Focusing on what matters: how to tackle the payroll administration burden in CEE
Article 4 minute read

Focusing on what matters: how to tackle the payroll administration burden in CEE

23 February 2018

Skills shortages across Central and Eastern Europe mean that recruitment is a key challenge for HR professionals in 2018. But many are spending their time bogged down by low-value tasks.

One of the top challenges for HR and payroll professionals across Central and Eastern Europe (CEE) over the year ahead will be finding and nurturing the necessary talent to ensure the success of the business. This was identified in recent research by Harvard Business Review (HBR), sponsored by TMF Group, on trends and developments in the market.

The problem in the region is that birth rates are low and emigration levels are high, which has led to labour shortages and wage inflation.

Unsurprisingly then, in Poland, the HBR research found that a key focus for managers this year will be recruitment (41% of those questioned). For CEE executives, it is all about building a strong employer brand (40%). The aim here is to make their organisations more attractive in order to woo local candidates, lure emigrants home or entice new immigrants to join them. Staff development is another priority.

Side-tracked by administration

But the issue that many professionals face in achieving these goals is that too much of their time is taken up handling administrative tasks (84% of Poland-only managers versus 88% of CEE execs). The vast majority are also struggling with over-complicated and manual processes (82% in Poland versus 93% in CEE) and in meeting deadlines for completing HR and payroll reports (99% for both).

To make life even more difficult for CEE managers, however, they also face the additional burden of having to deal with suppliers using inconsistent HR and payroll data formats (81%) and consolidating data from different markets (58%).

As a result, there is a growing international trend towards introducing middleware to solve such complexity problems. This software sits as a layer over the top of existing 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 HR and payroll professionals to manage their payroll more effectively, providing visibility of data across the countries in which they operate, allowing them to play a more strategic role in their business.

The outsourcing phenomenon

Another approach to help tackle some of the challenges faced, meanwhile, is to outsource. About a third of CEE-wide companies, and one in five Polish firms specifically, have now outsourced their HR and payroll services, according to the HBR research. Payroll preparation, administration and legal issues are the most common options. In terms of rationale, cost savings are high on the agenda here, as is gaining access to often difficult-to-find experts and expertise.

And the advantages of going down this route are many. HR and payroll professionals across the region found they had more time to focus on supporting the business rather than becoming bogged down in administrative tasks. They also benefited from easy-to-use secure automated processes, and faced a lower risk of errors.

In fact, it was on the automation of payroll processes and data security side of things that outsourcing providers were rated most highly. They also did well in terms of providing complex and sector-specific services.

Therefore, it seems likely that outsourcing will continue to grow in the region over the next few years. Just under two thirds of Poland-only managers expect this to be the case, while the same is true of 53% of CEE executives.

Shifting focus

Increased automation, an ever-strengthening outsourcing market and the introduction of middleware to ease complexity are just three of the ways that businesses across the region are attempting to address the dire implications of their skills shortages.

To understand more about HR and payroll trends in Poland and CEE, register for our 28 February 2018 event in Warsaw: Mastering the challenges of payroll management in Europe.

Read more about the latest global trends in HR and payroll - download our report with the Global Payroll Association.

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