Editor’s Note: John Lestock, CPP, CEBS, QPA, is a global payroll accountant at The Boeing Company. He has gained over 25 years of experience as an accountant specializing in payroll and pension plans, both defined contribution and defined benefit plans. His diverse experience includes payroll tax accounting, compliance auditing of futures and options trading, sales and use tax preparation, defined benefit pension plan administration, defined contribution plan accounting, and corporate accounting. Lestock is currently a Vice President of the APA. He was a member of the Board of Advisors representing Region 3. He is the Past President and current government liaison of the Rainier Chapter of the APA in Seattle. In addition, Lestock is the current Treasurer and Past President of the Pacific Northwest Chapter for the International Society of Certified Employee Benefit Specialists (ISCEBS).
What are the challenges you faced as you moved from domestic to global payroll?
The transition from domestic to global payroll is challenging. With domestic payroll, I have a solid and detailed understanding of nearly all aspects of payroll administration. For example, I can calculate income tax withholding and social taxes. I can explain how employee benefit deductions impact payroll tax calculations, and I can identify whether a certain component of compensation is taxable or tax exempt. As a CPP, it is expected that I can do all these things with a U.S. payroll. However, I do not have nearly this level of knowledge with payroll in other countries. In fact, without having job resources such as pay practice documentation, contact with our Total Rewards staff, and regular interactions with our third-party payroll administrator, I would be completely lost working on global payroll.
I remember having a discussion with my manager when I first started in global payroll, and he highlighted three things to consider. His advice has stayed with me throughout the time in my current role:
- Be patient with yourself. Unlike U.S. payroll, you will not know everything, and that will feel uncomfortable and stressful. He said, “Be comfortable with being uncomfortable.” No one person is an expert on all aspects of payroll in every country—it is simply not possible. Give yourself time to learn to master the job. It may take a year or two in the role to learn the job and become more proficient with it. Just be patient.
- Learn to trust our payroll administrator. Our company partnered with the third-party administrator to help us provide accurate pay to our employees in each country and to maintain compliance with local government legislation. If we see something on the payroll output that seems unusual, ask questions. But we need to engage with them as a partner and give them the benefit of the doubt.
- Don’t stop learning. When you think you have mastered payroll in a particular country, remind yourself that there is still more to learn. Pursue opportunities to learn more about payroll in that country. New legislation, new developments, and global changes are always happening. Stay current with those changes and continue to be knowledgeable about payroll in those countries you manage.
What’s new and surprising about global payroll?
It would be easy to talk about the differences and how payroll in other countries compares to U.S. payroll. However, I believe the opposite is true—U.S. payroll is very different from how payroll is administered in other countries. For example, the concept of “at-will” employment here in the U.S. is virtually unheard of in other countries. Terminating an employee is a far more complicated process than it is in the U.S. There could be components of pay that need to be included beyond simply the final regular pay and any unused vacation time. In certain situations, if a company does not provide sufficient notice, pay in lieu of notice may be required. A prorated portion of an annual bonus or 13th month pay may also be required. A retirement allowance may also need to be paid. And, if employees are leaving the county, they may need to settle their income tax liability with the government before they receive their final pay or before they are allowed to leave the country.
Adding new hires can be more complicated than in the U.S. For example, employees may need to be registered with the government’s social security system or be enrolled in national health insurance before their hire date. Many countries also require an employment agreement that details many aspects of employment, including pay, holiday, allowances, and hours worked. In addition, many countries have detailed statutory requirements regarding paid and unpaid leave—far more detailed than U.S. federal law and most state laws.
How has the move to global payroll added to your professional portfolio of skills and expertise?
The move to global payroll has been quite an eye-opening experience for me. It has been very challenging, but also extremely interesting and humbling. My past experience has been a blend of working in payroll, employee benefits, pension plan administration, corporate accounting, and tax. Global payroll adds another dimension to my work experience. It not only builds on my previous experience, but it has also taught me to think differently.
In previous roles, my focus was to connect payroll and employee benefits to see the whole compensation picture, especially since payroll and employee benefits are more interconnected now than those functions used to be years ago. Global payroll has helped me move beyond seeing total compensation from a U.S. perspective to seeing it on a much bigger scale. For example, how does my experience with 401(k) plans in the U.S. help me understand mandatory provident funds in Hong Kong? How important is health insurance in other countries as compared to the U.S., especially in countries with national health insurance? Is disability insurance still necessary in a country with mandatory paid leave?
In return, understanding the answers to these questions gives me a more holistic view of pay in each country. What benefit deductions from pay should I expect to see? What different categories of income and social taxes should I see deduced from gross pay? Are there pension contributions I need to consider with the monthly payroll run? What are the different accumulators for vacation and sick pay we need to maintain? As I learn about the unique aspects of payroll in each country, I build on my knowledge and prior work experience. This in turn provides me with the knowledge and experience I can apply when I learn about payroll in a whole new country I’ve never worked on before.
What are the soft skills that transfer over from domestic to global payroll?
The most significant soft skills that transfer over from domestic to global payroll include time management, effective written communication, and listening skills.
Time management is critical, given the time differences between my own Pacific time zone and the countries with which I interact. Most of the payrolls I work on are in Asia, so I often deal with a 14- or 16-hour time difference. I work with a few countries in Europe, and I deal with an eight- or nine-hour time difference. Although I do not interact with the in-country payroll (ICP) providers directly (we interact with our third-party administrator who in turn manages the ICPs in each country), I still need to interact with our local offices in those countries. In order to ensure timely payroll processing, we need to follow strict schedules regarding data feeds, initiations, reviewing output, and sending final payments. In order to meet the strict schedule deadlines, we need to be sensitive to time differences in other countries with the understanding that it may take a day or two to get questions answered and issues resolved.
Written communication is the primary method of communicating with offices in other countries. We may only communicate via email with our local offices as well as with our third-party administrator contacts. Given the language differences, we need to be careful with our written communications.
Short, simple sentences as well as bullet points are necessary to facilitate translation into a different language on the receiver’s side. Long paragraphs containing long sentences are discouraged. When we receive emails in English, we may need to read them a few times to assure that we clearly understand what the sender is trying to tell us.
Complicated payroll concepts can be difficult to translate into other languages, and the reverse is true. And, of course, we need to be culturally sensitive with our contacts in other countries in that we address them properly. We cannot assume that our cultural norms with regard to written communication will be acceptable to them. It may be improper to address a person by their first name if I do not know that person well.
Although it is not often that we have phone calls with our contacts in other countries, we still need to be sensitive to the other person’s communication skills while speaking with them. He or she may be struggling with speaking to us in English, so active listening and speaking in short sentences is crucial. It is usually a good idea to follow up via email to confirm our understanding with whatever was discussed over the phone to avoid any confusion.
What stress management techniques have you found useful?
The two things I’ve found most helpful for managing stress include working out and walking my dog. I go to a CrossFit gym and work out about three times a week. The exercise helps me clear my head and work out any stress. It’s beneficial for both physical and mental health. I also try to walk my dog every day. She loves it, and I use the quiet time to reflect on the day and process what has transpired. The walk helps me clear my head and find my balance.
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