How is the changing role of the global payroll professional—typified by greater interaction with the human resources (HR) department, data analysis, and strategic planning—making an impact in the field?
Global payroll is now a term that is internationally accepted and continuously evolving. From figuring out what it actually means, we are entering a phase where we are learning about the added value it can bring us as professionals and organizations and what unique challenges come along with it.
Our more transactional processes are mostly automated. More focus is put on ensuring local (and global) compliance, capturing taxable events, and controlling processes rather than inputting and outputting data. I think this will also mean that payroll could (and should) follow HR in its business partner role. Global payroll data needs to be unlocked, and I see providers already developing the tools to enable this. I trust that technology will make this possible in the near future, and I definitely want my team to jump on that. The real challenge is creating a platform within the organization for global payroll to build on that momentum.
It would be great to see payroll data—for instance, sifting through and analyzing time and attendance data—used in boardrooms to make business decisions every day rather than flat HR data or compressed finance data alone. In the future, the position of Payroll Business Partner might be one to add to the team as a linking pin among HR, finance, and global payroll with no transactional tasks at all.
What emerging trends or issues have your attention in global payroll?
Human capital management (HCM) systems are integrating more and more with payroll systems. This allows HR data to flow directly into payroll systems or via robots as part of robotic process automation (RPA). In the old days, you could still check and verify HR data before it was further processed in payroll. This means that now more than ever, the HR and payroll departments must work together in sharing best practices, updating regulatory requirements, and sharing in-country compliance knowledge. This also leads me to acknowledge another trend: Governments are looking to automate and enrich their payroll tax reporting and filing processes. The Netherlands implemented this process in 2006. Many more countries (Brazil, France, U.K., etc.) are following this trend. As a result, payroll must capture and hold far more data than required for the traditional gross-to-net calculation alone. Governments use the enriched nominative data as statistical information to make short- and long-term policy decisions. In other words, they trust payroll teams around the globe to gather the data they need to drive policy.
The need for timely, accurate, and complete data has never been more urgent. Global payroll will become (or continue to be) a more strategic discussion than that of a necessity.
Is there a frequently asked question that will no longer be part of the conversation in global payroll in the near-to mid-term?
I believe that in the near-term, the question “Is global payroll a myth or reality?” will no longer be part of the conversation. That one question might be replaced with, “What value can and must global payroll bring to our organization? How do we structure our global payroll team: regional arms or fully centralized in a shared service center? and “How do we ensure global harmonization while keeping visibility on local compliance?”
What resources do you use to stay current on the latest trends and legislation in global payroll?
I cannot emphasize enough that payroll professionals should have the intrinsic need to be well-informed and up to date on the latest legislative changes. In an attempt to keep up with those changes, I use a variety of sources, as I think most colleagues do—from government websites to newsletters of well-known providers, in-country magazines, and Global Payroll magazine, to verbal updates from colleagues and business partners.
It becomes an art to filter those changes that could impact how payroll is run within your organization, and I think you get better at it on the go. I also recommend one-day courses on specific country legislation, for instance those countries where you have high volumes, to avoid becoming fully reliant on the in-country provider. Each organization will always be accountable for complying with legislation, whether part or all of the process is outsourced. This should foster a culture of compliance awareness.
How would you advise someone whose company is just beginning to expand to a global payroll with regard to risk management and compliance?
Starting in global payroll is complex in regard to risk and compliance. It depends on the risk appetite of a company, but there is usually zero tolerance for noncompliance. You can begin with that in mind and then map out your countries, entities, industries, and head count. Use this information to design your process and assess what people, systems, and sourcing are needed. Partnering with a consultant who already has done this will help in this journey, whereby an in-country provider can help you understand local compliance requirements. You can only mitigate risks that you have identified, and this is an iterative process as payroll environments are constantly changing.
How can a global payroll department integrate on a strategic level with corporate finance, human resources (HR), and other departments to provide a competitive advantage?
This question touches on my view of the changing role of the global payroll professional. The role is changing from transactional to more of a role-based position, proactively analyzing and advising.
For this new role to be effective, a precondition remains. Payroll data must be timely, accurate, complete, and unlockable. I believe that each payroll or global payroll department should strive to reach this level of excellence. When it does, the business partner role is one to introduce and really evolve. In this role, the HR and finance teams (accounting and financial planning and analysis) can be supported to help them perform their tasks. This might mean that the decision of where the global payroll department reports is less relevant, as it will be a business line unto itself. Our biggest selling point compared to HR and finance data is that our data and information is commonly seen as the most trustworthy and enriched. Let us use that advantage and move toward more strategic discussions.
What is the one thing that happened in the past year that you didn’t see coming but has had a most profound impact on global payroll?
Brexit is the one I didn’t see coming in 2016, and from what I have heard, I’m not alone. I believe most global organizations have some, if not great, ties with the U.K. The insecure social, political, and economic environment will impact global payroll and HR as well.
Just think of immigration issues, or of headquarters moving away from the U.K. and opening in other European countries. I already noticed that some countries have invented new payroll (and expat) tax reliefs for foreign companies to lure companies away from the U.K. and into other countries in Europe. This will mean support from the global payroll team is needed, for both the new employees and the organization. They’d better be ready, as this process can demand many resources within stringent timelines.
Is it possible to have a single global payroll solution and service?
This question is still asked a lot, and it really depends on the definition of “single.” I see single global payroll providers serving customers in more than 165 countries from one common platform. These providers, however, partner with in-country providers (ICPs) who perform the processing duties on their behalf, integrate with their aggregation middleware, and provide local HR services where needed. These aggregators tend to be hybrid, meaning they do process payroll in some countries (mainly their high-volume countries to make the pricing of the solutions and services more attractive) but co-source the rest to in-country providers. I believe this model is the most commonly used for global payroll, and I don’t see it changing in the near future, apart from the constant technological improvements.
It does mean that due diligence throughout the whole chain of providers and contracts is needed. For the end client, us, this means that the ISAE 3402 Type II or SSAE 16 Type II statement is gaining importance. This statement should provide the wanted and reasonable assurance that single global payroll providers own their downstream processes. They in return must require their customers to implement controls on their end to have a seamless end-to-end process. I strongly recommend everyone to take notice of those so-called user control considerations and match them with how your internal control environment operates. In addition, and even more important, how does the ICP actually running your payroll comply?
What are the biggest challenges for global payroll teams?
To name a few: keeping up to date with legislative changes, dealing with cultural differences, data privacy (EU-US Privacy Shield), how payroll can unlock the value data it’s sitting on, and how technology can support the process. Baseline will be to meet all deadlines and deliver results; from there on challenges can be overcome to grow to a world-class department.
What countries or regions are the most complex for global payroll, and how do you advise a company to prepare for them?
The complexity of running (local) payroll for me lies in a variety of items, such as: language and cultural differences; regulatory pressure on timeliness for starters, changes, and leavers; level of automation and harmonization in payroll filings (social security, wage tax, municipality tax, etc.); and ease of understanding gross-to-net calculations and payslips.
I then think of running payroll in Italy, Belgium, and France as most complex, at least in Europe. More than with running payroll in other countries, having a strong in-country provider who speaks English is vital to ensure local compliance in those countries. Next to this, I would advise training the team in detail on the gross-to-net route and payroll-related regulations to translate that in a working standard operating procedure. By understanding the end, you’re better equipped for the start.
What are some of the challenges in cultural differences that you’ve encountered, and how do you overcome them?
As a regional payroll team, you need to earn the trust of local employees so that they trust you to run their payroll although you have no presence there. I found that’s easier said than done and requires a lot of empathy from payroll teams. It’s not only about constantly delivering the right output at the right time, but also listening to local needs and taking the time to address their concerns. This way you learn more about their culture and they about yours.
In the Netherlands, hierarchy is less important and employees can step into the office of the CEO, whereby this is unheard of in other countries and regions. For instance, I also found that a cautious approach toward sharing details of sick leave of employees varies highly in different cultures. In most countries, you cannot simply ask someone for the details of their illness. There are many more examples to think of, but in more general terms cultural awareness is critical in our line of work if you want to really succeed. Be kind, be transparent, and be respectful.
How did you become involved in global payroll?
I started running Dutch payroll in 2006. This is where I fell in love with running payroll and slowly started expanding to running foreign payroll. It wasn’t until I decided to join PwC that I really experienced how multi-country and global payroll can be run. I developed my own view and vision on how to run and control payroll there, together with some great mentors and clients. I then decided that managing global payroll was my dream and I wanted to fully dedicate my time to it. It’s a niche position in the labor market and a business process that’s always challenging, evolving, and exciting.
What are some pieces of wisdom you can share in regard to being effective, efficient, and legally compliant?
I believe that the design, implementation, and use of a Global Payroll Control Framework (GPCF) is a best practice that I developed to achieve payroll objectives relating to operations, reporting, and compliance. This GPCF demands that teams have a relentless focus on delivering results and mitigating risks within their global payroll control environment. Embedding a culture of identifying and mitigating risk helps each global payroll team have an operating model that’s effective, efficient, and transparent. Remove control activities that don’t mitigate risk and develop those that do with a perfect balance of people, systems, and sourcing supporting your operating model.
What are key qualities you look for in people you hire?
Apart from the obvious (detail-oriented, accurate, having integrity, and experience/education) I look for people who can read situations, adjust their attitude, and act, to be situational in behavior and communication. It’s all about reading the needs of someone else, being able to value someone else’s position, and unconsciously making the right (business) decision. In Dutch we call this gogme and it’s commonly used in sports. It means that someone can read the game. I also strive to develop this quality within my team, as you learn this on the go—not in school, but in situations at work and from mentors.
What books are on your recommended reading list?
I am a big fan of reading philosophy books—from Seneca to Epictetus to Marcus Aurelius. It’s really great to take notice of their wisdom, their take on life, and to find out our time is actually not as unique as we sometimes think it is. Many of our current macro and micro problems have occurred in the past in some form. Great thinkers have shared their vision about what mindset works best in certain situations or, for instance, how to overcome anxiety and the fear of missing out. I really like the Stoic philosophy and embedded these similar words from Epictetus: Give me the courage to accept anything that is not in my power, the strength to change everything that is in my power, and the wisdom to distinguish between the two.