global payroll landscape


operations and processes currently in place within multinational organisations. When asked to think about what drives their existing payroll operating model, more than half (54%) of respondents admitted that historical practices still dictate why organisations continue to operate many of their processes and systems. Lee concurs with this particular


discovery. Based on his experience, he found that one of the biggest challenges to the implementation of global payroll solutions is centred around inertia. He said: “For a variety of reasons organisations will often want to preserve what they already have and are, generally, reluctant to make wholesale changes to payroll, even where these may be desperately needed. This leads to organisations simply ‘tinkering’ with their payroll operations rather than really getting to grips with identifying what the organisation needs and then pushing for the appropriate change. Even where it is recognised that change is needed, obtaining the agreement of all the relevant stakeholders across HR and finance as to the most appropriate solution can seem like an impossible task. There is often a diverse range of needs across HR and finance and this is further complicated by the needs of stakeholders overseas such as local overseas HR and finance teams.” But for the organisations that decide to take the initiative to change the status quo of their payroll policies and practices, they are presented with a number of practical issues. For instance, Alison Ward MSc FCIPP, international payroll consultant for the CIPP, maintains that there are three main obstacles when implementing an international payroll solution. Firstly, there are legal issues that have to be addressed and managed adequately in each country. She commented: “It is not difficult to appreciate that each country’s internal requirements are going to change as their internal taxation and employment laws are subject to continual development, just as it is in the UK. The ability to be aware of such changes means investing in monitoring what is happening, by having staff on site and/or obtaining external advice.”


Secondly, there is the issue of agreeing on the manner in which payments are going to be executed, i.e. by region location, using centralised software, outsourcing or running functionality from the head office location. All these options


encompass various complexities but Alison is keen to point out that there is no single software platform that performs in every country. She continued: “All businesses which claim internal provision are in fact only able to offer their core product in certain countries and they will use local business partners in some situations. There is simply no product available that can process the payroll process in full for every country.”


...ACHIEVING ITS FULL POTENTIAL WILL TAKE SOME TIME


Thirdly, there is a broad spectrum of cultural, ethical and linguistic factors that need to be considered when dealing with local managers and professionals in other territories, which can pose major challenges in the implementation of this type of project. Alison emphasises that this is a crucial consideration that cannot be ignored. She said: “It is very important to ensure that staff can perform their duties with an appreciation of the legal obligations as well as the differences in cultural work expectations and behaviour of other countries. It is not just about language differences.” Finally, the Ernst & Young research highlighted additional difficulties. Nearly a quarter (23%) of respondents pointed to legislative compliance as an obstacle, along with organisational consistency in payroll processes (18%) and finding the right global payroll talent and resources (8%) as key concerns. What is interesting is that approximately a third (35%) of respondents said that there were ‘other’ issues that they were confronted with, citing a number of challenges including national laws that were amended frequently and having to convince local managers that their current procedures were inefficient. This demonstrates the diversity of complexities being dealt with by global organisations with their payroll models.


The future of global payroll So, to return to the question, “Is global payroll a realisable or risible goal?” The answer is yet to be revealed. There is a long way to go but the fact of the matter is that with an ever-increasing number of


companies having to implement global payroll solutions in order to compensate their workforce scattered across the world, businesses and payroll providers alike will have to work towards achieving a comprehensive global payroll solution. Alison goes a step further to say that the future of global payroll is dependent on two things: the level of commitment an organisation is willing to place in the skills and ability of key payroll management members and the amount of increased software capability. She elaborated: “There will be some companies who make mistakes due to lack of investment in skills and training of their staff, who believe that it is easy to just implement the home country’s working behaviour and procedures overseas. These organisations will suffer the consequences when relationships break down and when they are placed at risk for non-compliance.” She also makes a fair point when she argues that technology can only go as far as the people who are using it. “The challenge is that whilst organisations may be able to evolve by maximising the use of technology it will remain a problem that governments and their administration processes take a lot longer to maximise their use of such equipment.”


Having said this, the current ‘mishmash’ of initiatives that defines the international payroll landscape at present is the industry’s way of dealing with what is a relatively new phenomenon. It has only been a few decades since the globalisation of the world’s economy has truly started to have a pronounced impact on how businesses operate. In this respect global payroll is still in its infancy and as with all things, achieving its full potential will take some time. Technology, and in particular advancements in software, will certainly help us move towards a truly global payroll solution as it continues to play an increasingly significant role in the management of centralised processes and reporting.


Lee sums it up well when he maintained: “I think the ‘patchwork’ of international payroll solutions will continue for the foreseeable future. But in time, this is likely to change as payroll providers further extend and develop their global offerings and organisations perceive that the benefits of making large-scale changes to their international payroll will outweigh the cost of potentially getting it wrong.”


PP PayrollProfessional 35


Page 1  |  Page 2  |  Page 3  |  Page 4  |  Page 5  |  Page 6  |  Page 7  |  Page 8  |  Page 9  |  Page 10  |  Page 11  |  Page 12  |  Page 13  |  Page 14  |  Page 15  |  Page 16  |  Page 17  |  Page 18  |  Page 19  |  Page 20  |  Page 21  |  Page 22  |  Page 23  |  Page 24  |  Page 25  |  Page 26  |  Page 27  |  Page 28  |  Page 29  |  Page 30  |  Page 31  |  Page 32  |  Page 33  |  Page 34  |  Page 35  |  Page 36  |  Page 37  |  Page 38  |  Page 39  |  Page 40  |  Page 41  |  Page 42  |  Page 43  |  Page 44  |  Page 45  |  Page 46  |  Page 47  |  Page 48  |  Page 49  |  Page 50  |  Page 51  |  Page 52  |  Page 53  |  Page 54  |  Page 55  |  Page 56