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As multinationals continue the search for process excellence and economies of scale, more and more processes are being standardized and centralized, whether within a true shared services organization or otherwise. One of the more recent entrants to this increasingly crowded stage is payroll: more and more organizations are making the move form disparate local, national or regional payroll systems to one global payroll operation, centralized and optimized and yielding significant cost savings. But its not without its challenges....
1.?Optimizing local payroll operations
It's all very well to make grand plans for optimized, perfectly smooth global payroll operations, but if your processes konerko jersey are a mess at a local level you've got little to no hope of moving everything global without a great deal of heartache. Furthermore, as one of the primary benefits of moving to a global operation is saving on cost, it's vital to know where cuts can and can't be made: where can you afford to drop staff numbers and where is some kind of presence absolutely indispensable?
The first step towards a truly global operation is to review your existing processes and operations (local, national, even regional) and get as complete as possible an understanding of how they relate to each other and how optimized they are in the first place.
"There's a range of issues to look at including payroll efficiency, costs, risks (are any of the country operations dangerously dysfunctional, or are there compliance issues?) performance, supplier relationships and so on," says Keith Rogers of Webster Buchanan Research, a market research and consultancy company focusing on people management and multi-country payroll. "This helps companies define their strategy ? and in today's climate, this is all about pragmatism rather than purism. We find that strategies are often developed on a regional rather than global basis and in larger-scale projects, companies tend to divide up their countries into different tiers, focusing their primary efforts on Tier One. The aim is to deliver quick wins ? you need that of course to get initial project approval and to keep stakeholders on board."
2.?Ensuring compliance
No matter how pressing the cost drivers ? or any other motive ? no organization can afford to move to a global payroll system if this involves risking a lack of compliance with accounting legislation in any of its countries of operation ? and of course this includes the audit requirements posed by Messrs Sarbanes and Oxley (SOX). Concerns over compliance have traditionally been one of the main inhibitors preventing firms from moving to a global operation; the need to keep a degree of local knowledge within the system has led many companies to maintain relatively broad and bottom-heavy payroll organizations, frequently leading processes far from best-practice scenarios.
However, improved technology, increased familiarity with the shared service center concept (particularly the rise of "hub-and-spoke") and the rise of global outsourcing providers have all combined to ease the way to a compliance-friendly payroll model. Organizations looking to outsource payroll ? whether to a single provider or numerous ? should be confident (not forgetting the due diligence, of course) that their providers are able to ensure compliance for each and every jurisdiction they're active in. Meanwhile firms looking to keep at least the majority of their payroll in-house can turn to a number of existing methodologies to ensure compliance doesn't inhibit best practice.
"A balanced scorecard approach can work well in this instance. Using the BSC nine steps of success can be used to map a high level scorecard and build lower levels from this, in order to align local best practice and KPIs with a global one. This should include audit requirements for Sox and any other countries requirements such as the Data Protection Act in the UK," says Jeanette Hibbert, UK Payroll Manager at the Kerry Group.
3.?Getting the right balance between optimized global processes and local flexibility
Combining elements of the two aforementioned points, it's vital for organizations to achieve a healthy balance between getting the global system optimized and retaining the necessary flexibility at a local level. There's no point having ultra-pared-down software running a super-Lean global payroll system if local legislative and cultural idiosyncrasies, and rapidly fluctuating employment terms, mean your operators have to go outside that system for a high proportion of their activity.
At the other end of the scale, a single global system capable of catering for every single one of those idiosyncrasies for each and every one of your organization's employees doesn't exactly fit the definition of "Lean" ? and as no off-the-shelf package fitting that description yet exists, building the system from scratch would almost certainly entail the kind of expense that drives CFOs over the psychological edge, so working with a vendor to tailor an existing system to your needs is the logical step to take.
"Where companies use an on-premise system, the leading multi-country vendors have built systems that can handle core payroll processes for all countries centrally, and then layer local country capability on top," explains Keith Rogers.
Meanwhile, outsourcing, here, is increasingly seen as a way to square that particular circle, with providers having already made the lion's share of the investment ? but organizations need to be totally confident in their partner's ability to make those crucial local refinements at minimal extra cost.
"If you go down the outsourcing route… the leading vendors' approaches vary: some have built their own outsourcing backbone to deliver services in multiple countries, others act as ‘aggregators', working with payroll providers in individual countries and then linking everything together through their own middleware to provide a central interface to the customer," says Rogers.
4.?Getting accurate, real-time reporting
The need for gold-standard reporting is of course one of the major drivers behind a move to a global payroll system. With a single system in place, the organization can retrieve crucial data much quicker and with significantly less human involvement than is the case with disparate regional systems; again, this helps with compliance and audit issues as well as more obvious benefits like headcount reduction.
Furthermore the single source for and format of that data means that analysis thereof is simpler by orders of magnitude. Comparisons between countries' (or regions', or localities') effectiveness and efficiency can be done on a true apples-to-apples basis, while monitoring factors like compensation costs and absenteeism can be carried out across the organization using relatively simple and low-cost tools. The ability to perform this analysis contributes towards the agility which in critical times can prove the difference between success and failure.
Organizations looking to retain payroll management in-house while moving to a global operation need to ensure the systems they're putting in place allow for this kind of reporting ? it should indeed be one of konerko jersey the cornerstones of the technology. Meanwhile those turning to outsourcing providers should include reporting time and konerko jersey accuracy in any KPIs being included at the SLA stage.
5.?Keeping down technology acquisition and maintenance costs
