Top payroll challenges in the retail industry in Asia
Article 4 minute read

Top payroll challenges in the retail industry in Asia

12 June 2019

HR administration and payroll should be key areas of focus for all retail industry participants, as there are challenges that can have a significant impact on their business.

Payroll and HR administration can be particularly problematic for retail industry companies in Asia, which is why many of them seek to source a professional services provider that specialises in these areas. However, it’s not always easy to find the right partner, or to execute a project where the third-party can integrate their services successfully with your internal HR processes. These challenges resonate across the whole retail sector.

Retail industry HR and payroll – the challenges

The retail industry faces very high levels of staff turnover. This high turnover rate strains the HR team’s ability to maintain sufficient recruitment and training programmes, and leaves little time to address underlying issues or progress career development strategies.

A significant percentage of retail staff have flexible working hours and seasonal peaks in demand require temporary staffing. These issues make the collection of accurate attendance data more difficult and puts further pressure on regular employees and training programmes.

Adding to the challenges, staff commission structures are often overly detailed and subject to change. This results in further complexity for payroll data collection and calculation. 

Simply managing payroll processes can consume an inordinate amount of HR department time, leaving little left for recruitment, onboarding and staff training. In a growth sector, these issues continue to multiply. Businesses are faced with either hiring and growing a team of HR professionals to cope with the peaks encountered, or seeking an effective and reliable professional services partner.

The pros and cons of a using third party provider

Using a third-party provider for payroll can provide significant support to retail businesses, bringing local expertise, scale and accountability. There are many benefits to be gained from a successful partnership. 

  • Payroll and HR is the provider’s core business, so they have the expertise to maintain compliance with local regulations.
  • The provider fully supports the retail business through seasonal peaks, allowing its HR team to maintain focus on employee career development and training to enhance their skills and knowledge.
  • The provider is on the ground locally, thus avoiding the many issues that can arise when payroll is managed centrally from another country. A local team also typically provides a faster response.

But there can also be issues if the provider does not truly work as a partner.

  • Poor communication between the provider and the company can lead to misunderstandings and mistakes.
  • A lack of good account management can fail to identify changing circumstances that the provider may need to respond to, or could have assisted with.
  • HR staff can feel they lack control when payroll is outsourced, and resist change.
  • Frequent payroll issues and mistakes can breed negativity from employees toward HR and the company.

It is therefore essential to foster a good relationship between the provider and the company from the outset. Care must be taken to select the right provider to partner with. Simply using the same provider used by your head office may not meet your needs if they do not have sufficient local knowledge and experienced people on the ground. Ideally, you need a HR and payroll partner with local offices and a global footprint, that can match your ambitious expansion strategy - and support you in any country that you wish to target in the future.

You can navigate the HR and payroll-related risks and opportunities of doing business in 76 jurisdictions by downloading our Global Business Complexity Index.

How to have a successful partnership

There are many aspects that contribute to the success or failure of a sourced project, with effective project management, tight governance practices and regular and clear communication being especially critical success factors. 

From the outset you need to have:

  • executive level sponsorship to champion and support the project
  • a clear plan leading to a defined set of objectives
  • dedicated internal resources that understand your business and requirements
  • communication alignment between the stakeholders at all levels
  • a project committee of three-to-five key decision makers to manage progress and swiftly make decisions if changes need to occur, and,
  • you must select a provider that can satisfy your long-term growth ambitions. 

It is important to prepare well in advance of project initiation, bringing the temporary staff needed to cover for any permanent team members allocated to the project. The project will likely impact all of your HR team in some way, so it’s important that their full breadth of knowledge can be accessed by project team members. Your third-party provider should be able to help with temporary cover when needed. 

If you view your project as just outsourcing a problem, then it is unlikely to achieve your goals. The best way to ensure success is to build a true partnership together with your professional services provider that will not only deliver your project, but will stand the long-term test of time.  

Talk to us

TMF Group can be your retail HR and payroll provider of choice across Asia. Our local experts keep you up to date with regulation changes and provide the scale to meet your business growth.

Need more information? Contact us today.

A version of this article originally appeared on People Matters.

Written by

Esteban Espeleta

Director – Head of HR & Payroll Services, TMF Hong Kong.
Esteban

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