latest innovations, such as AI, and maintain

a roadmap to continuously improve payroll processes and the employee

experience.

Human in the loop is an AI model enabling humans to have an interactive role and assist the model in making significant decisions. As organizations navigate

this changing world of work, this approach embraces intelligent automation

that provides supporting information and recommendations while keeping

humans in control of all decisions.

The Strategic Ascent of Global Payroll | 5

Insight: Global payroll faces a serious strategy gap.

Findings at a glance. By and large, business leaders and payroll practitioners alike understand the

need to transform payroll from tactical processor to strategic asset. Yet many

payroll teams remain mired in manual tasks and complex data reconciliations

with strategic insights largely out of reach. Among survey respondents:

92%

recognize the strategic impact of payroll

89%

say their current payroll solution could do more to

uncover insights that inform the strategic direction of

the business

90%

agree that leadership could be more involved in elevating

payroll’s value and impact; interestingly, even 93% of board and C-suite respondents agree that leadership should be more

invested in elevating payroll

The Strategic Ascent of Global Payroll | 6

The deeper dive. Within most organizations, payroll holds some of the richest datasets that can

be used to inform strategic decision-making, optimize operations, and drive

business outcomes. Think: labor costs and tax liabilities that help determine

where to locate expanded operations. Overtime costs and attrition trends that

may signal the need to fund additional staffing or reassess talent management

approaches. Workforce expenditure forecasts that directly inform the balance

of employees and contingent workers in a particular geography.

When survey respondents were asked about the most important business

outcomes of strategic payroll, no singular standout emerged. Instead,

respondents pointed to a multitude of ways that organizations are leveraging

payroll to drive strategy and performance.

Paying employees aside, what do you consider the most strategic use of payroll data?*

1 Real-time workforce planning (37%)

2 Better pay transparency and equity (36%)

3 Increasing operational efficiency (36%)

4 Cost control and budget management (35%)

5 Enabling executive decision-making (33%)

6 Fueling international expansion (31%)

7 Understanding how employee benefits impact employee retention (31%)

8 Providing real-time insights (31%)

9 Compliance with legal and regulatory compliance (30%)

* Question: “What do you consider as the most strategic use of payroll

data (besides from paying employees)?” Percentages represent

respondents who selected answer as their top challenge.

The Strategic Ascent of Global Payroll | 7

Six strategic questions payroll data can help answer. As business leaders look to nimbly navigate a business and talent environment

marked by dynamic disruption, they’re asking more questions of payroll teams.

Is our workforce strategy financially sound? At a time when many companies are looking to reduce labor spend, granular insights are key to assessing your organizational structure and maximizing workforce deployment.

Do we have pay gaps within our organization? Pay discrepancies across gender, racial, or other lines can be hard to pinpoint—and address—without reliable, comprehensive payroll data that’s easy to slice and dice across multiple dimensions.

How does our per-employee productivity compare to industry benchmarks? Payroll data offers real-time insights into workforce trends, including productivity levels, that leaders need in order to make better decisions.

When does contract labor make more sense than overtime? To answer this question, executives need to see what they’re spending on workers across locations, categories, and pay periods, while also easily pulling pay-calculation reports and double-clicking into tracked overtime to determine root causes and forecast future costs.

Are we paying our top talent enough? Turnover trends on their own don’t reveal much but when combined with payroll and performance data, businesses are better able to assess compensation strategies and ensure they’re retaining top performers.

Are we doing all that we can to mitigate errors and compliance risk? Identifying root causes of errors and nonompliance is critical to realizing a strategic payroll vision. Automation can identify errors before they happen to save time down the line.

If the value of payroll’s strategic ascent isn’t in question, why haven’t more

organizations successfully made the move? Our research found that the

barriers to strategic payroll can be nearly as varied as the potential value

of a successful transformation. One pervasive problem: misalignment or

miscommunication over who manages each part of the payroll process.

What challenges prevent payroll from becoming more strategic?*

1 Belief that payroll is solely a transaction business function (44%)

2 Limited technology budgets (42%)

3 Limited executive support (39%)

4 Minimal influence due to reporting structure (37%)

5 Disconnected data and business systems (36%)

6 Inadequate performance metrics (36%)

7 Lack of time to dedicate to strategy (34%)

8 Change resistance (34%) * Question: “What are the current barriers/challenges preventing payroll

from becoming more strategic within your organization?” Respondents

selected all answers that apply. Percentages represent respondents who

selected answer as their top challenge.

HR (n=507) Finance (n=242) IT (n=239)

Operations (n=89) Payroll (n=223)

HR

87%

38%

44%

33%

46%

Finance

36%

72%

61%

29%

46%

Internal independent payroll department

35%

41%

49% 49%

55%

Third-party payroll processor

25%

36%

27%

33%

46%

Operations

20% 25%

30%

55%

25%

The Strategic Ascent of Global Payroll | 8

Where should payroll reside within an organization? Traditionally, there hasn’t been a clear answer, with organizations fairly evenly

split on whether payroll reports to finance or HR. But as Deloitte notes in its

latest Global Payroll Benchmarking Survey, more companies are moving payroll

to HR. Our research supports that trend, with 87% of HR respondents saying their function is now responsible for payroll. But that’s not a uniform view held

by all functions: 72% of finance respondents say payroll is their responsibility,

and 55% of operations respondents say the same about their function.

Which department is responsible for processing payroll within your organization?*

Which department is responsible for processing payroll in your organization, categorized by department.

* Question: “Which department(s) is (are) responsible for processing payroll, including taxes, within your organization?”

Respondents selected all that apply.

https://www2.deloitte.com/content/dam/Deloitte/us/Documents/human-capital/us-apa-payroll-congress-survey-report.pdf

The Strategic Ascent of Global Payroll | 9

Insight: Payroll integration still has a long way to go.

Findings at a glance. Executives recognize the need for the seamless, streamlined integration of

global payroll data, processes, and systems across functions and globally.

Most even believe they’re making strides. Yet our research illuminates

the current reality that beneath the veneer of payroll integration, most

organizations are juggling a complex web of systems and vendors.

• 71% say their organization has an integrated payroll solution, but fewer than half of HR and payroll data sources are integrated, on average.

• 5 different payroll systems, 5 integrations, and 5 vendors are the norm for managing global payroll at the average organization, and 15% of

respondents say their organization uses 8 or 9 vendors.

• 47% of payroll processes require some level of manual intervention, on average, and 52% of respondents say they’re not confident that their

workforce costs and metrics are always accurate.

The deeper dive. Executives are far more likely to consider their payroll system integrated than

those in mid-level management or junior management, who more likely have a

front-row view of the manual effort required to power their global payroll.

Executives

79%

Mid-Level Management

68%

Junior Management

54%

* Question: “Does your organization use one platform for HR and payroll?” Respondents selected one option.

99% say their organization

undertakes retroactive payroll processing—and report,

on average, 345 off-cycle payments due to errors within the past 12 months

Stored separately

Stored in single system

Benefits

51%

49%

Post-payroll compliance

52%

48%

Compensation/ expenses

55%

45%

Core HR

56%

44%

Time/timesheet data

57%

43%

Scheduling

58%

42%

Absences

68%

32%

The Strategic Ascent of Global Payroll | 10

Which of the following payroll data components are stored in separate systems within your organization?*

Aggregating and reconciling disparate payroll data across a complex tech stack not only takes time but also increases the risk of error and reduces the confidence in and timeliness of data used for analysis.

The net effect can be high financial and regulatory risk for organizations, and a frustrating employee experience for payroll practitioners and the workforce at large.

36% of leaders say disconnected data and business systems hamper payroll’s efforts to

be more strategic

Organizations that use 6 or more payroll providers are more than 2x as likely

to cite difficulties in management and global reporting, an EY global

survey found

* Question: “Which of the following payroll data components are stored in separate systems within your organization?”

Respondents selected all options that apply.

https://www.ey.com/en_us/insights/workforce/how-can-payroll-drive-value-in-organizations-with-flexibility https://www.ey.com/en_us/insights/workforce/how-can-payroll-drive-value-in-organizations-with-flexibility

Why does retroactive payroll need to be undertaken at your organization?* Even as the rallying cry for

full integration becomes louder and more urgent, the complex, fragmented state

of global payroll inside many organizations is impeding

progress1 HR transactions not in sync with payroll run times (42%) (42% of respondents say this is one of the top 3 root causes of retroactive payroll at their organization.)

2 Human error (38%)

3 Overtime data not incorporated correctly (38%)

4 Shortfall in pay calculated (38%)

5 Late timesheets (37%)

6 Contractual changes (36%)

7 Stale data/lack of real-time data (35%)

8 Inaccurate data (34%)

* Question: “Why does retroactive payroll need to be

undertaken in your organization?” Respondents ranked

responses first, second, and third.

Board Member or C-Level Senior Management Midlevel Management Junior Management

54%

44%

40%

38%

41%

45%

41%

35%

38%

39%

40%

32%

24%

32%

35%

36%

The Strategic Ascent of Global Payroll | 12

What barriers/challenges has/would your organization faced/face when implementing an integrated payroll solution?*

Data compatibility with third-party providers

41% Overall

Differing regulations or tax codes across global business units

41% Overall

Reliance on legacy systems

38% Overall

Too many payroll systems

34% Overall

*Percentages reflect respondents choosing all that apply.

The Strategic Ascent of Global Payroll | 13

Insight: Adaptability is a modern payroll imperative.

Findings at a glance. From entering new geographic markets, to supporting new workforce models

around remote and contingent workers, to staying aligned with C-suite

priorities around pay equity, labor costs, and talent retention, global payroll

is anything but static. But even as agility has become the lifeblood of modern

business, our research shows that many multinational organizations struggle

with payroll processes and systems that lack the flexibility and adaptability

they need.

• Nearly all (99.7%) of respondents say their payroll vendor could do more to support the international growth of their business.

• It requires 5 hours, on average, to change an existing business process or workflow with an organization’s current payroll solution.

• 68% of leaders say their employees have difficulty viewing their HR, time, and payroll information.

The deeper dive. Payroll vendors may seem like an obvious asset when it comes to delivering

on shifting strategic goals, but our research suggests only mixed reviews in

this arena.

45%

say their payroll vendor could do better in meeting

country-specific tax regulations and compliance

48%

say their payroll vendor could do better in delivering

real-time data across their regions of operations

48%

say their payroll vendor could do better in supporting

analytics to make informed decisions about workforce distribution across various

regions

1–2 hours

2–3 hours

3–4 hours

4–5 hours

5–6 hours

6–7 hours

7–8 hours

8–9 hours

4%2%

10%

18%

24%

22%

14%

6%

How long does it take to change an existing business process or workflow with your organization’s current payroll solution?*

Our research indicates that more than 24 people at the average global

organization help to process or manage payroll. And each department—and

employee!—handling payroll has different needs, priorities, and preferences.

Consider, for instance, that HR respondents say the most important feature in

a new payroll solution is the ability to implement new API integrations (35%).

Finance, meanwhile, is most interested in payroll’s ability to create customized

reports (36%), and survey respondents within operations point to integrations

that span systems and departments as their top priority (40%).

Likewise, meeting employee expectations around payroll is hardly a

one-size-fits-all, set-it-and-forget-it endeavor. For instance, there’s growing

demand for flexible pay options, such as early earned wage access and pay

advances, as well as greater pay transparency and novel pay programs for

distributed workers. Keeping pace with evolving employee wants can give

organizations an edge in a tight talent market. But it first requires the ability

to swiftly introduce payroll changes to relevant workforce segments.

More than

60% agree that it can be

difficult for employees to view their payroll

information

* Question: “Approximately how long does it take to change an existing

business process or workflow (e.g., an employee’s pay rate, issuing a

bonus, benefits changes, etc.) with your organization’s current payroll

solution, on average?” Respondents chose one answer option.

The Strategic Ascent of Global Payroll | 15

Insight: Global payroll is embracing AI— with humans in the loop. Multinational organizations need no convincing that AI and automation have

transformative potential for global payroll. Our research shows they’re wasting

no time in putting this technology to use in vast and varied ways—and already

reaping tangible benefits. Among respondents:

• 96% say automating payroll systems has freed (or would free) up time to focus on innovation and building business activities within their organization.

• About half (53%) of payroll processes are automated, on average, saving 2 working days per payroll cycle, respondents say—

a yearly savings of 96 days.

• 43% say their organization plans to invest more in payroll automation over the next year.

The deeper dive. Our research reveals payroll automation’s huge potential across multiple areas:

improved accuracy, yes, but also increased agility, enhanced analytics, and

more time to focus on innovation. When respondents were asked to identify

the value that automating payroll can create, they registered a strong—and

broad—consensus.

At the same time, respondents are evenly split across AI’s leading capabilities.

• 39% prioritize the ability to consolidate global payroll data

• 38% prioritize reducing the time it takes to run payroll

• 40% prioritize surfacing real-time insights to visualize data trends

95%

say it can provide enhanced reporting and analytics

96%

say it can create more timely and accurate payroll

processing

96%

say it can help quickly adapt to changes within organizational structure, employee roles, and

headcount allocation

The Strategic Ascent of Global Payroll | 16

To what extent has your organization implemented AI and automation features across payroll?*

Somewhat implementedFully implemented Plan to implement within next 1 to 2 years

No plan to implement within next 2 years

Automated payroll processing

50% 39% 10%

Expense management automation

48% 41% 11% 1%

Automated time tracking 46% 42% 11% 1%

Predictive analytics for workforce planning

1%45% 42% 11%

Compliance and taxation 1%45% 41% 13%

Fraud detection and security in payroll data

44% 43% 12%

Self-service and chatbots 2%44% 39% 15%

* Question: “To what extent has your organization implemented the following automation, AI, and machine learning features for its payroll?”

Respondents selected one option. Because of rounding, percentages might not equal 100.

Despite a consensus around automation’s importance, our global survey

results indicate that different departments involved in payroll have different AI

priorities that reflect their functional needs.

The bottom line: Organizations are automating payroll for multiple reasons—

and many are ramping up their automation investments. The average budget

increase to support automation this year is 43%. Despite this strong push,

virtually everyone—99% of organizations—wants to keep humans in the loop

on some level. That aligns with our earlier research, showing 70% of leaders and

66% of employees overall think AI should be developed and used in a way that

easily allows for human review and intervention.

Priority Total HR Finance IT Operations Payroll

Surface real-time insights to visualize data trends 40% 39% 38% 41% 35% 43%

Consolidate global payroll data 39% 38% 40% 35% 44% 45%

Eliminate manual data entry 38% 42% 38% 38% 35% 30%

Schedule and automate audits 38% 42% 41% 34% 28% 34%

Reduce the time it takes to run payroll 38% 38% 35% 39% 45% 36%

Reduce errors and anomalies 36% 32% 38% 41% 34% 40%

Reduce the time it takes to run end-of-year closing 36% 35% 36% 36% 38% 38%

Lower risk of noncompliance 34% 34% 33% 34% 35% 35%

Question: “Which of the following automation, AI, and machine learning features do you consider most important when selecting a

payroll solution?” Respondents ranked first, second, and third answer options.

The Strategic Ascent of Global Payroll | 18

A new playbook for global payroll. Our research makes it clear: payroll’s current state isn’t tenable. To become a

true strategic business partner, the function needs to replace its fragmented

systems with a streamlined, fully integrated solution that provides complete

data visibility across payroll, HR, and finance. Leaders who unlock global

payroll’s full potential not only improve efficiency and accuracy but also enable

their organization to stay ahead in a dynamic marketplace.

The good news is that business leaders are well aware of payroll’s strategic

potential. But our survey shows that leaders are stuck in a holding pattern,

unable to fulfill that potential as they struggle with the fundamental objectives

of accuracy and timeliness.

That’s why business leaders are looking to transform global payroll.

Half of our respondents say their organization plans to invest more into payroll

over the next year, with a 43% average year-over-year increase. That’s a positive

sign. But how can business leaders leverage this investment to drive payroll’s

transformation? We have a few suggestions.

The Strategic Ascent of Global Payroll | 19

Three ways for payroll leaders to take immediate action.

1. Get crystal clear on who owns each part of payroll transformation.

Our survey reveals that payroll responsibilities are broadly misaligned, with

some organizations folding certain duties into HR, some into finance, and

others into IT, operations, or a standalone department. Still others outsource

payroll duties entirely. To begin a functional transformation, organizations need

to agree on which department owns which part of the overall payroll experience

(including execution, technology, employee communications, and data

integration and analysis)—and how these stakeholders work together to deliver

a unified experience that boosts productivity, engagement, and overall agility.

2. Align payroll goals across departments and stakeholders.

Right now, different departments also expect payroll to meet different needs.

To establish a modern solution that exceeds all stakeholder expectations,

organizations need to understand each department’s priorities. According

to our survey, finance values a payroll system that can create customized

reports, while HR wants one that can implement new API integrations. By

assessing and aligning payroll goals, leaders can take a major step toward

creating a successful payroll strategy and technology roadmap.

3. Embrace higher-level automation and AI.

Automating payroll tasks such as calculating taxes, data entry, and conducting

audits can improve accuracy, maintain compliance, and reduce risk—all while

freeing professionals to focus on higher-level strategic work. But the value

of automation should extend beyond efficient record-keeping and tax filings

to enable forward-looking data analysis, too. To generate automated insights

that go deeper (think: determining root causes and future forecasts related to

overtime costs, for example), organizations need to integrate payroll data with

other operational and HR data. A unified system can instantly connect the

dots between each, generating valuable insights into employee performance,

productivity, and engagement.

Adopting a strategic payroll approach begins by recognizing that

change is needed. To explore how Workday can help unlock the power

of your payroll data and provide a seamless experience for your workforce,

please visit: workday.com/en-us/products/payroll/overview.html

https://www.workday.com/en-us/products/payroll/overview.html

About the research. The data in this report, unless otherwise indicated, comes from a global survey

commissioned by Workday and conducted by Vanson Bourne in April and May

2024. The survey of 1,300 decision-makers sought to understand the state of

global payroll in today’s organizations and how it is impacting payroll’s ability to

deliver strategic value to the organization.

Respondents were based in North America, Europe and Africa (EMEA), and

Asia Pacific and Japan (APJ) and worked across 11 unique industries, including

retail, energy, financial services, and manufacturing. Respondent titles spanned

the C-suite level, senior management, midlevel management, and junior

management across HR, finance, IT, payroll, and operations.

About Workday Workday is a leading provider of enterprise cloud applications, delivering

financial management, human resources, planning, spend management, and

analytics applications built with AI and machine learning at the core to help

organizations embrace the future of work.

For more information about Workday, visit: workday.com

+1-925-951-9000 +1-877-WORKDAY (+1-877-967-5329) Fax: +1-925-951-9001 workday.com

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