Us 2018 Payroll Operations Survey

The 2018 Payroll Operations Survey
Summary of results
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The 2018 Payroll Operations Survey |
Summary of results
Executive summary
Explore the results of the
2018 Payroll Operations Survey
This year’s survey focused on questions associated with payroll in the following areas:
Operations Technology Global outsourcing Taxation Quality and

continuous
improvement
The survey targeted experienced professionals in a wide range We’ve also taken a broader view into the systems and service
of industries who lead or are directly involved with the payroll delivery models within each of the global regions: North
function through in-house processing, outsourcing, or a shared America (NA); Asia Pacific (APAC); Europe, Middle East, and
services function at their respective organizations. Explore the Africa (EMEA); and Latin America (LA), providing insights
results of the 2018 Payroll Operations Survey. The companies into the similarities and differences among them. One of the
ranged in size from fewer than 10,000 active employees key themes from a global perspective is that many global
to approximately 200,000 active employees. This year we organizations don’t have complete visibility into their global
expanded the number of companies to include a wider range payroll operations but are looking to gain better understanding
of organization sizes. Where logical, we’ve broken down the of holistic operations.
responses by groupings (smaller to larger organizations) to
make the data relevant for different company populations.
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Summary of results
Executive summary
continued
We hope you find the results of
this year’s survey useful. If you
Some of the key findings and trends identified from the survey responses include: have any questions regarding
the survey or specific payroll
operations or tax challenges,
please don’t hesitate to reach out
to the payroll and employment
tax specialists listed at the end
39% 21% 6% 16%

of the report, or to me directly.
With best regards,
Beth Shanton
of organizations are evaluating are already using some aspect are planning to implement Managing Director
currently use a cloud- moving payroll of process automation for process automation for Human Capital HR Transformation
based payroll solution to the cloud payroll processing payroll processing Deloitte Consulting LLP
+1 404 631 2336
bshanton@deloitte.com
Grace Melton
Partner
Global Employer Services
Top 3 Online payroll

self-service
Global companies
report tax compliance
Full payroll outsourcing
is more common
Deloitte Tax LLP
+1 404 220 1742
areas for improvement: grmelton@deloitte.com
functionality is challenges in three areas: outside of North
widely used, with America; however,
Compliance
and controls 83% Employee mobility and
determining tax
satisfaction with the
payroll outsourcing
Legend of geographic regions
North America
of respondents offering (NA)
withholding arrangement is higher
Payroll accuracy the ability to view pay Asia Pacific
in North America.
statements online. (APAC)
Reporting of local Europe, Middle East, and Africa
Integration of various
payroll taxable income (EMEA)
technologies
Latin America
Year-end processing (LA)
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Summary of results
Survey highlights
1. Company demographics 4. Payroll outsourcing 6. Compliance and taxation
•• In more than half of the organizations surveyed, •• The North America region, followed by EMEA •• 35 percent of respondents indicate the accuracy
payroll reports to finance with the exception region, outpaces other global regions in terms of of withholding calculations for regular or
of organizations having 50,000–99,000 scope of payroll services outsourced supplemental pay is their greatest challenge
employees, where payroll tends to report to HR
•• In the US, 69 percent of respondents are satisfied •• 40 percent of respondents use travel and
or shared services
or highly satisfied with their current outsourced expense data to track US domestic business
payroll service arrangement travelers, but 36 percent do not track or
are not sure how or if they track their
•• The top three areas of focus for payroll vendor
2. Global payroll services are compliance controls, process a nd
US domestic travelers
technology integration, a
nd payroll accuracy •• The top three payroll challenges related to
•• Globally, 56 percent of respondents do not have a globally mobile employees are determination of
shared services center that includes payroll, while 44 tax withholding obligations, reporting of taxable
percent do have one compensation to local payroll, and year-end
•• 16 percent of respondents are managing their processing procedures
payroll processing regionally, while the majority of •• More than 50 percent of respondents outsource
the other respondents are not global organizations 5. Technology local payroll processing a
nd tax reporting to help
and pay employees from one central country mitigate the risks associated with global m
obility
payroll processing
•• 39 percent of respondents are currently using
cloud-based technologies for payroll functions,
3. Payroll operations while 21 percent are considering moving to the
cloud in the n
ear future 7. Q
uality and c
ontinuous
• 89 percent of respondents have online payroll
•• Only 6 percent of respondents are using RPA improvement
self-service functionality
technology to support payroll functions, while
• 83 percent of respondents offer employees 79 percent are either unsure if they will use RPA •• 63 percent of respondents report having
the ability to view pay statements online or are not in favor of using RPA. governance policies covering the payroll function
• 37 percent of respondents determine whether •• 81 percent of respondents conduct periodic

to process payroll corrections on a case-by- reviews of their payroll process
case basis, while 24 percent process payroll •• 75 percent of respondents have Service
corrections during the next p
ayroll cycle Level Agreements ( SLAs) established, which they
track and monitor
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Summary of results
Section 1
Company demographics
Overview
This year’s survey captures responses from a wide variety of
organizations spanning seven different industries, ranging in
employee size from a few hundred to several hundred thousand.
This section sets the foundation for the types of organizations that
participated and how they are structured and staffed.
Question 1: 32% 24% 12% 11%

What is your company’s Consumer and Financial services Energy and resources Professional services
industrial products
primary industry?
10% 8% 3%
Life sciences and Technology, media, and Public sector
health care telecommunications
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Summary of results
Over 100K 2%
50K–99.9K 2%
Question 2:
How many active 20K–49.9K 8%
employees are on
your payroll? 1K–19.9K 36%
The majority of respondents
belong to small-sized
Under 1K 52%
organizations (under 1,000
active employees).
0% 10% 20% 30% 40% 50% 60%
Over 100K 1,399

Question 3:
What is the average 50K–99.9K 2,200
number of active Smaller organizations tend to have a

1,603 lower ratio due to the requirement
employees supported by 20K–49.9K
for a minimum number of FTEs to
each full-time equivalent support the payroll function.
1K–19.9K 731
(FTE) supporting the
In contrast, larger organizations have
payroll cycle? Under 1K 151
much higher ratios, implying a degree
of scale and efficiency achieved.
0 500 1,000 1,500 2,000 2,500
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Summary of results
Similar to the 2014 survey responses, the vast majority of respondents have payroll reporting to HR or finance;
however, there has been a continuing trend of payroll reporting to shared services.
2% 2% 4%
HR
10%
Question 4: 14%
Finance
31%
Where does the payroll Shared services
function report in your 2018 2014 Combination/varies within the organization

48%
organization? responses responses Other
38%
51%
Where does payroll report by company size?

Organizations with
between 50K and 99.9K
Over 100K 25% 50% 25%
employees tend to have
a greater occurrence of
payroll reporting to 50K–99.9K 33% 34% 33%
HR or shared services.
Other organizations tend
20K–49.9K 40% 53% 7%
to have payroll operations
reporting to finance.
1K–19.9K 35% 41% 20% 2%2%
Under 1K 27% 58% 12% 3%
0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%
HR Finance Shared services Combination/varies within the organization Other

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Summary of results
Section 2
Global payroll
Overview
Nearly half of the survey respondents (49 percent) either
currently have a global payroll strategy or plan to develop one.
Ten percent of the respondents operate in all four of the global
regions. The consumer and industrial products industry remains
the most regionally diverse with a presence in three or more of
the global regions.
Breakdown of global respondents

76%
76% have a presence in North America
57% 48% 27% have a presence in Latin America
57% have a presence in Europe, Middle East, and Africa
27% 48% have a presence in Asia Pacific
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Summary of results
Regions where payroll is processed
80% More than 10 percent of

respondents process payroll for
Question 5: Fifty-four percent of respondents more than one global region.
60% 54%
are based in the US only. The consumer and industrial
Which global regions
products and financial services
do you process 40% 35%
industries are the most regionally
payroll for today? 26%
23% diverse, on average present in
20%
13%
three or more global regions.
Life sciences and health care
0% and public sector are the least
US only NA LA EMEA APAC regionally diverse industries.
Average number of countries supported in each region
NA 2
Question 6:
How many countries LA 5
do you support in each

global region? EMEA 10
APAC 5
0 2 4 6 8 10 12
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Summary of results
Does your organization have a payroll shared services center?
Forty-four percent of respondents indicate

Yes 44% they have a shared services center containing the
Question 7: payroll function.
Where are your regional
shared services located?
No 56%
0% 10% 20% 30% 40% 50% 60%
Regional shared services center locations

Number of regions with shared 60% Of the 44 percent of respondents
services centers containing payroll 55% who have a shared services center
containing payroll, 55 percent only
8% operate a center in the United States.
5%
5% 40% The remainder operate a center in
one or more of the global regions
29% with North America being the most
prevalent, followed closely by EMEA
20% 20%
20% and APAC regions.
82%
9%
1 2 3 4
0%
Eighty-two percent of respondents US only NA LA EMEA APAC
have shared services in one region,
while only 5 percent have shared
services in all four global regions.
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Summary of results
How do you manage responsibility for global payroll processing?
Question 8: The second-largest group of

The majority of respondents (16 percent) indicate
How do you manage 16%
respondents pay 52% that they currently operate on
responsibility for global employees in one country a regional payroll-processing
payroll processing? by processing payroll from a model. Most organizations
3%
single central location. expanding operations outside
4% their home country tend to
4% postpone developing a global
payroll strategy once they find the
9%
regional payroll-processing model
12%
works for them.
Twelve percent process

Employees paid in one country,
single processing location payroll within each individual
country. This model tends
Regionally
to have multiple disparate
Individual countries
payroll systems that do not
Centralized in the US communicate with each other.
Centralized in another
non-US country
Other
Employees paid in one country,

multiple processing locations
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Summary of results
Plans to create a global payroll strategy (responses from global organizations)
Nearly half of the respondents (49 percent) either currently The remaining (51 percent) have
have a global payroll strategy or plan to develop one. no plans or are not sure.
Question 9:
Does your organization
have plans to develop a
global payroll strategy?
41% 8% 36% 15%
Yes No No Not sure

(one already exists) (no plans)
Future plans for a global payroll strategy (responses from global organizations)
Of the 41 percent that plan to develop a global payroll strategy, The remaining 44 percent have plans to
56 percent are in the process of implementing one. implement one based on the following timeline:
56% 29% 9% 6%
Yes Yes
(it is already in progress) (but timing is undefined or not known)
Yes
(within 12 months)
Yes
(within 3 years)
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Summary of results
Section 3
Payroll operations
Overview
89% 37%
of respondents offer online of respondents evaluate
payroll self-service with a whether to process off-cycle
21% payment corrections on a

case-by-case basis
increase in the option to elect and/or
update voluntary deductions online
in the past three years
24%
process payment corrections
on the next on-cycle
23%
11% process off-cycle payment
of respondents that do not offer corrections based on a defined
online payroll self-service have policy or practice
fewer than 1,000 employees
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Summary of results
Offering
View online pay statements 83% employees the
ability to view (and
View annual tax documents 74% print) online pay
Question 10: statements and
Which payroll employee annual payroll
Update home address 62%
tax documents
self-service transactions
Update personal and
(i.e., W-2 forms in
do you offer online? emergency contact information
62%
the US) continue
to be the most
Time reporting 55% prevalent
self-service
54%
transactions.
Request time off
Update banking details

54%
(direct deposit)
Update employee payroll

51%
tax information
There has been a
Elect and/or update
21 percent increase in 43%
voluntary deductions
the last three years in
organizations providing View garnishment details 21%
online self-service for
electing and/or updating
Payment modeling/simulation 12%
voluntary deductions and
viewing garnishment details.
Other 1%
0% 10% 20% 30% 40% 50% 60% 70% 80% 90%
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Summary of results
Online payroll self-service transactions offered Types of online self-service provided

(by company size) (by geographic region)
Over 100K 100% APAC 9% 8% 7% 14% 13% 12% 11% 4% 8% 10% 4%
50K–99.9K 1% 99% EMEA 9% 8% 7% 14% 13% 12% 12% 4% 8% 10% 3%
20K–49.9K 100% LA 10% 9% 6% 14% 14% 13% 12% 5% 6% 10% 1%
1K–19.9K 2% 98% NA 9% 8% 7% 14% 14% 12% 12% 4% 8% 10% 2%
Under 1K 9% 91% US only 9% 9% 7% 14% 13% 11% 11% 4% 10% 10% 2%
0% 20% 40% 60% 80% 100% 0% 20% 40% 60% 80% 100%
No online payroll self-service provided Update banking details (direct deposit) Update employee payroll tax information
Provided one or other form of online payroll self-service Elect and/or update voluntary deductions View online pay statements
View annual tax documents Update home address
Eighty-nine of respondents offer some type Update

personal and emergency contact View garnishment details
information
of online payroll self-service to their employees. Request time off
This trend indicates companies are focusing on Time reporting
Other
cost-effective methods to deliver information to Payment modeling/simulation
employees to manage customer support and provide
flexibility to enhance the employee experience.
Across geographical locations, the types of online self-service provided to
employees are widely consistent.
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Summary of results
How do you process payroll corrections in your organization?
Question 11:
More than a third (37 percent) of Of the 23 percent of respondents that process payroll
In the majority of cases, respondents prefer to evaluate whether corrections based on policy/practice, 42 percent run an
how do you determine to process payroll corrections in their off-cycle correction if the issue resulted in a difference to the
whether to process organization on a case-by-case basis. employee that exceeds a defined flat-dollar amount.
payroll corrections with

an off-cycle payroll run?
Case-by-case basis Next on-cycle Policy or practice As required by law
37% 24% 23% 13% 3%
Regardless
About a quarter (24 percent) process of amount or
the corrections in the next on-cycle. percentage
The descriptions of each method are included below:
Case-by-case basis are Next on-cycle are payment Policy or practice are payment As required by law are
payment corrections that the corrections that the payroll corrections that the payroll payment corrections that the
payroll department plans to department plans to process department plans to process payroll department plans to
process after the issues are with the next normally based on the company’s process only if it is required
reviewed. No specific guidelines scheduled payroll. No off-cycle standard policy or practice for by law. An example would be
as to the amount or a particular payrolls are processed for processing off-cycle payrolls. a termination in the state/
company policy are followed. payment corrections. province that requires final
Instead, the issues are reviewed payment to an employee to be
and then a decision is made to paid by a certain time.
process an off-cycle correction.
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Summary of results
Payroll corrections Difference that exceeds a defined flat-dollar amount 42%

Which policy or practice
Requested by employees and/or managers 24%
do you follow for
payroll corrections in Another policy or practice 20%
your organization?
Difference exceeds a defined percentage of earnings 14%
0% 10% 20% 30% 40% 50%
Payroll corrections by geography

Types of processing payroll corrections by geographic region
Nearly half of the respondents in
the Asia Pacific region determine
APAC 12% 49% 5% 17% 8% 2% 2% 5%
whether to perform corrections on
a case-by-case basis.
EMEA 20% 44% 4% 14% 10% 4% 4%
LA 4% 43% 9% 18% 18% 4% 4%
While 32 percent of respondents in

NA 13% 38% 7% 13% 13% 5% 1% 10%
the United States determine whether
to perform corrections on a case-by-
US only 27% 32% 7% 12% 10% 3% 4% 5%
case basis, 27 percent of respondents
perform corrections during the next
0% 20% 40% 60% 80% 100%
on-cycle payroll.
We do not run any off-cycle payrolls to process corrections— Run

an off-cycle correction only when required by law un an off-cycle correction for all payment issues regardless
R
all corrections are made with the next on-cycle of the amount or percentage difference
un an off-cycle correction if the issue resulted in a
R
e do not have a policy governing corrective off-cycle
W difference to the employee that exceeds a defined un an off-cycle to make a correction based on another policy
R
payrolls—the decision to process an off-cycle correction flat-dollar amount or practice
is made on a case-by-case basis
un an off-cycle correction if the issue resulted in a
R
un an off-cycle correction only when requested by
R difference to the employee that exceeds a defined
employees and/or managers percentage of earnings
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Summary of results
Section 4
Payroll outsourcing
Overview
Regardless of an organization’s payroll operating model, nearly all
organizations outsource some portion of their payroll function to
help manage costs, risks and exposure, skilled staffing concerns,
and highly administrative/paper-driven tasks. Full business process
outsourcing (BPO) for payroll is more commonly seen in the United
States and Europe, Middle East, and Africa region and to a lesser
degree Asia Pacific and Latin America regions.
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Summary of results
Organizations outsourcing all of payroll processing (payroll BPO by global region)
US only 17%
Question 12:
Which regions do you EMEA 13%
outsource the full
payroll function— APAC 10%
payroll business process

NA 9%
outsourcing (BPO)?
LA 5%
0% 2% 4% 6% 8% 10% 12% 14% 16% 18% 20%
Organizations outsourcing the full payroll function (payroll BPO) by industry
4% 2% Public sector

9% (state and local government, higher education)
32% Sixty percent of organizations Life

sciences and health care
11% (health plans, providers)
using full payroll BPO are in the
financial services industry, Energy
and resources
(oil and gas, power and utilities)
such as insurance, asset
14% management, real estate, and Technology, media,and telecommunications
banking and securities, and in Professional

services
28%
the consumer and industrial (accounting, advisory, consulting, legal)
products industries, such as Consumer

and industrial products
(manufacturing, consumer products, retail,
manufacturing, retail, distribution,
distribution, travel, hospitality and leisure)
and hospitality and leisure.
Financial
services
(insurance, asset management, real estate,
banking and securities)
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Summary of results
Which payroll services do you outsource to an external vendor?

Outsourcing payroll functions is far more common in North America than in other global regions. The most commonly outsourced
functions include payroll tax preparation, year-end tax form printing and distribution, and time and attendance.
46 percent 49 percent 51 percent 42 percent 41 percent

year-end tax year-end tax payroll tax garnishment check printing
form distribution form printing preparation administration
and filing
60%
51%
50% 49%
46% 46% 46%
42% 41%
40% 37% 37%
36% 37%
34% 35% 34%
34% 33%
32% 31%
30%
20%
16% 15%
14%
9% 9% 9% 10%
10% 7% 8% 8% 8%
6% 6% 7%
6% 5% 5%
4% 3% 4% 4% 3%
2% 3%
1%
0% 0%
0%
Time and Payroll Year-end Year-end Payroll tax Garnishment/ Check Check Gross to net
attendance self-service employee tax employee tax preparation tax levy distribution printing calculation
form distribution form printing and filing and/ administration
(e.g., W-2, T4) (e.g., W-2, T4) or lodgements
APAC EMEA LA NA US only
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Summary of results
Payroll services outsourced to an external vendor (in the United States vs. in North America) Organizations with more than
46% 36% 18% US only 50,000 employees are more likely to
Time and attendance 9% 64% 18% 9% NA selectively use outsourced services
50% 50% Outside NA largely due to their economies of
scale and justification for in-house
50% 31% 19% US only
Payroll self-service 43% 36% 14% 7% NA processing. In addition, complex
50% 21% 29% Outside NA business and legal/regulatory
requirements may further hinder
37% 38% 25% US only
Year-end employee tax the ability to create a viable case
21% 48% 22% 9% NA
form distribution (e.g., W-2, T4) for outsourcing; however, many of
35% 29% 29% 7% Outside NA
the largest organizations still use
51% 31% 18% US only outsourcing for the areas that pose
Year-end employee tax
23% 51% 16% 10% NA
form printing (e.g., W-2, T4) the highest risk or require specialized
40% 26% 50%27% 7% Outside NA knowledge and training.
49% 34% 17% US only
Payroll tax preparation and
filing and/or lodgements
21% 54% 18% 7% NA Outside North America, organizations
35% 41% 24% Outside NA with fewer than 20,000 employees
53% 27% 20% US only are more likely to outsource portions
Garnishment/tax levy
15% 65% 12% 18% NA of the payroll function.
administration
26% 47% 50% 27% Outside NA
39% 39% 22% US only

Check distribution 22% 57% 10% 1% 10% NA
43% 28% 50% 29% Outside NA
54% 31% 15% US only

Check printing 21% 57% 13% 9% NA
35% 29% 29% 7% Outside NA
60% 35% 5% US only

Gross to net calculation 35% 45% 15% 5% NA
35% 40% 20% 5% Outside NA
0% 20% 40% 60% 80% 100%
Under 1K 1K–19.9K 20K–49.9K 50K–99.9K Over 100K

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Summary of results
Level of satisfaction with your outsourced payroll service arrangement (by company size)
North America only
Question 13: Over 100K 33% 67%
Describe your overall

50K–99.9K 100%
level of satisfaction with
your outsourced payroll
20K–49.9K 14% 43% 29% 14%
service arrangement.
1K–19.9K 27% 45% 14% 14%
Under 1K 29% 59% 12%
On average, 70 percent of 0% 20% 40% 60% 80% 100%

respondents in North America had
a payroll outsourcing arrangement Outside North America
and of those, 86 percent were
Over 100K 100%
satisfied or very satisfied.
Outside North America, only 50K–99.9K 100%

21 percent of respondents
had payroll outsourcing 14% 29% 57%
20K–49.9K
arrangements, but on average,
89 percent of those were
1K–19.9K 33% 57% 5% 5%
satisfied or very satisfied.
Under 1K 43% 53% 4%
0% 20% 40% 60% 80% 100%
Very satisfied Satisfied Unsatisfied Very unsatisfied

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Summary of results
How many years has the current outsourcing services contract been in place?
Question 14:
29% Up
to three years
Indicate how many years
North 41%
Outside Four to seven years
on average your current 46% America North 50%
outsourcing services only America More than seven years
contract has been in 21%

13%
place/in production.
In North America, outsourcing relationships with Outside North America, payroll outsourcing relationships
payroll service vendors are mature with 46 percent are continuing to mature and develop with only
of respondents having their contracts in place 29 percent of contracts in place for more than seven
for more than seven years and 41 percent of years and 50 percent of contracts in place for fewer
contracts in place for fewer than three years. than three years.
Compared to the 2014 survey results, there has been little change in the outsourcing services contract
durations in North America; however, the outsourcing relationships outside North America have continued to
mature as shown by the increase in seven-year contracts from 14 percent to 29 percent and decrease in
contracts that are fewer than three years from 60 percent to 50 percent.
14%
24%
to three years
Up
North Outside Four to seven years
47% America 26% North
only America More than seven years
60%
29%
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Summary of results
Top areas of focus or improvement relating to outsourced payroll vendor services

Question 15:
Compliance and controls 52%
In terms of payroll
outsourcing, which of
Payroll accuracy 45%
the following do you
consider your top areas
Process and technology integration 37%
for focus or improvement
relating to outsourced Cost savings and productivity
31%
improvements
payroll vendor services?
Standard and ad hoc
26%
reporting capabilities
Employee and manager

Even the organizations that 21%
self-service capabilities
are most satisfied with their
outsourcing arrangements 19%
Payroll timelines
seek opportunities to
improve vendor relationships Upgrading/modernizing
18%
and services provided. technology platforms
The top areas of focus or Payroll corrections

15%
and adjustments
improvement relating to outsourced
payroll vendor services are:
Governance and customer service 13%
compliance and controls, payroll
accuracy, process and technology
Consolidation and simplification of
integration, and cost savings and 11%
solutions, vendors, and contracts
productivity improvements.
These priorities are nearly identical 9%
Sales and quality measurement
to those identified three years ago.
0% 10% 20% 30% 40% 50% 60%
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Summary of results
Section 5
Technology
Overview
The survey responses confirm that payroll departments are
shifting their systems toward cloud-based solutions, also known
as software as a service (SaaS). Three years ago, only 14 percent
of companies had migrated to processing payroll in the cloud,
while by 2018 that number has increased to 39 percent; however,
this increase is primarily in North America. Despite the increase
in cloud-based solutions, enterprise resource planning (ERP)
systems continue to be prevalent in North America, especially in
organizations with more than 20,000 employees.
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Summary of results
Payroll service delivery models in place in each global region
Question 16:
1%
9% 13% 9% 8%
What service delivery
24% 24%
arrangement applies 32% 14%
18% 18%
29%
to the majority of NA LA EMEA APAC

employees in each
23% 22%
global region? 41%
27% 18%
27%
43%
North America has a higher In-house Hosted Outsourced to one vendor Outsourced to multiple vendors Aggregator
percentage of in-house and

hosted payroll models, but
almost no respondents using The descriptions of each service delivery model are included below:
multiple outsourcing vendors or In-house means that the Hosted means that the payroll Outsourced means that the Aggregator is an outsourced
the aggregators model, which payroll system and payroll system resides on a third party’s system is maintained by a arrangement where one vendor
are both used at a higher degree processing team reside within servers, but processing the third party, and processing manages multiple local-country
in the other global regions. your organization. payroll is done by the team responsibility resides with the vendors and consolidates the
within your organization. third party. payroll results.
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Summary of results
Platforms used by companies in North America with more than 20K employees
ADP 41%
Question 17:
What is the payroll 27%
SAP SuccessFactors
technology used in North
America for companies Sage 23%
that have more than
20K employees? PeopleSoft HCM 18%
Workday 14%
Infor Lawson HCM 14%

Organizations in North America with
more than 20,000 employees have
Other vendor solution 9%
a higher prevalence of in-house or
hosted ERP systems and the use
of ADP as an outsource provider. Ceridian 9%
These larger organizations tend Oracle EBS 9%

to have fewer payroll solution
options that can handle their Ultimate Software–UltiPro 5%
volume and complexity.
JD Edwards 5%
Oracle Cloud 5%
0% 5% 10% 15% 20% 25% 30% 35% 40% 45% 50%
26
ES 1 2 3 4 5 6 7
Summary of results
Platforms used by companies in North America with fewer than 20K employees
ADP 33%
Question 18:
What is the payroll Other vendor solution 16%
technology used in North Ultimate Software–UltiPro 8% Thirty-three

America for companies percent use an
Paychex 7% Sixteen percent use a ADP technology
that have fewer than
variety of other systems. platform.
20K employees? Workday 7%
PeopleSoft HCM 7%
SAP SuccessFactors 6%
Not sure 6%
Organizations in North America
with fewer than 20,000 Ceridian 4%
employees tend to be a better
fit with outsource providers’ Sage 4%
standardization expectations and
Intuit QuickBooks 3%
have a wider range of solutions
reported by respondents. Oracle EBS 2%
NGA 1%
Infor Lawson HCM 1%
JD Edwards 1%
Oracle Cloud 1%
0% 5% 10% 15% 20% 25% 30% 35%
27
ES 1 2 3 4 5 6 7
Summary of results
Companies considering cloud solutions

Question 19:
Is your organization Thirty-nine percent of survey respondents are already using a cloud-based
system to process payroll—an increase from 14 percent three years ago.
considering the use
of software as a
service (SaaS), also 40% 39%
referred to as cloud- The number of respondents who are not considering a cloud-based payroll
based technology, solution dropped from 34 percent to 17 percent over the last three years.
30%
to support payroll
functions? 23% Twenty-one percent are planning
on transitioning to the cloud.
20%
17%
Cloud-based payroll solutions 12%

have seen an increase in 10%
adoption and acceptance by
4%
organizations as functionality, 3%
2%
security, and confidence with 0%
the applications has grown. Already using Not sure No Yes, but timing Yes, the Yes, within the Yes, within the
SaaS technology is undefined implementation next 3 years next 12 months
2014 responses or not known is in progress
40% 34%
6%
30% 26% 26% 10% Satisfied
with current solution
Of the 17 percent that
Not cost-effective
20%
14% indicate they are not 13%
42%
10% planning to transition Unfamiliar
with SaaS
payroll to the cloud: 13% Data security concerns

0%
Yes Already Not sure No 16%
Not
part of company strategy
using SaaS
technology
Not
needed
28
ES 1 2 3 4 5 6 7
Summary of results
Organizations considering the use of robotic process automation (RPA) to support payroll
Question 20:
46%
Is your organization
considering the use
of robotic process
33%
automation (RPA) to Sixteen percent are planning to use The payroll function is in the early
support payroll RPA in the short or near term. This is an stages of implementing RPA, with
operations? increasing trend that looks to continue. 5 percent using it as part of their
payroll operations today.
11%
Robotic process automation (RPA)
is a way to automate repetitive, 3%
4%
rules-based processes. These 2% 1%
transactional processes are
typically located within a shared Not sure No Yes, but timing Yes, within the Yes, within the We are already We are already
services center or another is undefined next 12 months next 3 years using RPA using RPA
or not known technology for technology for
part of the back office.
payroll, but payroll and plan
Seventy-nine percent of the no plans to to enhance,
Software, commonly referred to as a “robot
respondents indicate that they enhance, upgrade, or
or bot,” is used to capture and interpret
are not familiar with RPA, or RPA is upgrade, or expand its use
existing applications to enable transaction
expand its use
processing, data manipulation, and not part of their current strategy.
communication across multiple systems.
Multiple robots can be seen as a virtual
workforce—a back-office processing
center with human resources overseeing As RPA technology matures and becomes more well-known in the marketplace, the trend
the process automation rather than
performing the manual transactions. indicates that more organizations will adopt some form of this processing capability.
29
ES 1 2 3 4 5 6 7
Summary of results
Section 6
Compliance and taxation
Overview
Increasingly mobile employee populations continue to
create tax challenges for employers. Tracking employee work
locations and determining where and when a tax liability arises
represent significant impediments to tax compliance. While
many respondents indicated either an increased awareness of
the tax requirements or the implementation of more robust
compliance programs, more than half indicated that they
currently seek to outsource processing of these withholding
and reporting obligations.
30
ES 1 2 3 4 5 6 7
Summary of results
According to respondents, the most significant challenge

50% 49% in terms of payroll tax compliance is the accuracy of tax
withholding calculations for regular or supplemental pay.
55%
Question 21:
What issue represents
40%
the greatest challenge
in terms of payroll tax 35%
compliance? Tracking short-term business travelers ranks second,
30% 28%
which reflects a continuing trend of organizations seeking
to be in compliance with state tax withholding regulations.
25%
20%
15%
15%
10% 8%
5%
0%
Accuracy of tax The tracking of short- Inbound international Taxation of

withholding term business travelers and/or US outbound global rewards
calculations for regular assignees
or supplemental pay
31
ES 1 2 3 4 5 6 7
Summary of results
4%
There is both a greater level of awareness and
Not applicable—we do not
have US business travelers increased compliance on the part of employers
11%
Question 22: focused on tax obligations associated with short-
29% Reporting in jurisdictions
What is your level term business travelers. Compared to three years
Partial awareness for select ago, more employers are reporting nonresident
of state income tax populations/jurisdictions
16% business travelers in other jurisdictions, and fewer
withholding compliance Exploring exposure and
employers are simply exploring exposure and the
compliance requirements
awareness for US reporting requirements.
Issues identified,
domestic short-term determining next steps
business travelers? 18% 22%

Developing processes and
systems to address
The primary method used to track employee

Travel and
40% business travel is through the company’s travel
expense data
and expense data. Use of travel and expense
We don’t track
data increased by 7 percent from three
38%
years ago, and at the same time employee
Question 23:
self-reporting of work location increased by
Which methods do you Employee
24% 6 percent. This shows a greater dependency
self-reporting
use to track US domestic on accurate travel and expense data to be able
Internally
business travel? developed 12% to maintain employee business travel for work
procedure location purposes.
External vendor 4% Seventy-eight percent of respondents who track

0% 10% 20% 30% 40% domestic business travel only use one method
to do so.
32
ES 1 2 3 4 5 6 7
Summary of results
Determination of tax 27%

withholding obligations Determining tax withholding
Question 24: obligations and reporting
If you have globally Reporting of taxable of taxable compensation
23%
compensation to local payroll to local payroll continue
mobile employees/
to be the top two payroll
expatriates, which of the challenges related to globally
Year-end processing 13%
following do you consider mobile employees.
your top payroll-related
challenges or risks? Immigration and visa issues 12%
Equity-based compensation and/

11%
or executive compensation
Efficiency of processing taxes 11%
Accuracy of source data 11%
Reporting and availability

of data to track/monitor 10%
expatriate-related expenses
Cross-country charging
10%
of payroll costs
0% 10% 20% 30%
33
ES 1 2 3 4 5 6 7
Summary of results
Outsourcing local payroll 30%

processing to a vendor To address many of the
Question 25: challenges associated
Which of the following Outsourcing tax 26%
with global payroll and
reporting to a vendor tax processing, a majority
are in place to address
of companies outsource
global mobility/ payroll processing and/
Payroll taxation guidelines 15%
expatriate payroll for each jurisdiction or tax reporting. In 2018,
processing challenges fewer respondents are
Clear delineation of responsibilities using payroll tax guidelines
and risks? between finance, global mobility, 15%
for each jurisdiction where
tax, and payroll teams
they have employees,
Standard global mobility
which may suggest more
14%
process across locations reliance on outside
providers and vendors.
Global compensation
collection and reporting 13%
procedures guidelines
Regular training on taxation

7%
and policy guidelines
Automated tracking of
7%
compensation and taxable income
Established reporting
mechanism to track key 5%
aspects of the program
Automated system for monitoring/

3%
tracking business travelers
0% 10% 20% 30%
34
ES 1 2 3 4 5 6 7
Summary of results
Section 7
Quality and continuous
improvement
Overview
Despite payroll being a mature function within most organizations,
it continues to present challenges and opportunities for improving
service delivery. More often, organizations are relying on formally
established governance models and analytics to manage the
processes and results produced by the payroll function.
35
ES 1 2 3 4 5 6 7
Summary of results
Payroll cutoffs,
70%
timing, and deadlines
Payroll processes 68%

Question 26:
Payroll system security 56%
Which of the following
Payment requests,
topics are defined by corrections, and authorizations
55%
your organization’s Payroll system configuration

40%
and maintenance
governance policies?
Not sure 10%
Not applicable—we do not have

8%
governance policies covering payroll
0% 10% 20% 30% 40% 50% 60% 70% 80%
2%
Customers are internal individuals and/
13% Yes, vendors only
or departments who rely on payroll’s
Question 27: No SLAs with customers or vendors services (e.g., employees, managers,
Are Service Level Yes, both customers and vendors HR, finance).
Agreements (SLAs) 42% Not sure
established with the 21% Vendors are external individuals and/
Yes, customers only or companies that Payroll interacts to
payroll department’s provide its services (e.g., outsourced
customers and third- service providers, technology
party vendors? hosting/providers).
22%
36
ES 1 2 3 4 5 6 7
Summary of results
KPIs tracked and monitored by payroll operations

Not applicable—no defined KPIs 38%
Question 28:
What are the key Cycle time to process payroll 25%
performance indicators Payment errors as a percentage

20%
(KPIs) that payroll of total payroll payments
operations regularly Days to resolve payroll errors 18%

tracks and monitors?
KPI are defined but
18%
not monitored or tracked
Timelines in submission
of statutory returns 17%
Of the respondents who track and Manual/voided payments/stop payments

17%
monitor KPIs, more than 90 percent as a percentage of total payroll payments
track five or fewer indicators with Average overall cost
the average respondent tracking 9%
of producing a pay slip
three different indicators.
Untimely payroll payments as a
9%
percentage of total payroll payments
Percentage of payroll payments

8%
that include pay adjustments
Percentange of accurate
6%
statutory returns
Cost of payroll processes as a

5%
percentage of total payroll cost
Cost of payroll systems as a

4%
percentage of total payroll cost
0% 5% 10% 15% 20% 25% 30% 35% 40%
37
ES 1 2 3 4 5 6 7
Summary of results
Payroll service delivery and processing challenges

Accuracy and timing of payroll inputs 19%
Entry and approval of worked and absence time 9%

Question 29:
Inbound integrations and reporting of payroll data 9%
What are your biggest
payroll service delivery Tracking and reporting mobile employees or changes in employee locations 7%
and processing Complex processes or lack of process standardization 7%
challenges? Vendor management and/or dissatisfaction with outsource vendor 7%
Limited available talent and retention of staff 6%
Manual processes 5%
Maintaining payroll compliance 4%
Other challenges 4%
The most common challenges
that payroll teams experience are Outdated or limited systems 3%
associated with the receipt of inputs Tax reporting and filing 3%
to processing payroll, often from
Lack of policies, procedures, and/or controls 2%
outside sources and exceeding the
defined cutoffs and deadlines. Company growth in employees, countries, and/or states/jurisdictions 2%
Respondents report issues with
Multiple, inconsistent, and/or decentralized systems 2%
the accuracy and timeliness of the
information provided, employees Ad hoc or urgent requests 2%
and managers not completing and 2%
Payroll budget and expenses
approving time cards, and difficulties
loading data into the payroll Stabilizing processes and systems 2%
system from upstream systems. Managing the payroll operations schedule 2%
Corrections and adjustments 2%
Employee relations 1%
0% 5% 10% 15% 20%

38
Summary of results
Acknowledgments Beth Shanton

Managing Director
We would like to thank everyone who contributed their time, experience, and insights by Human Capital HR Transformation
participating in the survey. We would also like to thank and acknowledge those Deloitte Deloitte Consulting LLP
colleagues who contributed to the survey effort and creation of this report including +1 404 631 2336
Shruti Raj, Grae Gray, Joy Weidling, Somnath Ghatuary, Besa Glasgow, Naina Sabherwal, bshanton@deloitte.com
Nirav Patel, Peter Kebuz, Pramila Sahu, Vijayender Vadi, Saloni Rajpal, Akanksha Arora,
Ashley Molyneaux, Premjit Das and Scott Greebon. Dave Zachary
Specialist Leader
Human Capital HR Transformation
For further information Deloitte Consulting LLP
+1 513 723 4175
Deloitte Consulting LLP and Deloitte Tax LLP provide a broad range of human resources dzachary@deloitte.com
transformation and employment tax services. These services are designed to accommodate
both large and small employers across an array of industries and geographical markets. Our Grace Melton
services are tailored to our clients’ specific needs, using established methodologies and Partner
strategies. Global Employer Services
Deloitte Tax LLP
In addition, Deloitte provides services using a multidisciplinary coordinated approach +1 404 220 1742
with Human Capital including HR transformation and employee benefits; payroll tax and grmelton@deloitte.com
accounting; and risk management. This multifunctional approach allows us to provide a
dynamic perspective to our clients’ payroll issues through technical experience, thought Nick Broomhead
leadership, and innovation around core business issues: financial management, risk Senior Manager
management and compliance, operational excellence, and transaction effectiveness. Global Employer Services
Deloitte Tax LLP
For more information on the survey or to discuss aspects of human resources +1 404 460 3222
transformation and employment tax, please contact: nbroomhead@deloitte.com
You can also visit our website at www.deloitte.com.
39
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experiences and research of Deloitte practitioners. Deloitte is not, by
means of this publication, rendering business, financial, investment, or
other professional advice or services. This publication is not a substitute
for such professional advice or services, nor should it be used as a basis
for any decision or action that may affect your business. Before making
any decision or taking any action that may affect your business, you
should consult a qualified professional advisor. Deloitte, its affiliates, and
related entities shall not be responsible for any loss sustained by any
person who relies on this publication.
As used in this document, “Deloitte” means Deloitte Consulting LLP, which

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The 2018 Payroll Operations Survey

Operations Technology Global outsourcing Taxation Quality and

39% 21% 6% 16%

With best regards,

Top 3 Online payroll

• 37 percent of respondents determine whether •• 81 percent of respondents conduct periodic

Question 1: 32% 24% 12% 11%

Over 100K 1,399

number of active Smaller organizations tend to have a

function report in your 2018 2014 Combination/varies within the organization

Where does payroll report by company size?

Under 1K 27% 58% 12% 3%

HR Finance Shared services Combination/varies within the organization Other

Breakdown of global respondents

Regions where payroll is processed

80% More than 10 percent of

Average number of countries supported in each region

do you support in each

Does your organization have a payroll shared services center?

Forty-four percent of respondents indicate

0% 10% 20% 30% 40% 50% 60%

Regional shared services center locations

How do you manage responsibility for global payroll processing?

Question 8: The second-largest group of

Twelve percent process

Employees paid in one country,

Plans to create a global payroll strategy (responses from global organizations)

Yes No No Not sure

21% payment corrections on a

Update banking details

Update employee payroll

0% 10% 20% 30% 40% 50% 60% 70% 80% 90%

Online payroll self-service transactions offered Types of online self-service provided

Over 100K 100% APAC 9% 8% 7% 14% 13% 12% 11% 4% 8% 10% 4%

50K–99.9K 1% 99% EMEA 9% 8% 7% 14% 13% 12% 12% 4% 8% 10% 3%

20K–49.9K 100% LA 10% 9% 6% 14% 14% 13% 12% 5% 6% 10% 1%

1K–19.9K 2% 98% NA 9% 8% 7% 14% 14% 12% 12% 4% 8% 10% 2%

Under 1K 9% 91% US only 9% 9% 7% 14% 13% 11% 11% 4% 10% 10% 2%

View annual tax documents Update home address

Eighty-nine of respondents offer some type Update

How do you process payroll corrections in your organization?

payroll corrections with

37% 24% 23% 13% 3%

The descriptions of each method are included below:

Payroll corrections Difference that exceeds a defined flat-dollar amount 42%

Payroll corrections by geography

LA 4% 43% 9% 18% 18% 4% 4%

While 32 percent of respondents in

We do not run any off-cycle payrolls to process corrections— Run

Organizations outsourcing all of payroll processing (payroll BPO by global region)

payroll business process

0% 2% 4% 6% 8% 10% 12% 14% 16% 18% 20%

Organizations outsourcing the full payroll function (payroll BPO) by industry

32% Sixty percent of organizations Life

banking and securities, and in Professional

products industries, such as Consumer

Which payroll services do you outsource to an external vendor?

46 percent 49 percent 51 percent 42 percent 41 percent

APAC EMEA LA NA US only

39% 39% 22% US only

54% 31% 15% US only

60% 35% 5% US only

Under 1K 1K–19.9K 20K–49.9K 50K–99.9K Over 100K

Question 13: Over 100K 33% 67%

We do not run any off-cycle payrolls to process corrections— Run