Just like customers, employees worldwide expect a networked and consistent user experience – exactly what an HR cloud in Human Capital Management (HCM) promises. So it’s no wonder that companies are upgrading or replacing older personnel and employee systems with cloud-based technologies on a large scale. As early as 2017, 73% of companies had at least one HR process in the cloud.
More and more companies moving to the cloud are implementing their new cross-border HR system before adding services like global payroll. But there are many benefits to having a global strategy that starts with implementing cloud-based payroll before implementing a system of record (SOR).
Advantages of an HR cloud
If companies consolidate many instances of the HCM system, but do not include payroll in these efforts, this lowers short-term costs, but creates financial disadvantages and competitive disadvantages later. Data management issues, additional costs, critical system downtime, and project fatigue are real risks when payroll is the second most important part of implementing an HR system.
A networked payroll for HR-SOR integration offers more functionality for local markets, including better administration and communication of the individual service packages. Building a team-oriented HR environment creates more differentiated possibilities: employers can provide accessible self-service functions that improve the accuracy of payroll accounting and enable employees to check their own salaries themselves.
By integrating HR systems with payroll systems that feed data into or from these HR systems, processes can be streamlined that would otherwise become more complex as the company expands. Companies can develop in such a way that employees do not have to enter the same data repeatedly in different formats, but have time for value-adding work.
Implementing the HR cloud: these hurdles need to be overcome
However, there is an obstacle to integrating payroll with other established HR and talent systems. In reality, most HR systems are not geared towards cross-border accounting rules.
Integration between payroll and HR systems has been one of the most commonly reported issues facing HR executives.
Implementing a cloud-based payroll system for global business units is the best first step in company-wide personnel optimization. Despite a higher use of resources, the implementation of a cloud-based payroll before the global HCM system integration reduces mismatches between the systems, eliminates redundancies and helps team members to adapt to the two related technologies.
Accordingly, payroll accounting is about much more than just the correct remuneration of employees – it is a highly visible organizational function that affects employees, processes and service providers. If this is not fully taken into account before the company moves to a new global core HR system, whether it is cloud-based or not, the success of the HR transformation strategy will be jeopardized.