By Frank J. Mendelson
Editor’s Note: Anita Lettink is a Partner at the Strategic Management Centre and a leading expert on the future of work, HR technology, and emerging technologies. She is an international speaker and the author of “How to Select Your Next Payroll.”
What emerging trends in global payroll are demanding your attention, and how will they exert impact?
There are three emerging trends that are certainly worth following. The first is the rise of new technologies, and how they can make the lives of payroll professionals easier. The second is the increasing need for quality data insights to drive corporate decision making. Finally, the third trend is pay transparency legislation that is popping up across the world, specifically in several U.S. states, the EU, and Brazil.
What are the chronic challenges for companies that have, or are moving into, global expansion?
When you are expanding globally, from a payroll perspective the first question to ask yourself is: Are we setting up a legal entity in the new geography? If you do, you can hire employees and put them on the payroll. Obviously, you can also work with contractors and freelancers, etc.
When you don’t create a legal entity, typically because you only hire a handful of people, you need a third party to legally hire and pay employees. Boards usually don’t think about pay issues when they talk about expansion, but laying out the options and the consequences is crucial for business success.
A second topic involves how to set pay levels. What are we paying people, and what kind of benefits do we offer? I see a trend where instead of setting country-specific salary levels, companies that operate internationally are clustering countries together to define regional salary and benefits ranges. That also makes it easier for employees to work cross-border.
Ensure you spend time thinking through the options you have, understand the corporate strategy, and choose a provider that can support that expansion.
What resources do you use to stay current on the latest trends and legislation in payroll?
I read a lot! I have a couple of alerts on payroll-related terms, which populate a feed reader. I have them set up in four different languages, so that gives me a global perspective. I also follow news from focused websites like Payroll.org and Unleash.com. LinkedIn also has a lively set of payroll professionals who are very engaged in discussing new developments. I also enjoy listening to payroll podcasts. I walk during my lunch break every day, and most days, I discover new ideas from guests on those podcasts.
How can a payroll department provide support on a strategic level to corporate finance, human resources, and other departments?
You should first understand what leaders are talking about. What are the strategic objectives, and what are the topics being discussed in the board room? Is it retention? Is it about health and absence? When you have this information you can find ways to support those conversations with analytics and facts. If there is a way to bring clarity to this conversation using numbers, then use that data. Be specific and to the point in your presentation. You can do this with a few well-chosen charts and analyses that help the board to make people decisions. And even better if you discover something that will materially impact the organization’s future workforce. The questions will follow once you have demonstrated what you can deliver.
What are the biggest challenges for payroll teams, and what is emerging to address these challenges?
The greatest challenges for payroll teams are pay transparency legislation, making sure they understand the value of new technologies, and retaining the payroll team. We are looking at a demographic cliff where more people will retire than enter the workforce. And while we love the profession, it’s not something young people aspire to. That means we have our task cut out for us. How can we ensure that payroll teams are properly staffed, and how can we upskill them quickly? Fortunately, new technology helps us automate more parts of the process, so that payroll professionals can focus on helping employees understand their pay. We will also have to contribute to the equal pay legislation that is happening around the world. It’s a daunting task, but it’s also exciting to see so many initiatives that make the payroll space more attractive.
What strategic advice would you give to a company moving from a domestic to a global payroll?
The most important question to answer is: “What is the problem you are trying to solve?” The answer drives the focus and scope of your project. For example, if you forecast that you won’t be able to hire enough payroll professionals in the countries where you operate, then outsourcing might be the way forward. If you are happy with the in-country payroll delivery but need more control, you now have options in the form of overlays and analytics solutions. Global payroll projects can be costly and long, so maybe it’s better to pick a vendor per region. In other words, know what you are trying to achieve and structure your project accordingly.
What have been your experiences on successfully navigating cultural and other differences on a world-wide stage?
I have been involved in many global payroll projects and that has allowed me to work with people from different cultural backgrounds. That is an enriching experience. I learned that before starting a global project, it’s important that you define collaboration and communication guidelines, and that you understand how people will respond to those guidelines. From my experience, I noticed that in meetings with Dutch people, everyone can speak up regardless of rank. But that is not the habit in other geographies, and sometimes you must find different ways to encourage participation. You must be mindful of cultural habits and backgrounds. Fortunately, there are great books and courses that can help.
What are the things you would like to see payroll vendors address in the next three years?
Payroll is relatively static and stability is important. When a payroll solution delivers correct paychecks, you don’t want to unnecessarily change anything. But within the past couple of years, many new technologies have matured enough that it is probably time for payroll vendors to redesign the architecture of their payroll solutions. Think about native application programming interfaces (APIs), always-on payroll engines, and of course the latest robotics and artificial intelligence (AI) technologies. The focus must be on data. The value of data in payroll is huge, and companies can do much more with that data than pay people. But that’s not always easy and it’s not always allowed. New apps and solutions often require data connections—you can’t offer services to employees without them. So, start from those two angles: data insights and employee services, while being mindful of privacy and security. Explain to the vendor what your future needs are, find out what their roadmap is, and then determine if that helps you move forward or if it’s time to search for a new solution.
What do you see as the value and limits to emerging technology, robotics, and AI in managing a global payroll?
Robotics and AI have been around for a while and are often used in managing payroll processes. Generative AI is a relatively new development, which can help payroll professionals with better communication. AI can help payroll professionals become more productive by quickly surfacing answers to questions. But in some cases, payroll questions contain sensitive employee information that should probably not be handled by AI. The AI applications are better able to assist payroll service agents with suggestions, so they can answer questions faster.
From what you are hearing from colleagues, what are the internal synergies you think may be strengthened in companies with a global workforce?
Payroll systems hold a lot of valuable data, and it’s useful to compare that data. It gives boards insights into productivity, costs, health, attrition, engagement, etc. But before you can derive meaningful insights, you must make sure you are comparing apples to apples. Payroll professionals should set global standards about global workforce data and understand how that translates to the local level. When you do that properly, everyone in payroll contributes to the success of the global company.