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CEO Corner

2022 Left Us Guessing at Each Twist and Turn. What Can We Learn for 2023?

2022 was the year the payroll industry earned its MBA, learning more about how to handle the unknown, and how to face rapidly changing situations than ever before. Looking back over key events from the past 12 months, only one thing is clear – if you’re waiting for a new normal that settles for the long term, you’re missing the point.

Instead, in a global business, every few months you will have new realities to contend with. Your payroll technology will have a direct impact on how you hire and manage your workforce, protect your data and compliance posture, and forecast and plan ahead for business growth.

Q1 2022: Russia Invades Ukraine, Costing 4.8 Million Jobs and Causing Overnight Changes to Payroll, and immigration status

In February, the world did everything they could to support Ukraine in the wake of Russian aggression, and many companies had to think quickly to enable remote working, immigration support, and even physical tracking of employees to ensure they found safe harbor.

Employees who could continue working remotely needed to be paid on time and accurately according to their new region, and each location had its own rules in place for supporting refugees, many of which fell on the business to implement.

For example, neighboring regions such as Hungary simplified employment laws for Ukrainians, allowing anyone with temporary protection to apply for any job, without the need for a work permit. However, the United Kingdom and the USA implemented more complex schemes, where individuals would need to be sponsored by individuals or organizations in order to live and work in-country. In the case of the United States, organizations would need to declare that they are providing financial support, a decision which was never made lightly.

Of course, not all roles could be supported remotely, and estimations were that close to 5 million people lost their jobs altogether. Workforces had to deal with supporting those who they could help, while ensuring gaps didn’t leave them open to risk.

Q2 2022: Inflation Rose at the Highest Rate Since 1981, and Economists Start Shouting “Recession”

As the Consumer Price Index (CPI) rose year on year by 8.6%, and US inflation hit more than 9%, both the largest increases in more than 40 years, Bloomberg economists started talking about the likelihood of a recession. Between January and August, the US Federal Reserve raised interest rates four times. These economists predicted “more layoffs, fewer jobs and higher interest rates.”

For the employers on the ground, this uncertainty translated into a lot of hard work, and the need for technology that enabled granular visibility and control. Just three of the items on the agenda which required a flexible payroll infrastructure were:

  • Managing different budget scenarios and forecasting what tough decisions might need to be made
  • Understanding both the termination costs and employment costs in each country
  • Remaining compliant throughout an unstable environment where consequences changed almost daily

In a period of such uncertainty, where global conflict, supply chain instability and high inflation are all realities of everyday work, 360 degree compliance in particular became more important than ever before. Firm leaders and analysts predicted a “resurgence in litigation” from March 2022 into 2023, and we’ve seen this come into fruition. More legal disputes and more claims, means organizations more than ever before need to remain two steps ahead.

Q3 2022: Companies Look to Score Highly on an Efficiency Matrix by Rethinking Remote Teams

As public markets changed, we have seen companies being rewarded for being more efficient in the way that they work. Where can they trim the fat, make smart changes to their workforce, or become more sustainable?

This gave businesses another difficult task, to make projections about increasing efficiencies, simulate what these changes would look like and their outcome, and then put these efforts into place. In July, we saw that Tech companies began moving their highest-paying roles abroad to save costs on hiring top talent. I’ve seen the same with whole teams such as R&D, which no longer needs to be joined at the hip with the Bay area of San Francisco, as well as other functions like Customer Support or Success.

Comparing cost alternatives means having a vice-like grip on a wide range of international hiring topics, including taxation, pensions, medical insurance, equity, vacation days, parental and sick leave, and much more. Without this insight, you could be making changes that end up costing you in terms of efficiency in the long run.

Once decisions have been made, a flexible payroll infrastructure means you can implement these changes without a heavy impact on processes like getting payments out of the door accurately and on time.

Q4 2022: Huge Tech Layoffs Prove the Key to Success in Uncertainty is Control

Big Tech layoffs are everywhere you look right now, and have impacted more than 200,000 employees in 2022. However, more than 75,000 of these have been in Q4, as hiring freezes just don’t cut it anymore in terms of reducing operating expenditures

There is so much uncertainty for employees and employers right now, and we’re seeing a wide range of challenges in the market, from employees who were holding specific types of work visas before losing their jobs, to workplaces looking for ‘phantom employees’ on their payroll – defined as employees who left or have never existed and yet are still being paid each month or entitled to year-end bonuses.

As employees leave, companies need to be aware of the high rate of data leakage which occurs when people end their relationship with a company, and have systems and processes in place for protecting this data, and their reputation.

Visibility and control are essential for all of these challenges. By understanding who under your employment is tied to work visas, you can make compassionate decisions that don’t undermine your authority. By obtaining a single pane of glass view of everyone on your payroll, there is no possibility of phantom employees.

With a workforce management platform handling your data, you have the checks and balances in place to ensure payments aren’t made erroneously, and compliance of sensitive data is always front and center. Even before workers leave, you can set up roles and permissions so that access is always based on zero trust.

2023: In an Unstable World, The Only Thing You Can Rely On is your Infrastructure

Since the advent of COVID-19, I’ve seen countless articles, webinars and conference events touting the arrival of the new normal. It only takes looking back over the major events of 2022 to recognize that there is no such thing.

This is the power of a flexible workforce management platform. It standardizes and syncs your data into a single, accessible dashboard so that you can view all workers in one place. You work with a unified global payroll process and can access one single stream of global payroll data that’s automated and accurate, no matter where workers are in the world.

Documents are robotically checked against international and regional compliance regulations, providing an extra layer of security and control. You can use the platform to make simulations and forecasts, so that no decision is a shot in the dark.

Today, we live in an unstable world, and all of our businesses are closely tied to geopolitical events, wider economic pressures and supply chain demands. The only way to be prepared for whatever will be thrown your way is to ensure you have a reliable, stable and flexible payroll infrastructure. This is your foundation, the basis of handling whatever comes next with visibility and control.

Looking to implement global payroll and payments technology and infrastructure that is prepared for whatever comes next? Get a demo of Papaya Global, and see how it works for yourself.