Making the journey towards global payroll Making the journey towards global payroll

Making the journey towards global payroll
17 Nov 2017

The journey towards creating a global payroll is unique and cannot easily be compared with the globalisation of other processes. But as the trend among multinational companies continues to grow, it is becoming clear that they are more likely to see effectiveness increase before they realise any efficiency gains. For most organisations, it is necessary to define a return on investment (ROI) case that brings about not only cost savings, but also other important advantages such as simplification due to increased global visibility and compliance, process standardisation, fraud reduction and system and resource optimisation. Such benefits can generally be obtained over the first few years.

Why it’s important?
When creating a business case for globalising your payroll, it is important to set realistic expectations from the outset. In general, the initial focus will be on designing a global service delivery model in order to optimise the payroll process. From a cost perspective, this usually means that expenditure on reworking such processes will increase initially, although cost reductions are likely to follow over time.

What leaders can do

When globalisation discussions occur, one of the first things that need to be talked about is the service delivery model. Before any potential benefits can be explored, it is vital to understand how the payroll service will be provided. Key components of this service delivery model comprise:

Service placement: Understand who will take responsibility and be accountable for all services included in the payroll process
Sourcing: For each sub-process and/or activity included in the overall payroll process in each country, evaluate whether services should be delivered in-house or by third party outsource providers
Design: Identify and design all processes from end-to-end across all countries where possible
Information: Identify and define common data elements, global reporting requirements, reporting capabilities etc
Technology: Make the most of technology by integrating systems, creating a mobile and selfservice strategy and simplifying and automating processes across the world
Governance and organisation: Create a formal governance structure for the payroll process and determine how it aligns with the rest of the organisation

Skills and talent: Conduct skills assessments for all staff members across the region, identify gaps and provide training to ensure the right expertise is in place for the newly-designed organisation
Culture: Evaluate the cultural impact of the changes being made and make plans to ensure cultural differences and preferences across the organisation are taken into account
Change management: Develop a change management strategy and understand what the implications of this change will be in each country that is affected.

Conclusion

Spending time carefully thinking through each of these areas is necessary when creating a comprehensive service delivery model. Once you have a clear understanding of how services will be delivered on a global basis, you will be better prepared to discuss the ROI and clearly articulate what benefits, and potential downsides, can be expected.

In short, multinational organisations that globalise their payroll process will see costs increase initially as they introduce change and start to become more effective. But as they roll out this change in different countries with the aim of simplifying, standardising and eliminating duplication, cost reductions will start to appear. The process will take time, however, and the speed with which such benefits are realised will ultimately depend on organisational readiness, its ability to exploit technology as well as its global footprint.

 

By Felicia Cheek, global payroll advisory programme practice leader and senior business advisor at The Hackett Group.

The journey towards creating a global payroll is unique and cannot easily be compared with the globalisation of other processes. But as the trend among multinational companies continues to grow, it is becoming clear that they are more likely to see effectiveness increase before they realise any efficiency gains. For most organisations, it is necessary to define a return on investment (ROI) case that brings about not only cost savings, but also other important advantages such as simplification due to increased global visibility and compliance, process standardisation, fraud reduction and system and resource optimisation. Such benefits can generally be obtained over the first few years.

Why it’s important?
When creating a business case for globalising your payroll, it is important to set realistic expectations from the outset. In general, the initial focus will be on designing a global service delivery model in order to optimise the payroll process. From a cost perspective, this usually means that expenditure on reworking such processes will increase initially, although cost reductions are likely to follow over time.

What leaders can do

When globalisation discussions occur, one of the first things that need to be talked about is the service delivery model. Before any potential benefits can be explored, it is vital to understand how the payroll service will be provided. Key components of this service delivery model comprise:

Service placement: Understand who will take responsibility and be accountable for all services included in the payroll process
Sourcing: For each sub-process and/or activity included in the overall payroll process in each country, evaluate whether services should be delivered in-house or by third party outsource providers
Design: Identify and design all processes from end-to-end across all countries where possible
Information: Identify and define common data elements, global reporting requirements, reporting capabilities etc
Technology: Make the most of technology by integrating systems, creating a mobile and selfservice strategy and simplifying and automating processes across the world
Governance and organisation: Create a formal governance structure for the payroll process and determine how it aligns with the rest of the organisation

Skills and talent: Conduct skills assessments for all staff members across the region, identify gaps and provide training to ensure the right expertise is in place for the newly-designed organisation
Culture: Evaluate the cultural impact of the changes being made and make plans to ensure cultural differences and preferences across the organisation are taken into account
Change management: Develop a change management strategy and understand what the implications of this change will be in each country that is affected.

Conclusion

Spending time carefully thinking through each of these areas is necessary when creating a comprehensive service delivery model. Once you have a clear understanding of how services will be delivered on a global basis, you will be better prepared to discuss the ROI and clearly articulate what benefits, and potential downsides, can be expected.

In short, multinational organisations that globalise their payroll process will see costs increase initially as they introduce change and start to become more effective. But as they roll out this change in different countries with the aim of simplifying, standardising and eliminating duplication, cost reductions will start to appear. The process will take time, however, and the speed with which such benefits are realised will ultimately depend on organisational readiness, its ability to exploit technology as well as its global footprint.

 

By Felicia Cheek, global payroll advisory programme practice leader and senior business advisor at The Hackett Group.

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