Global payroll has not yet reached the sophistication of its domestic counterpart, but industry leaders discussed a path for reaching that level in “The State of Global Payroll: Facts, Fears, and the Future for Your Organization.”
The executive panel discussion was part of the Global Payroll Management Institute’s (GPMI) presence at the American Payroll Association’s (APA) Annual Congress in May.
Jeff Brown, Americas Leader of Global Payroll Advisory for Ernst & Young LLP, led the discussion in Nashville, Tennessee. Panelists were Ian Sparrow, VP, Global Payroll for Multinational Clients for ADP; Brian Radin, Chief Revenue Officer for CloudPay; Michele Honomichl, Founder, Executive Chairman, and Chief Strategy Officer for Celergo; Pamela Webb, Chief Administrative Officer for SafeGuard World International; and Aaron Hurst, VP, Global Partnerships and Solutions for Ceridian.
One topic of growing importance in global payroll is the integration between human resources (HR) and payroll.
“More and more, we are seeing some sort of HCM integration at the time of payroll conversion,” Honomichl said.
Regarding compliance, Honomichl noted that international governments are automating compliance measures and asking for more and faster information about an organization’s employee base.
“If you have a new hire, they will not wait for a quarterly or monthly filing,” she said. “They might want the information at the time you hire someone.”
Sparrow said as organizations consider globalizing their payroll function or expanding their operations, global HR leaders need a thorough understanding of local and regional regulations and the implications of those laws for their organization.
“Often the impact of compliance regulation is difficult to fully assess without the support of those who have expertise in local laws,” he said. “It’s prudent to embed this expertise into the operations group so they can monitor and manage compliance with a contextual understanding that allows the appropriate oversight.”
The participants agreed that the level of service achieved domestically has not yet been achieved on a global basis.
“The market is still very much in its infancy,” SafeGuard World’s Webb said. “There is an expectation for much more sophistication across the global market than currently exists. Simple things like the online delivery of pay slips, taken as a given, is not in other countries where you still have an obligation to have the employee sign upon receipt.”
ADP’s Sparrow added that from a client perspective, the market can seem fragmented, with a lot of options for payroll services.
“Businesses need to realistically assess what they can manage themselves,” he advised. “Choose carefully.”
Hurst noted two challenges his clients face most frequently.
“First is a lack of vision of what a global payroll technology solution, organization, and partner environment should look like,” the Ceridian executive said. “Second is a clear understanding of what is included in the price and matching the selection with one’s vision.”
Although the trend is toward shared services, Celergo’s Honomichl said that as you go from a local to a shared services model there are a few problems to consider. One is that without an in-country team you will lose some flexibility, such as making a last minute-payroll change. What is lost in last-minute flexibility is gained in greater control, processing, and visibility.
Data and Performance Management
The panelists discussed the need to capture more performance management data so that global payroll managers can evaluate their team’s performance. CloudPay’s Radin noted that you want to capture data the same way you would domestically, with unbiased metrics.
“Organizations need to demand more of their payroll solution,” he said. “If you’re using a global payroll solution, you must be sure to have one true source of data.”
Radin said that the way the industry uses payroll data in the next few years will include a shiftbeyond basic reporting (i.e.—headcount by region) to include a more robust use of analytics which allow forperformance management, and true processimprovement—such as understandingthe number of people involved in processing a global payroll.
“Once you’ve gone through the process of optimizing your process, you canbenchmark against peers to get continual measurements of how you’re doing overtimeand how you’re doing relative to others in each process and region.”
The group discussed the attributes and growth opportunities of the global payroll professional. They agreed that the global payroll professional is often underappreciated.
“A clear way to build your career from tactical into a more strategic role comes in how you handle the global payroll picture,” Radin said. “If they’re committed to educating others in their organization about the complexity and value of payroll processes, it will help to give them a stronger voice.”
Hurst pointed to three strategic roles a payroll manager can play beyond the standard transactional role:
- Process consultant to assess and optimize processes across the HR and payroll spectrum
- Human capital management data expert
- Risk assessor to understand compliance risk and track government changes across the world
“The global payroll professional can understand compliance risk, see what changes are happening in governments around the world and how your businesses are reacting,” he said. “Then they can flag compliance risk at a country level for your company.”
Webb sees a growing trend of companies establishing formal global payroll leadership functions as they recognize the strategic advantage of quickly setting up in a new country to properly pay employees. Cloud-based applications allow companies to gain better visibility into data so that global payroll teams can glean insights into trends such as employee productivity and employer and employee costs.
“With people costs being one of the biggest line items in a company’s P&L, contributions such as these can be invaluable input to foster more strategic decisions on how best to deploy the company’s resources,” she said.
Global Payroll, HCM Technology
The market is still maturing with regard to true global payroll tools, ADP’s Sparrow said, and as it does organizations should consider utilizing the experience of a global service provider to navigate complex business challenges. He added that payroll technology also should enhance the employee experience.
“The conversation needs to shift to be about the way service is delivered to employees—mobile, real-time, ease of access to information, working in professional communities, self-service—with no constraints based on locations and time of day,” he said.
A Single Solution to Global Payroll
Radin said that while skepticism around a single solution to global payroll still exists, it is largely based on a localbias that was established through historical relationships managed by in-countryleadership. He said unique and complex technical/statutory issues can be overcome.
“While these local requirements are abundant, they are not beyond standardization,” he said. “They are actually relativelyminor compared to the multiplesteps required to manage a payroll processacross the globe.”