European Union: How To Harmonize Your Payroll Process In Central And Eastern Europe

Last Updated: 4 April 2018
Article by Daniel Proychev
This article is part of a series: Click Jak zharmonizować proces płacowy w Europie Środkowej i Wschodniej for the previous article.

Disparate processes, systems and suppliers are all creating challenges in the region, but change is in the air.

The harmonization of payroll processes is a key goal for many employers across Central and Eastern Europe (CEE) at the moment. The reason is that they are keen to gain visibility into their operations throughout the region, as well as speed up the time it takes not only to process payroll, but also produce pertinent reports.

But the problem is that, according to recent research conducted by Harvard Business Review and sponsored by TMF Group, a mere 7% of the HR and payroll managers questioned believe their payroll processes are sufficiently standardised, simplified and automated to enable harmonisation to take place today.

Some 45% of respondents also indicate that they use as many as three or more payroll software systems. Just under a third (29%) of the sample even say they employ different software in each of the geographical markets in which they operate.

But this situation means it is often difficult to obtain a single view of the organisation's payroll data and the status of its entire payroll processing activities. This scenario increases the risk of non-compliance with local regulations and makes errors and delays more frequent, once again blocking the likelihood of harmonisation.

A third area in which payroll activities are splintered relates to working with suppliers. While just under a third of those surveyed currently outsource their personnel and/or payroll services, the average number of providers they generally work with is 2.5. In fact, nearly three quarters point out that they use different vendors in every country where they operate.

How to find harmonization

The downside of working with so many partners, however, is that managers end up having to deal with lots of different report formats all provided by disparate suppliers (81%). They also need to consolidate data from a range of markets (58%).

According to a survey conducted by the Global Payroll Association (GPA) and TMF Group, among global and in-country payroll professionals around the world, other common challenges in vendor management terms include:

  • account managers not being as accessible as they should be
  • problem escalation procedures being slow and inefficient
  • too many layers to go through I order to obtain a response because of call centers failing to prioritize queries properly, and
  • lack of coordination in relation to the deliverables negotiated in multiple contracts.

Again, this scenario makes the act of harmonization more difficult to achieve.

But the sheer size and diversity of the CEE region also means that the biggest barrier to harmonization of all is simply the ability to communicate effortlessly between different countries, particularly in terms of language (94%).

As a result, it is unsurprising to learn that the single most significant reason for companies to outsource their personnel and payroll services is to gain access to local experts and their knowledge (91%), both in language terms and in relation to local legislation.

Given the inefficiencies inherent in the situation though, it will come as no great shock to hear that change is in the air. Although there may be no such thing as a global payroll services provider, regional outsourcing suppliers are increasingly being called in to help.

As a result, there is a growing trend towards either asking them to connect disparate in-country applications together or to introduce middleware to solve the complexity problem. This software sits as a layer over the top of these systems and makes it possible to pull all of the necessary data together in a more accurate and timely manner – into reports for compliance purposes. It also enables payroll professionals to drill down into information held in systems around the world, making it easier to spot problems and see trends.

The Horizon solution

Our own middleware payroll software solution, TMF Horizon, provides global payroll intelligence at your fingertipss. A single online portal with dashboards providing full visibility of payroll processing activities and performance, TMF Horizon gives our clients that truly global payroll solution they've been looking for.

And, it's supported by local teams across CEE with know-how and expertise.

In the interests of harmonization, it's clear that this can only be a good thing.

Read more results from the global payroll survey.

Want to know how TMF Group in Eastern Europe can help harmonize your local payroll processes? Make an enquiry with us today.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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This article is part of a series: Click Jak zharmonizować proces płacowy w Europie Środkowej i Wschodniej for the previous article.
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