Beyond recovery: Pitfalls holding back APAC growth initiatives
COVID-19 has been seismic, but so are emerging growth opportunities posed by recovery. In today’s highly competitive snooze-and-lose environment, there is zero time to waste.
Anticipating vaccination critical mass and economic reopening, organisations are moving into growth planning while still finalising new working models.
There are many often conflicting considerations to reconcile – from distributed working models to employee engagement, skills gaps to pay parity, and talent shortages to brand new undefined skills yet to be scoped. Strong hesitance exists over writing growth requirements into new HR policies to support growth, while working towards testing and assessing new structures.
“If you’re not seeking new approaches, you’re on borrowed time,” said John Antos, VP of Strategy at ADP. “Workforce costs for some businesses can account for up to 60% of total business costs, yet ADP’s research shows only 27% of financial leaders consider payroll data when developing their commercial and growth strategies,” he explained.
“Equally concerning, nearly a third (30%) of finance and HR leaders are not confident that their payroll system can support their plans for growth or geographical expansion.”
The pandemic continues to highlight the shortcomings of separate and complex systems.
The inability to work real time based on a single source of truth is forcing many organisations to face spiralling costs associated with multiple systems compliance, operational vulnerabilities related to resource effort required, and inability to scale to meet mid-term business requirements and future growth strategies.
COVID-19 has turned business operations upside down across the board, but perhaps none more so than payroll teams.
A jump in pay errors is an unforeseen consequence. According to ADP research, more than three quarters (76%) of employees in Asia Pacific say they were paid late at some point during the pandemic. Almost two thirds (65%) say they were underpaid and around half were overpaid (57%) or received some other kind of incorrect payment (55%).
While inaccuracies were recorded across the world, APAC is the worst-performing geography. Unsurprisingly, half of workers review their pay more closely than they did before COVID-19. Companies have scrambled to respond to increased scrutiny and expectations from employees to receive accurate compensation each pay cycle.
ADP’s research shows before the pandemic, only 52% of businesses said their payroll accuracy was above 90%. This fell to a mere 27% after the first six months of the onset of COVID-19.
Antos also highlighted how the pandemic introduced an unprecedented influx of legislative changes in quick succession. Not all payroll systems were ready to respond. “A spotlight shone on compliance as tax changes, employee furloughs, variations to working hours and various support schemes were added to the books,” he said. “As HR and payroll professionals were working through these changes, businesses were also shifting to remote work, making it increasingly difficult to access information and systems that were not yet digitised.”
Following the ambiguity imposed by pandemic-triggered compliance changes, ADP’s latest research overwhelmingly shows the majority of businesses (70%) believe their payroll is unprepared for future disruption or major regulatory change, while just over half (51%) currently have limited confidence in their payroll compliance.
The research also shows 26% of businesses believe integrating payroll with other HR systems would be one of their top 3 gains given the opportunity to transform.
“Payroll is more important than people think. Managing workforce costs is core to both employee retention and business growth strategy,” Antos explained. “Optimised, agile payroll and HR systems can provide real value to business continuity, help reduce risks of losing top talent and aid modelling future workforce operational scenarios for growth while managing the bottom line.”
HR and Finance leaders now have an opportunity to rethink payroll. Managed strategically, it has the potential to form a critical part of the COVID-19 recovery and enable greater business growth.
Click here to find out more about optimising payroll for your business.
Join Nela Richardson, Chief Economist, ADP, at HR Tech Festival Asia Online 2021, where her session, titled, Finding a New Normal: Navigating the Shift Back to On-Site Work, will be taking place on Wednesday, September 22 at 11am (SGT).