Many multinational organizations are realizing a need to improve their global payroll operations but are overwhelmed by the prospect of integrating a global payroll solution into existing HR systems. Also daunting are the myriad service delivery models offering in-house and outsourced solutions, or a hybrid approach allowing for global governance and processes without sacrificing local expertise and cultural intelligence. Not surprisingly, HR and finance stakeholders are often challenged by the task of evaluating the various service providers and solutions, and defining the knowledge base and workforce required to implement a global solution.
An experienced third-party HCM/global payroll advisor, evaluates an organization’s business needs and creates a customized strategy to deliver fundamental payroll support and services to employees in every country. The resulting global payroll delivery system will reduce risk of non-compliance and associated penalties, as well as increase accuracy of payroll processing, providing better insight into a company’s human capital worldwide.
How to Begin
The first step in establishing a fully global operation is to define an overall strategy, outline critical components, and then review existing processes—at all levels—to determine how they relate to each other and how well they are meeting current business needs.
Key Considerations and Must-Haves:
- Are the current global HR and/or payroll services reliable, flexible, and responsive to changing market conditions?
- Is your company achieving value from existing systems?
- Are the existing payroll processes well controlled and monitored? Are they consistently compliant and up-to-date with local regulations?
- Are company stakeholders able to quickly gain access to useful data as it relates to their business unit?
- Are current standards driven by best-in-class systems and best practices or are they holdovers of legacy systems?
- Which aspects of company operations can be outsourced and which should be kept in-house?
The Importance of Data
When it comes to data, more isn’t always better when it comes to your HR system of record. Not all data that is necessary for successful payroll operations is compelling for high-level metrics and reporting. Attempting to maintain every piece of employee data at both the local level and within the global HR may often require redundant data entry, increasing the likelihood of human errors. A streamlined approach to integration identifies which payroll-specific data fields are essential to an organization’s global HR picture, then develops consistent standards and processes for only that subset of data to be integrated into the global payroll system.
Third party payroll advisors are highly skilled in helping organizations identify their business objectives and reporting needs, then determining which data fields are critical to those overall objectives. This process becomes the framework for creating the core set of data that must be synced across all business systems.
Challenges of Integration and Implementation
It's critical to build an integration solution road map and, prior to implementation and anticipate potential challenges. Pro-actively put policies and best practice standardization in place to eliminate or minimize the effects those challenges might have on the implementation timeline and costs.
The integrative strategy should:
- Anticipate inconsistent processes and functions across business units and countries.
- Address complex country-specific legislative, regulatory, and data privacy requirements.
- Reconcile differences in data between a global HR system and local payroll solutions.
- Justify the business case of whether or not to include countries with only a small number of employees in the global payroll system.
- Achieve buy-in from all stakeholders prior to the start of implementation.
It's important to develop a common reference of policies and procedures that will serve to mitigate risks and provide guiding principles for all impacted parties.
This approach will:
- Establish and document payroll policies across lines of HR, benefits, payroll, and finance; Identify responsibilities and recommend accountability for managing key data inputs.
- Develop a global framework of standardization that clarifies global processes and standards.
- Create and define key data fields and definitions and thereby eliminate redundant—and possibly erroneous—data entry and render the task less burdensome.
The success of any global payroll system implementation is determined by whether global processes and deliverables have been optimized while achieving local compliance and flexibility. Although Global Payroll Providers offer end-to-end global payroll solutions, there are often unaccounted variables that must be considered, such as local compliance requirements and the inherent and irreplaceable value of local knowledge. Some degree of payroll presence in a given country of operation may be necessary and ultimately any global payroll solution will require a localized component. Management of the customized configuration required to successfully integrate a global HR system into a global payroll system to help you avoid:
- Increased implementation costs.
- Extended launch timelines.
- Redundant or inaccurate data entry.
- Inconsistent enterprise-wide reporting.
- Revenue loss and audit fees.
Organizations need solutions that help ensure employees are paid in a timely, accurate and compliant manner and provide visibility to workforce information across the enterprise in order to optimize analytic capabilities. Partnering with a third-party payroll integration advisor gives your company competitive insight.