How does workforce affect payroll proficiency?
If you look at European companies, it’s safe to say that no two workforces are the same. The composition and size of workforces affect payroll proficiency, as jumbles of job profiles, statutes and contracts add to their complexity. Moreover, companies experiencing a high level of mobility tend to have a harder time keeping track of payroll admin changes resulting from people moving in, through and out. Let’s dig deeper into the workforce characteristics that drive or undercut payroll proficiency.
Scores by country
The impact of workforce: size matters
The composition of your workforce can make or break your payroll proficiency. Coming right after legislation, it’s the driver that complicates payroll in European countries the most. This is particularly true for larger companies: nearly half of them say that their workforce makes payroll handling more difficult. As companies go international, the complexity rises as they must manage cultural, legislative and local tax differences and figure out the ins and outs of split payroll and frontier work administration. At the same time, international companies are more likely to rely on external payroll partners or shared service centres to elegantly navigate through complex payroll.
Els Hanssens, Sales Director International Markets at SD Worx
Workforce: top 3 countries
Ranked from most proficient to least proficient
Poland
Poland’s top score for the payroll driver ‘workforce’ is likely linked to the country’s high level of HR and payroll education, yielding many specialised payroll professionals who can manage workforce-related complexities in their sleep. Only 1 in 10 Polish companies experience difficulties related to the composition of their workforce when processing payroll – kudos to them for their HR teams’ payroll capability!
As for the movement of personnel: about 1 in 5 Polish companies report that this makes payroll more difficult. At the same time, 30% of companies believe it has no impact on their payroll, while almost half say their workforce mobility makes payroll easier.
Norway
The hierarchy in Norwegian companies is typically quite flat and labour legislation is a lot less challenging than in other European countries. Besides wage or benefit differences, salary schemes are usually similar and straightforward: little variety of contracts, statutes and exceptions to keep track off – which makes handling payroll a breeze for over half of the Norwegian companies. Even the movement of personnel doesn’t seem to throw a spanner in the works.
In fact, the figures even show that mobility is significantly easier to manage in larger international corporations than in SMEs with employees at home and abroad. This is probably due to the fact that those larger companies are more likely to rely on external payroll partners or shared service centres, while SMEs usually handle these tasks in house or with fewer resources.
Spain
Although the Spanish workforce is glued together through several different contract types and collective agreements, nearly 6 out of 10 companies report that the compositions of their organisations make payroll easier. Only 13% experience workforce-related difficulties when managing payroll. This perceived low complexity might be linked to Spanish companies’ ongoing shift toward payroll outsourcing – where trusted partners are increasingly handling the administration processes related to contracts and on- and off-boarding.
In addition, the laws and rules on employment termination are probably clearer in Spain than in other countries – making dismissals and new hires easier. At the same time, however, those rules also slow down mobility in the market. The amount that companies need to pay when dismissing an employee, increases substantially with the years of employment. As such, many employees stay put for as long as possible.
Workforce: bottom 3 countries
Ranked from most proficient to least proficient
Denmark
If you were to look up ‘job hopper’ in the dictionary, a picture of a Danish employee would pop up. In Denmark, it’s a typical cultural trait to always be striving for better. That’s why most Danes have a habit of changing jobs every two or three years. These constant workforce changes make payroll overly complex for a third of Danish companies and explain why they’re struggling with the administration of contracts, on- and off-boarding, and pensions a lot more than other European countries. The administrative burden is high, and post-termination pay calculations often go wrong.
Another peculiarity of the Danish workforce is its multi-country set-up. With Danish companies frontrunning digitalisation, many of them are working with employees in and outside of Denmark. Processing payroll correctly and ensuring those employees are consistently paid their full compensation package usually requires a lot of manual work
France
With frequent adaptations and additions to France’s Code du Travail, changing legislation affects payroll processing in a plethora of ways. Employee protection measures sure are robust, but changing statutes, contract details, working conditions or collective agreements also cause workforce complexity to spiral out of control.
While the principle of ‘égalité’ or ‘equality’ is deeply ingrained in French culture, not all employees are treated equally under labour laws. Tracking and managing different pay scales and social contributions, for example, gives payroll professionals regular headaches and leads to errors in payroll calculations, which can be costly and time-consuming to correct. When it comes to mobility, France reports the highest percentage of companies that say movement of personnel complicates payroll: 2 in 5 companies have trouble managing new contracts, other statutes, dismissals, etc. But with the high number of employment regulations, that doesn’t come as a surprise ...
Belgium
Of the 16 countries surveyed, companies in Belgium struggle the most with the complexities of their diverse workforces. Only legislation has an even bigger impact on payroll proficiency. The composition of the Belgian workforce is mostly organised through a wide range of employee statutes and contract types – which all have different legal implications, social contributions, benefit packages and fairly vague demarcations between them.
There is, for example, a clear distinction between white-collar and blue-collar workers – but when it comes to legislation regarding freelance or temporary employees, many Belgian companies stay in the dark. Ploughing your way through confusing regulations and complying with every single one of them is no easy task. This partly explains why so many Belgian companies outsource (parts of) their payroll admin.