Is Your Payroll Ready for COVID-19?
The new coronavirus COVID-19 is the worst deadly virus outbreak in many decades. As of March 9th, more than 100,000 people have been infected in more than 100 countries and more than 4,000 people have died from the virus within the past few weeks, making it far deadlier than the Ebola, SARS, MERS and H1N1 outbreaks over the past years. Much uncertainty remains on how the virus will further spread and how many lives will be affected.
What we do know is that it has already caused major disruption to the personal lives and businesses around the world. In China and Italy, for example, millions of people have been quarantined and are restricted in their movements. In Seattle, one of the cities in the United States with the highest number of infections, companies like Microsoft, Amazon, Google, Salesforce and many other tech giants are asking their employees to not come into the office and work from home out of fear of potential contagion and further spread of the deadly virus.
Clearly, we are living in uncertain times and we have to adjust our daily routines in face of this global health emergency. In order to avoid a complete collapse of the global economic system, it is critical that we all prepare and develop contingency plans. Having worked in the Payroll industry for the past 10 years and having developed a deep passion for Payroll, I cannot help but wonder how this global crisis will impact the global Payroll community.
Payroll is the lifeblood of any business. While Payroll often operates unseen behind the scenes, it is absolutely mission critical to the smooth operations of any business. If you do not pay your employees on time and correctly, you will soon be facing dire consequences: disgruntled, unmotivated employees and serious fines from tax and social security offices. So, it is absolutely critical to keep Payroll running as smoothly as possible, even in times of global crises like the one we are facing right now.
So, what does the current crisis mean specifically for Payroll, what are the risks you may be facing and what can you do to mitigate the potential impact? Let’s look at some of the key scenarios that you may encounter as a payroll leader over the coming weeks and months and how you can prepare yourself:
1. Office Closure and Work-from-home:
One of the most likely scenarios is that your company may close offices to avoid the further risk of contagion and ask employees to work from home. This scenario is very real as we have already seen a number of larger employers starting to institute this kind of policy at least in parts of their organizations. So, what are the implications for Payroll?
The first question to ask is: Can you operate your payrolls remotely? Your HR and Payroll employees will need to be able to access systems and data from their homes. While digital workflows and cloud-based solutions generally bear many benefits in terms of efficiency and central governance, they are absolutely indispensable in crisis situations like this. So specifically, what you should have in place are:
• Digital workflows so your processes do not depend on local, human interactions (e.g. a payroll calendar or other key to-do lists written up on the whiteboard in the office won’t do you any good when the team is working remotely from home)
• Documents and data stored securely in a central cloud environment so all team members can access crucial information anytime, anywhere
• Digital means of distribution for payslips and payments to employees as much as feasible given local country infrastructures
If you have not fully digitized your global payroll environment yet – including payroll operations in smaller remote countries – the current crisis should give your organization the impetus to do so ask quickly as possible.
2. Sick Leave and Shortage of Staff:
Of course, as the health crisis spreads and more people contract the virus, you may have members of your team who need to go out on sick leave and you will have to find ways to cover their responsibilities. And in a severe crisis like the current one, even normal local backups may not be available to step in when the primary payroll owner is out sick. Now, given payrolls very country-specific nature, it will be difficult to have someone from your broader global team and try to cover off the payroll in another country. However, if you have standardized your payroll processes and tools in a way where each country is following the same fundamental steps and uses the same tools to collect, compare and sign-off the monthly payroll data, you will have a much better chance of having someone else in your team be able to step in on an emergency basis and at least make sure that payroll does not come to a grinding halt. So standardizing processes and tools across different countries again will serve as a way to reducing people risk and single points of failure in your payroll organization.
3. External Provider Risk:
Another potential risk to your payroll operation’s business continuity may come from outside of your organization which in many ways is beyond your immediate control. Your local payroll partners may get hit by business continuity challenges, either because their staff is impacted by the disease or because their overall business ends up in a financial crisis (i.e. bankruptcy) because of delayed or cancelled contracts, disrupted supply chains or difficulties to secure necessary funding. In this case, you need to be able to switch to a new local vendor quickly to ensure you can continue to rely on professional experts to get your employees paid correctly and on time. Of course, any switch in payroll vendor is not trivial. However, you can ease the pain and potential disruption by (a) establishing well documented, standard operating procedures – ideally in form of processes that have been codified in digital workflows – with your local providers and (b) capturing all data exchange between you and your local payroll partners in an easily accessible document and reporting cloud so you can readily make all the required information available to a new payroll provider in case you have to make a transition.
4. Increased Burden on Your Team:
And while normal business operations for payroll may get impacted, the global crisis is already creating exceptional conditions that put more burden for payroll professionals. In order to protect employees who are looking to protect themselves and their colleagues by calling in sick to self-isolate themselves from financial hardship, the UK government, for example, is in the process of instituting an emergency measure that will entitle employees to full statutory sick pay from the 1st day of sick leave instead of from the 4th day under the current rule. Needless to say, payroll departments will need to scramble to effectively reflect this new rule into their payroll calculations and in some cases manual overrides of the system in use may be necessary to account properly for the new rule.
In summary, we are living in disquieting times. But whether at a personal or professional level, we must make sure we prepare ourselves for potential contingencies and risks so we can mitigate the potential impact of the crisis on our daily lives. In the case of Payroll, for organizations who have not yet standardized and digitized their global workflows and centralized their document and data management in a secure cloud-based environment, the current crisis should serve as a stark reminder that it is high time to move their payroll operations into the 21st century.