Allow me to begin with something I reminded myself about when appointed to my first market-facing or vendor-side executive role after spending the first 15 years of my career as a human resources (HR) and HR Technology practitioner (US and Europe). That solution vendor position also served as the first of what would become several thought leadership and analyst or adviser platforms I would have the opportunity to operate from. It was heading up product strategy for the Human Capital Management (HCM) market leader at the time and the quick but consequential tidbit I reminded myself about was that customer satisfaction across the HR and workforce management technology landscape generally ranged from poor or mediocre to only slightly above average.
While I was likely citing prominent industry reports and studies at the time, I was also reflecting upon first-hand experiences at five different Fortune 500 companies. And when reminding myself about that unfortunate industry stat, I also thought about logical causal factors and correlates which, unfortunately, have not disappeared all that much with the passage of time. The two main ones that stuck with me were:
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- Disconnected processes and enabling technologies that needed to be organically connected in true “end to end” fashion – as advertised.
- Known or potential risks that were not accounted for and properly mitigated.
Compounding this dynamic in my view is that in some segments of the HCM and workforce management tech and services ecosystem – such as payroll for example, and especially global or cross-border payroll – the lack of organically connected, end-to-end processes is often not even visible to the end customer. Thus giving rise to the other personal learning alluded to from my practitioner days: All HR/payroll operating risks had to be accounted for and properly mitigated.
Why cross-border payroll is complex
My highlighting of a global or cross-border operating context in the payroll domain includes two major elements of what’s often referred to as last mile processing, and are frankly among the least visible areas of operating risk: extremely reliable payment processing and continuous local/regional regulatory compliance.
Cross-border payroll is complex due to the need to navigate different countries’ tax laws, currency fluctuations, varying employment regulations, and potential compliance issues across multiple jurisdictions. This requires careful management of payroll calculations, deductions, and payments while adhering to each location’s specific rules, often necessitating collaboration with local financial institutions and payroll providers.
This can also mean the inability to pay in the most convenient way, certainly undermining a quality employee experience. Additionally, conducting accurate employee cost forecasts and analyses on a global scale becomes much more difficult and time-consuming. We already know that labour costs typically account for roughly 70-75% of running a business. That seems material enough without adding bifurcated, inefficient processing aspects on top of it. Finally, and again concerning the employee experience and delivering a great ‘EX’, a prevalent theme in my work for over a decade now (e.g., “Future Proofing the Employee Experience”) this focus area must include getting paid 100% accurately and 100% when expected.
Digital age payroll and payments solutions
As the near-constant although justifiable buzz about artificial intelligence (AI) in recent years eventually started to yield practical use cases, we’ve witnessed the proliferation of high-value examples getting brought to market by both regional and global HCM / payroll solution providers. These included the ability to predict and preempt potential inbound errors before they surfaced as processing errors, prescribing the best actions when key compliance-related information was suspect and curating regulatory updates from the most reliable sources available. In the context of the seamless integration of real-time payroll data for strategic decision-making, AI has been a major boon there as well.
We have the common expectation of workers (employees and non-employees) everywhere that their questions and issues will be handled more swiftly thanks to tech innovations like the use of AI-powered digital help desks and customer support or the powerful tag-team of these bots and competent payroll staff.
As for the payments component of global payroll, I’ll cite this from the “world’s most systematically important bank,” according to the G20’s Financial Stability Board. This austere institution, known more conventionally as JP Morgan, in their very informative paper on cross-border payment modernisation stated the following: “… whereas instant payments are fast becoming the norm domestically, the picture is different when businesses try to move money across borders. This is perhaps understandable when you consider there are 195 countries all with their own payment systems, regulations and levels of technological maturity.”
A look at modern payment infrastructures
Indeed, a best-in-class, end-to-end payroll process now includes a modern payments infrastructure – sometimes referred to as payment rails. When we think about an enterprise that operates in dozens of countries and deals with cross-border payments, not having direct control over the payments function can easily mean extra fees from exchange rate fluctuations and intermediary banks, plus payment processing delays for the business and its workforce. And we haven’t even broached topics like cybersecurity threats, natural disasters, geopolitical conflicts, international payment restrictions (predictable or not) and even the potential insolvency of banks.
From what I could ascertain doing a fair amount of HCM/payroll product and market research, the global payroll, payments and total workforce management solution provider Papaya Global, was the first global payroll provider to develop its own native payments platform. They perhaps achieved this seeking to be at the forefront of fintech innovation within their approach to global payroll management. The previously mentioned JP Morgan, and specifically its Payments group, helped Papaya address the myriad challenges outlined above with an expansive suite of cross-currency solutions that demonstrably expanded Papaya’s payment capabilities.
This enabled real-time AND fully end-to-end global payroll processing. This very strategic partnership materially strengthened the hybrid payroll/fintech vendor’s offering set via the aforementioned “payment processing rails.” By collaborating with JP Morgan Payments, and by pairing the new global payments infrastructure with a very efficient payment consolidation process more broadly, in addition to enhanced user experiences and other operational efficiencies, all of this led to noticeably increased customer satisfaction. So perhaps the decades-long trend of low customer ratings in HR and workforce management technology is beginning to turn around after all.
A lasting competitive advantage
In the global and cross-border payroll solutions space, the most critical provider capabilities include the number of supported currencies and countries, along with the strength of their global banking infrastructure. But true end-to-end payroll and payments functionality requires more, it must be built on a single SaaS platform with industry-leading security standards. Only then can it effectively manage real-time global payments while also enabling better planning, modeling and decision-making tailored to regional and business-unit needs. The result isn’t just operational efficiency – it’s a lasting competitive advantage.
Steve Goldberg is an Analyst and Advisor at SBG Consulting LLC
