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Emerging Trends

Emerging Trends in Global Payroll Data

By Frank J. Mendelson and Simonetta Batteiger

1496510786_fg8iykf8i21. How is the changing role of the payroll professional—typified by greater interaction with the human resources department, data analysis, and strategic planning— making an impact in the field?

Payroll professionals—like virtually all professionals in the modern workplace—are increasingly taking advantage of technology as an aid to work more efficiently. While the actual processing of payroll is sometimes seen as a commodity that can be outsourced, the resulting data from payroll processes are heavily used for decisionmaking in organizations. It has become increasingly important to have flexible reporting tools for payroll data.

Payroll data may aid decisions related to outsourcing, for example by providing information about fully loaded head count costs in various jurisdictions. Collecting and comparing this data has become a key component in making strategic decisions in multinational companies, a task that can be challenging when source data is coming from different systems. As a result, there is a clear trend toward integrating payroll and HRIS data, and to keeping engagements with vendors to a minimum—ideally to one or two providers.

2. How can a payroll department integrate on a strategic level with corporate finance, human resources, and other departments to provide a competitive advantage?

Data is key. Senior decision-makers want to see recommendations based on data. A payroll department should find out what strategic questions its finance, HR, or other departments are looking to understand. As a payroll professional, you can then ask yourself what payroll data could aid good decision-making in these other departments.

For example, you might provide data showing whether women in your organization are paid fairly relative to men in similar positions. This data could in turn become the basis of a recruitment or talent-retention strategy targeting high-performing women, with a promise that your company will compensate them fairly. Data analysis is the tool, and asking the right questions is the art that will make a payroll department engage in a meaningful way with other parts of the organization.

3. What would you advise for a company moving from a domestic to a global payroll?

Know you will have to rely on local expertise (i.e., experts in the target country or countries) or a vendor that specializes in running payroll in many jurisdictions. Keeping up with each jurisdiction’s statutory changes—and knowing all the legal requirements and local expectations related to contracts, employment relationships, collective bargaining agreements, leave policies and benefits—is a timeconsuming task for a U.S.-based payroll or HR department. Unless you have individuals with experience running international payrolls, your team will often not even know what questions to ask about running compliant payrolls in Germany, Sweden, South Africa, India, or any other target country.

There is real value in working with a vendor that will not only provide gross-to-net calculations, but that can provide advice and consult on sustainable HR policies in other countries. You will want to pick a vendor that is able to communicate with you in English, can provide all your required reporting, will allow for an online payroll submission process, and can be relied on for processing a compliant payroll.

The selection process can be daunting. Buyers must choose between engaging with many different vendors (and many different processes, user interfaces, languages, and cultural barriers) or selecting one vendor that can process payroll in many countries utilizing one standardized payroll process, one submission interface (making it easy to train your domestic payroll team), and one reporting interface (allowing for easy data consolidation).

4. With the emergence of technology and data-driven HR decision-making, how do you see the role of the payroll professional evolving?

Payroll professionals need to be aware of the strategic advantage data-driven, decision-making processes pose in today’s economy. If the payroll department cannot contribute by providing data, or does not add value by interpreting data in a meaningful way, it risks being seen as a mere tactical, or non-strategic, functional area. At the same time, managing data and keeping records secure and confidential are increasingly important responsibilities of payroll professionals and cannot be ignored.

In short, senior payroll administers in today’s global economy must keep abreast of trends in big data, data analytics, data security, data access permissions, and data privacy regulations around the world to be successful.

5. What are some of the key best practices and strategic choices to manage risk and compliance?

First of all, you need to have a full overview of your risk sources and compliance responsibilities. The latter can be challenging to obtain when operating on a global level and in many countries. You will need to keep a concise list of risks and compliance events in a calendar, together with any activities that must be accomplished before the compliance deadlines. If working on a global scale, make sure you consolidate your compliance events into one global calendar.

It’s important to incorporate risk, compliance, and tax considerations into your expansion strategy choices. Thinking about these topics before making a final expansion decision can save a lot of money and effort later. Pay specific attention to the Organization for Economic Cooperation and Development’s new base erosion and profit shifting (BEPS) recommendations.

Finally, one needs to be aware of the potential financial and reputational risks of failing to meet compliance responsibilities. In today’s globally connected world, a media story about failing to meet payroll compliance responsibilities can cause much more longterm reputational damage at home and abroad than the financial penalty, which may be relatively insignificant.