How does capability affect payroll proficiency?
Some companies manage their payroll on automatic pilot, others break out in cold sweat every month. To which group a company belongs largely depends on their access to adequate payroll expertise, knowledge and experience – whether it’s in-house or via a payroll partner. Under the umbrella ‘capability’, we’ve examined which European countries score best for this driver and thus improve their overall payroll proficiency.
Scores by country
Mastering payroll: a matter of priorities
Aiming for enhanced payroll capability is a simple choice: either you put dedicated people on it who receive regular training and have access to the right tools – the UK way – or you contract a payroll partner who can provide continuity, compliance and competence – the Belgian way. There are obviously hybrid solutions as well. Outsourcing only those payroll subprocesses that cause you headaches and keeping the rest in-house can be an effective approach. They key, however, is always: think long-term and adjust your priorities accordingly.
Tom Saeys, Chief Operating Officer at SD Worx
Payroll capability in the heart of Europe
Ranked from most proficient to least proficient:
With a score above 70 points, ‘capability’ accounts for a large part of the UK’s overall top position in our 2022 Payroll Proficiency Index. And this has everything to do with the way British companies value the payroll profession. Instead of being simply absorbed by HR or finance, it has become a stand-alone function. Moreover, both industries and the government are making educational content and training available, further enhancing the capability of payroll officers.
Belgium is a perfect example of the fact that strong capability and a highly complex payroll environment don’t have to be mutually exclusive. The glue that holds everything together: payroll partners. They keep track of the constant legislative changes, calculate salaries, advice on reward systems, take over reporting and much more. That’s a big part of the reason why Belgian companies are more satisfied about the correctness and punctuality of their payroll than companies in the other surveyed countries.
Dutch companies are quite happy with their level of payroll capability. Important to know is that some local characteristics reduce complexity, such as relatively straightforward remuneration systems, limited movements within organisations and widespread use of technological solutions. Also, (partial) payroll outsourcing is quite common in the Netherlands, which gives many organisations an alternative route to expertise, knowledge and experience.
Well below half of the French companies say their access to specific knowledge and know-how is making payroll (much) easier – not an impressive result. Mainly large enterprises (over 3,000 employees) struggle with ‘capability’. Their internal complexity, combined with an already overly complex legislative landscape, drags down their overall payroll proficiency. This partly explains why France is the country that’s most positive about full payroll outsourcing.
Germany is on the fence, not really choosing either path towards more capability. First, payroll is often seen as something that’s best kept in-house, because of the strategic value of payroll data. This cuts off the external route to expertise. Second, in-house expertise tends to weaken, because the immense workload of German payroll officers prevents them from learning the ins and outs of legal exceptions, special arrangements, etc.