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When you start viewing your payroll function as a strategic asset to your organization, there’s a wealth of insights that you can gain from your international payroll data. When you can accurately view how different employees are paid across your multi-regional workforce, you’re able to go beyond providing accurate reporting and start sharing intelligent insights.
A growing number of organizations have started investing in building a comprehensive payroll strategy: EY found that 67% of organizations have a formalized payroll strategy in place as of 2021. Establishing a pay strategy is the first step to generating insights your team can act on.
Instead of viewing payroll as an administrative function, your business can develop pay initiatives that improve the employee experience, from improving salary benchmarking and pay equity to more effective conversations about compensation and financial wellness. These key opportunities can help payroll teams further demonstrate their impact across the greater international organization.
Let’s take a closer look at some of the benefits a pay strategy developed with insights from your international payroll data can bring.
1. Simplify salary benchmarking
To attract and retain the best people, company leaders today need to keep a close eye on market rates: the standard salary for every role in their workforce. Only through this knowledge can they gauge whether their employment proposition is standard, below-par, or truly competitive. This can be challenging for multinational organizations if each region has a different market rate and compensation information can’t be easily compared.
Competitive compensation is a powerful incentive for retaining your talent, especially in today’s volatile marketplace. Today, as many as 29% of employees are currently looking for a new job, according to a 2022 PwC Financial Wellness Survey, and of those surveyed, 65% cited pay as their primary reason.
More than half of employers (56%) are tapping into the latest payroll technology to benchmark compensation and ensure market pay rate, according to Ceridian’s Future of Payroll Survey. Salary benchmarking is a critical element of your compensation strategy because it helps ensure your people are paid fairly and competitively. The right salary bands can give your people room to grow within their role.
Pay insights open the door to better employee transparency
Pay is an important part of engagement and can reflect how valued an employee feels by their employer. With more complete access to your international payroll data, developing a competitive compensation package can be easier to achieve.
Beyond ensuring that you pay people fairly, you can empower managers with insights to have more transparent conversations with their direct reports and show people clearly how pay decisions are made, which helps demonstrate fairness to your employees. A two-way discussion about pay can now take into consideration factors like time in the position, exact hours worked, and overall performance levels.
When your leaders are better informed and can be more open with employees, those employees will feel better understood, more valued, and will be more likely to remain engaged and loyal to your company.
2. Improve pay equity
Diversity, equity, and inclusion (DEI) has become a major priority for forward-focused organizations. One key indicator of inequity in the workplace are gender pay gaps, where men globally earn an estimated 23% more than their female counterparts. Racial pay gaps also persist. Black men earned 87 cents for every dollar a white man earned, and Hispanic workers only earned 91 cents on the dollar.
It’s clear that pay equity can be an important initiative for organizations to show measurable progress. 20% of respondents indicated that addressing pay equity is the single most important action a company can take to improve DEI.
When you have visibility into workforce pay data across your operating regions, you can quickly identify and address those gaps. Getting more granular with your payroll data and reporting means you can properly calculate pay differences, factoring in additional components such as bonuses, benefits, and additional compensation.
The potential risk of non-compliance
Organizations that neglect to take steps against pay inequity could be at risk of costly fines, corrected wages, and a loss of brand reputation. In fact, some countries such as the U.S. and the UK require companies to publish gender pay gap data. Now, the European Commission is taking it a step further, compelling employers to publish an annual gender pay gap report and allowing employees to sue for full recovery of back pay, with interest, as well as compensation for lost opportunity and moral prejudice.
With a sound global payroll strategy and data insights in place, you can easily take proactive action against pay inequity. You can earn the respect of your workforce and avoid potential reputation damages and financial loss.
3. Promote financial wellness
Employers are feeling increasingly responsible for employee wellness. After the past two years, supporting employee financial wellness has become paramount and an integral part of overall employee health and mental wellness programs. Even if you’re not running an international business, you should know the benefits of moderating the pay experience for your employees and how this impacts retention.
PwC found that among financially stressed employees, 49% said money worries had a severe impact on their mental health and nearly half (47%) said that their personal finances have been a distraction for them at work. Your pay strategy can have the power to improve employee engagement and satisfaction when you can compare retention metrics with your compensation strategy.
From fixed cycles to flexible pay
It’s no longer just a question of how much your people get paid. When they get paid matters just as much. The inability to access earned income on demand is a significant cause of financial stress. You can adopt a new pay strategy that enables employees to access earned income in real-time, daily, weekly, or whenever they choose. The result is better financial wellness as well as greater focus and productivity at work.
Some organizations are even providing financial education in the form of smarter pay slips that clearly break down applicable deductions, garnishments, and tax information. This helps employees better understand how their income is calculated and more easily prepare for tax season. A smarter pay slip can improve the pay experience and increase employee satisfaction and trust at the same time.
To remain competitive, a smarter international payroll strategy grounded in a single solution is essential for any multi-country business. It can add value across the entire company by providing more accurate payroll data for the financial team, insights to improve employee pay equity, and a solid foundation for a strong employee culture with happier, more productive people.