With approximately 3.2 billion employed people around the world, it is the role of payroll professionals to keep the paychecks coming in a timely and accurate manner – one pay cycle at a time. To an employee, their pay arrives precisely when it is expected to, and they often don’t give it a second thought. Those in payroll, however, know it is a much more complicated process than that – one with multiple moving pieces. That’s all before you add in the complexity of managing payroll from a global perspective.
Single-country payroll has its own nuances; still, it gets more complicated when you include additional countries in the mix. Global payroll operations introduce complex challenges with implementing, managing and processing payroll to ensure that the organization can not only pay employees across the globe in an efficient manner, but also address the increased compliance risk and minimize penalties.
We’ve compiled our top considerations for mastering the art of global payroll management below.
A robust payroll system, characterized by its scalability, repeatability, effective controls and adaptability to changing landscapes, is a pivotal component in the success of any payroll operation. Choosing the right Human Capital Management (HCM) or payroll system transcends mere compliance; it means having a deep understanding of organizational demographics and the anticipated evolution of your business and its operations.
In the current business environment, a payroll system should not only serve immediate needs but also be primed to grow with the organization. Scalability ensures that the system can effortlessly accommodate growth, whether through expanding workforces or internationally. Repeatability guarantees consistency and efficiency in payroll processes, reducing errors and enhancing overall productivity.
Effective controls are the foundation of financial integrity, assuring that payroll operations remain compliant, secure and accountable. Further, a flexible system is essential to realign with the ever-shifting business climate, accommodating mergers, acquisitions, divestitures and changes in market dynamics.
GLOBAL PAYROLL TRANSFORMATION STRATEGY
In a borderless corporate landscape, global organizations face the task of seamlessly handling employee data, payroll processing and addressing compliance requirements on both a global and local scale. A robust global payroll strategy, in addition to determining the organizational placement of payroll operations (whether within HR, finance or shared services), must include:
- Current and future state process design: A central aspect of a comprehensive global payroll transformation strategy involves the design of current and future state processes that support service delivery. This involves a meticulous examination of existing processes and the creation of streamlined, efficient and adaptable workflows that meet current needs and accommodate the evolving demands of your organization. By optimizing process design, organizations can ensure that global payroll operations remain agile, responsive and capable of adapting to the dynamic landscape of the global workforce, ultimately contributing to improved efficiency and compliance across the board.
- Design of payroll service delivery: Strategically designing a payroll service delivery model across various geographical regions means encompassing both local and centralized approaches. This includes a careful evaluation of your organization’s unique needs, workforce distribution and regulatory landscapes in different countries. By devising a well-structured approach to payroll service delivery that can be tailored to local, regional or centralized models, organizations can effectively navigate the complexities of global operations. This adaptive design ensures compliance and optimizes payroll processing efficiency, consistency and accuracy across borders while accommodating the specific requirements of each region.
- Effective integrations into technologies and vendors: It’s essential to prioritize integrations with both internal and external systems in addition to vendors. This allows data transfer and reporting to be timely and accurate across the global footprint. By establishing robust connections with vendors and technologies, organizations can streamline their payroll processes, minimize errors and enhance compliance.
- Robust governance model: A robust governance model monitors program performance and adheres to essential service-level agreements (SLAs) and key performance indicators (KPIs). Effective reporting and management of these metrics ensures that the global payroll operation remains accountable, efficient and aligned with organizational objectives, fostering transparency and reliability throughout the process.
- Defined service delivery model: A comprehensive service delivery model outlines the various approaches, such as insourced, outsourced, localized, regionalized, shared service center and employee service models, to cater to the diverse needs of your organization across different regions. By carefully defining and deploying these service delivery approaches, businesses can establish a flexible and adaptable framework that optimizes payroll processing efficiency while aligning with the specific requirements of each geographic area for an efficient global payroll strategy.
GLOBAL PAYROLL TRANSFORMATION MOBILIZATION
One common misconception is that selecting and implementing a payroll system that meets all your organization’s needs accomplishes your global payroll transformation. Often, organizations seek to replicate the functionalities of their previous system without harnessing the potential to improve business processes and uncover enhanced capabilities for data analysis and reporting. Organizations that undergo a global payroll transformation can then develop a well thought out strategy that encompasses governance models and harmonizes efforts aimed at optimizing streamlined operations. It is only after these components are thoroughly defined and documented that an appropriate system can be selected to align with these strategic objectives.
As your organization develops plans to master its global payroll management, you may look to outsourcing globally, regionally or a mixture of the two. While these service delivery models are popular, there are multiple variations of them that can be leveraged to achieve your organization’s defined transformation strategy objectives.
At Sikich, we have professional resources that can help you assess your current global payroll strategies to provide recommendations, assist in vendor selection and implement a robust global payroll strategy. Please contact us to learn more.