A new report from UKG and KPMG reveals that payroll inefficiencies are costing large multinational organizations millions of dollars annually, further pointing to the increasing demand for payroll modernization and strategic oversight. By reading the report, one can find that almost 40% of employers have blamed such preventable losses from $1 million to $5 million a year to payroll errors and operational gaps.
This new report is exclusively focusing on a study, which was done through a survey of 300+ senior executives only those working for companies of a minimum of 10,000 employees and $5 billion in revenue. The result of the survey has been revealing the size and severity of global payroll operations. Many respondents do their business in several dozens of countries; some even across 100 countries, which makes payroll management even more challenging.
A key issue identified is “payroll leakage,” where companies lose between 2% and 4% of total labor spend due to inefficiencies, system limitations, and fraud. Even a 1% loss can translate into as much as $15 million for large enterprises. Despite payroll accounting for up to 60% of operating expenses, the function often lacks sufficient resources and executive attention.
Also Read: Thunes Launches Instant Cross-Border Payouts to Support Global Gig and Remote Workforce
“Employee pay is one of the most powerful levers multi-national organizations have to strengthen their financial health, elevate the employee experience, and operate with confidence on a global scale,” said Richard Limpkin, General Manager of Global Payroll Solutions at UKG. “Payroll teams sit on a wealth of actionable insight that leaders can use to guide smarter, faster decision making. The opportunity ahead is immense: global payroll is a rich source of workforce intelligence for organizations that make the bold decision to modernize and empower their teams with new technologies.”
The report also indicates the low adoption rate of using AI in the payroll system, as less than half of the executives are using the technology in production. However, the report indicates that the use of AI is expected to enhance compliance, efficiency, and generation of insights.
Furthermore, while most organizations have indicated the existence of a global payroll strategy, only a third have adopted the standardized model, while the rest have adopted the use of multiple vendors. The fact that most organizations are not utilizing the data is still an impediment to the strategic value of the payroll operations.
