Globalization was a buzzword just a few years ago, but is now an operational fact and a central component of any business strategy. With instant connections across borders and fewer barriers between geographic regions, we must reconsider our accepted working definition of “global,” which effectively maintains a distinction between U.S. and international populations. As integration and process optimization become more essential to operational efficiency and revenue growth, the inherent difficulties and drawbacks of managing multiple payroll systems around the world are becoming more extensive and problematic. Truth is: If you haven’t consolidated your domestic and international payroll onto one integrated payroll platform, you’re behind.
Globalization Is Maturing
The next wave of globalization is abandoning the split model of viewing a company’s headquarters as one group and everywhere else as another. For multinational organizations to achieve the scalability and efficiency they desire, their most critical functions must be fully integrated and optimized. HR began this change in the early ‘90s, along with telecommunications, sales, and many others, with payroll lagging far behind. Yet it’s not a question of if payroll should be consolidated on one global platform, but of when.
A single, integrated solution for global payroll is now possible, and the movement toward a consolidated and optimized payroll function is gaining momentum. The early adopters have achieved significant performance and visibility benefits from their global consolidation initiatives. However, the majority of organizations have yet to begin the conversation of converting to one global platform, and it's easy to understand why a split model persists.
As companies expand globally, they often end up with many core applications—both selected and acquired—that aren't built to work together or cover broader organizational needs. To address the issue, companies purchase another system for yet another country or business, further complicating the problem of software aggregation.
However, the next wave of globalization will demand a new operational narrative to support global expansion and business growth. Rather than reacting to issues and opportunities as they arise, company leadership must proactively create the conditions for their continual success. As the Harvard Business Review
stated in its recent Agenda for the Future of Globalization, “Business as usual will not be sufficient.”
Time for Payroll to Move Forward
A serious look at the future of global business necessitates a thorough review of the events that brought us to today. Several functions have already begun this process of revision. For example, global telecom providers have leveraged technology and the cloud to go beyond providing simple phone capabilities to also enhance the agility, mobility, and collaboration of their adopters’ workforces. Financial services companies offer their clients an unprecedented integration of accounts and operations that nets incredible savings of time, resources, and capital.
Yet the critical function of payroll remains sidelined, despite obvious inefficiencies and half-hidden costs that plague the ad hoc approach pervasive in multinational organizations. As the only business function that touches every member of an organization, payroll is a widely untapped source of valuable data. Just as HR and finance have leveraged technology to streamline processes and gain strategic insights into their operations, payroll leaders have an opportunity to optimize their departments and extend the capabilities of payroll.
Key Is Being (Not Going) Global
What’s required is the inevitable merging of U.S. and international payroll into global systems. It’s the next step in the evolution of business process optimization, a step that’s now possible to take.
The technology is present, and forward-looking service providers are incorporating a truly multinational perspective into their solutions. Yet not all solutions are created equal. U.S. providers face harsh challenges in adapting their technology and process to take on international payroll. On the other hand, international providers have been dealing with the complexities of global payroll for decades. Take, for example, the hundreds of domestic payroll platforms and services in the United States: How many are able to grow with you across the world? The answer is almost none, because they were never designed to be global.
As technology has advanced, international providers have added capabilities for new countries and emerging markets, leveraging automation and other technological developments to accommodate the various idiosyncrasies and complexities that previously would have been managed manually by subject matter experts. These thorough, complex, yet standardized systems allow for a new level of scalability. And now they can take on U.S. payroll requirements just as they would any other country. This means a global, strategic payroll is now possible, with benefits that touch every aspect of an organization.
Benefiting Is Believing
By consolidating payroll onto a single global platform, organizations are better prepared to scale their operations and move into new countries or markets. Fully integrated payroll services enable companies to evaluate operational costs more quickly and accurately, which can aid and accelerate important decision-making. Data harmonization across an entire organization not only eases processing, but also offers insights into populations that would easily be missed across disparate platforms. An integrated system also creates opportunities for shared labor, enabling domestic staff to perform global functions and vice versa, which can free up hours and employees for more essential tasks.
A single, closed, fully integrated global payroll system also delivers perhaps the most sought-after benefit of any process standardization: heightened compliance and data security. With just one platform, payroll leaders gain unprecedented visibility into their data and can better highlight, report, and address compliance needs or issues. By obviating the need to link systems or transfer data, there is less room for error or chance of leaks. And by routinely monitoring and updating regulations and requirements by country, a single global system helps ensure compliance with local statutes in every market.
It’s Better Business
The international nature of business today requires a willingness for self-evaluation and change. Growth demands reflection and adoption of new and better processes. Continuing advancements in technology, especially cloud-based services, allow organizations and individuals to work smarter and faster to support a rapidly changing global landscape. Payroll encapsulates the needs, opportunities, and motivations of the growing global workforce, the people who make any business succeed. It’s time to do it better.
To take globalization seriously in 2017 and beyond requires a sincere look at new opportunities for process improvement. Where can your organization be more sleek, agile, and integrated? How can you be best positioned for growth? Payroll must be viewed as an essential function and given proper structure and investment so that it cannot only support but enable companies’ success. Adopting one complete, agile system for both U.S. and international payroll will allow your company to take the next essential step in process improvement—and arm you with a new tool for future success.
Brian Radin is the President of CloudPay, and is responsible for all revenue-generating activities, strategic partnerships, and business strategy. He brings more than two decades of leadership experience and a track record of enhancing results for multiple leading organizations, primarily within human capital. Radin founded four start-ups including a global payroll software company, a professional employer organization (PEO), and an employment and income technology platform.