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Turn Global Payroll Challenges Into Opportunities

By John Galvin, MA, ACA

Happy People Jumping When your company implements a global payroll for the first time, it presents a new set of challenges and opportunities for your payroll professionals. It is critical for the success of the implementation that your payroll team step up and meet these challenges, rather than risk becoming demotivated and disengaged with the initiative.
You can improve the performance of your internal payroll team by up-front analysis and planning. In this article I will identify key challenges the payroll team faces when implementing a global payroll, and I will suggest mitigating actions your company can employ to convert these challenges into opportunities.
Prior to implementing a global payroll, it is likely that your company has a legacy, country- or region-based, payroll organization. Most companies in this position do not have a global payroll manager because there is often little incentive to centralize payroll on a global basis. Your regional or country payroll managers have the required knowledge and relationships to manage local providers for each country.

Global Payroll and Organizational Change 

The Challenge—The introduction of global payroll disrupts normal payroll roles and responsibilities, which in turn has the potential to confuse and demotivate your international payroll team. 

Having a global supplier means that some tasks require a centralized global organization and management. The challenge, then, is to bring your international payroll team onboard. There will be occasions during the project when they need to either take direction from a central payroll manager or work together in a coordinated fashion. Because this may require organizational change, you will need to engage them and enable effective cooperation. Otherwise, your project can suffer. In fact, global payroll projects are hugely reliant on international payroll teams.

The Opportunity—Mitigating actions not only can prevent problems but can enhance the performance of your payroll teams in future. You can do the following:

  • Re-evaluate how your organization should organize payroll on a global basis. If you develop a clear plan of the organization you require in the future, you can work toward creating this goal during the project.
  • Provide open and transparent communication that clearly states the benefits and reasons for the project. This will increase the engagement of your teams during the project.
  • Use the project to give your high-potential international team members new development opportunities. If your best people are involved in the project, they will be your most effective performers once it is up and running.
  • Learn from the experience of other large restructuring projects in your company. Many of their learnings will be applicable to your global project.

Top Tip: If you are worried about your key international staff leaving during a project, then manage this problem proactively—rather than hoping it does not happen. If they have no reason to be concerned, then let them know. Consider project bonuses or retention incentives if there is a high probability and impact associated with losing key personnel.

Selecting and Managing a Global Payroll Supplier

To ensure the success of your global payroll implementation, it is essential that you pick the right global payroll supplier for your company. Your payroll team members should play a full part in selecting the supplier, as they are the professionals with the most in-depth knowledge of your organization’s payroll situation and requirements.

The Challenge—The challenge is how to ensure your payroll team members can adequately inform the procurement exercise when they do not have prior experience of implementing a global payroll. It is unlikely they will have the range and depth of procurement skills required to identify and appraise all of the supplier deliverables. Although they may have selected country payroll suppliers, they may be unfamiliar with key global payroll items such as international data privacy laws, data interfaces, and consolidated reporting.

The Opportunity—By fully involving your payroll teams in the procurement phase, you not only can improve the selection process but also ultimately improve the implementation and recurring performance of your global payroll. Consider:

  • Creating a global payroll procurement team that includes both experienced professional procurement resources and selected members of your international payroll team
  • Taking time up front to explain to the payroll team members how a good procurement process works. This sounds obvious but is easily forgotten amid the pressure of the project
  • Giving your payroll team members a sense of ownership in the decision, such as allowing them a say in the key criteria that you use to rank the suppliers

Payroll team members involved in procurement will be better able to challenge sub-standard supplier performance in both the implementation and recurring support phase.

Managing Remotely Across Different Time Zones, Languages, and Cultures

With the onset of a global payroll, your payroll team will need to manage a large operation that is much more remote, distributed, and complex than ever before.

The Challenge—It is risky for your organization to simply assume that your payroll team has the managerial skills to step up and manage a global payroll contract. How do you ensure that your payroll managers have the ability to manage a large vendor across different cultures and languages?

If they are not up to the challenge, you will face an extremely difficult implementation. Even worse, it will be hard for your organization to know whether it is your management, the new vendor, or a combination of both that is at fault.

The Opportunity—In payroll or any other function, a new global project can be seen as a unique opportunity to develop your high-potential managers. Consider:

  • Evaluating the skills and competencies of your current payroll team
  • Identifying those individuals who have the potential to manage in a global environment. If none are suitable, then you may need to either complement the team with resources from another function or recruit externally
  • Establishing personal development programs to enhance the required skills of your chosen managers, backed up by on-the-job mentoring
  • Using the implementation phase of the project to develop the remote management and cross-cultural skills of your chosen managers, rather than relying wholly on outside consultants

Implementing global payroll can be a difficult and sensitive time for your existing payroll team. However, it is also a unique opportunity to improve the team’s managerial skills and professional development. By fully involving your team throughout the project, you can greatly increase your chances of a successful implementation