Creating a successful shared services centre for global payroll Creating a successful shared services centre for global payroll

Creating a successful shared services centre for global payroll
15 Aug 2018

The number of shared service centres (SSCs) that are being set up globally is on the rise. Deloitte estimates, for example, that 80% of US-based Fortune 500 companies now use some form of shared service facilities to support their operations. Indeed, this type of outsourcing is forming a key part of many organisations’ long-term strategy, not least in terms of delivering global payroll services.

So what are SSCs?

SSCs are responsible for providing specific backroom organisational functions such as accounting, HR, payroll, IT, legal, compliance, purchasing, and security. They often look after the requirements of business operations across multiple geographies and may become centres of excellence and efficiency.

The SSC model has been around since the mid-1990s and so is not a new concept. The business case for this approach almost always revolves around cost, but it can demonstrate value for money – as long as the organisation gets it right, that is.

What benefits do SSCs offer?

In general terms, SSCs should result in increased standardisation and fewer customised processes, which should in turn lead to a boost in organisational efficiency and improved service levels. As tasks are handled centrally, the amount of work that is duplicated across various sites should likewise reduce, which should make it possible for staff to handle higher volumes of work. Other benefits include:

  • Saving time: As organisations usually consolidate their information systems in this scenario, incompatibilities between disparate applications should be eradicated. This means it should no longer be necessary to manually consolidate information from across various regions for reporting purposes;
  • Reducing the impact of skills shortages: Different sites around the world can struggle to provide consistent service levels and find the right skillsets locally. For example, recruitment consultancy Robert Half’s 2018 Salary Guide indicated an existing UK-wide skills shortage is only set to continue. Some 40% of UK firms currently find it challenging to acquire candidates with the appropriate skills. But ensuring that SSCs are located where the skills are makes it easy to overcome such challenges;
  • Providing cost efficiencies: SSCs can offer economies of scale and other cost savings as a result of headcount reductions and roles being reassigned. They can also become centres of best practice.

What challenges does introducing a SSC pose?

Moving to a SSC model is not without its challenges. The company’s organisational design may need modifying as new operational workflows and ways of working are likely to be different to the past. Comments such as “but we’ve always done it this way” will require project leaders to react sensitively and provide constant reassurance that change is not always a bad thing.

The implementation support provided by third parties during such a shift is crucial. Because it is often quite a different way of operating, unless all levels of management embrace the change, the success of the implementation will be compromised. In other words, executive buy-in is key to a successful SSC deployment.

Another challenge relates to local recruitment. As more and more companies go down the SSC route, the demands placed on certain locations in terms of talent are outstripping supply. Therefore, careful thought must be given to personnel issues, which includes staff training, to ensure that service levels are not compromised.

Technology training is another important consideration. Moving to a SSC model is usually associated with technological transformation, which includes more data being transferred electronically. As a result, employees at both the SSC and ‘home locations’ must receive adequate training to ensure they are up to speed.

One challenge that is often overlooked relates to the cultural implications of running a SSC. Wherever it is located in the world, the SSC team will need to interact with colleagues in other geographic locations.

This means that training them on how to deal with people from different cultures is vital. If not done correctly, it can result in ‘home locations’ feeling that service levels have dropped or their needs and requests are not being fully met. Equally ‘home locations” should be educated on the cultural norms associated with the place in which the SCC is based.

Communication styles and methods are important in this context too. SSC staff will require training on how to communicate effectively with teams based elsewhere and vice versa.

Can you leave your SSC to get on with it once it has been set up?

The answer here is a definite “no”. Once your SSC is established, it is necessary to embark on a journey of continuous improvement. Customers will require higher levels of service than ever before as leaders look for cost efficiencies and best practice approaches based on the introduction of standard processes.

As a result, the focus will need to move towards one of business partnering. This is because customers’ commitment levels to the concept will make a tangible difference to the initiative’s outcome.

So it is important to be aware that the biggest complaints tend to relate to poor response levels in terms of service and a perceived inability to support the business remotely. Inadequate work quality and costs that are higher than initially predicted are also commonly pitfalls.

So what can you do to address these issues? Firstly, ensure you have the correct performance metrics and service level agreements in place. It also makes sense to set up a governance management team to ensure that service levels are up-to-scratch.

Another key area that constantly requires work relates to language and communication skills, but the good news here is that practice makes perfect. As South African golfing legend Gary Player often said: “The harder you practice, the luckier you get.”

Conclusion

SSCs definitely have a role to play within global payroll operations. To succeed, they must have buy-in from the senior management team during the implementation and delivery stage. Cultural training for SSC and ‘home location’ teams is also essential to ensure that mutual communication is a positive experience. Because when managed effectively, SSCs can make a positive contribution towards creating a successful global payroll operation.

Sharon Tayfield

Sharon Tayfield is a senior manager, with extensive experience in global outsourcing and a special interest in payroll. She has undertaken senior management roles at a range of multinational companies, including a wholly-owned subsidiary of Anglo America where she was financial director. Prior to her current role, Sharon was chief operating officer for a payroll service company specialising in outsourced services to Africa and the UK.

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The number of shared service centres (SSCs) that are being set up globally is on the rise. Deloitte estimates, for example, that 80% of US-based Fortune 500 companies now use some form of shared service facilities to support their operations. Indeed, this type of outsourcing is forming a key part of many organisations’ long-term strategy, not least in terms of delivering global payroll services.

So what are SSCs?

SSCs are responsible for providing specific backroom organisational functions such as accounting, HR, payroll, IT, legal, compliance, purchasing, and security. They often look after the requirements of business operations across multiple geographies and may become centres of excellence and efficiency.

The SSC model has been around since the mid-1990s and so is not a new concept. The business case for this approach almost always revolves around cost, but it can demonstrate value for money – as long as the organisation gets it right, that is.

What benefits do SSCs offer?

In general terms, SSCs should result in increased standardisation and fewer customised processes, which should in turn lead to a boost in organisational efficiency and improved service levels. As tasks are handled centrally, the amount of work that is duplicated across various sites should likewise reduce, which should make it possible for staff to handle higher volumes of work. Other benefits include:

  • Saving time: As organisations usually consolidate their information systems in this scenario, incompatibilities between disparate applications should be eradicated. This means it should no longer be necessary to manually consolidate information from across various regions for reporting purposes;
  • Reducing the impact of skills shortages: Different sites around the world can struggle to provide consistent service levels and find the right skillsets locally. For example, recruitment consultancy Robert Half’s 2018 Salary Guide indicated an existing UK-wide skills shortage is only set to continue. Some 40% of UK firms currently find it challenging to acquire candidates with the appropriate skills. But ensuring that SSCs are located where the skills are makes it easy to overcome such challenges;
  • Providing cost efficiencies: SSCs can offer economies of scale and other cost savings as a result of headcount reductions and roles being reassigned. They can also become centres of best practice.

What challenges does introducing a SSC pose?

Moving to a SSC model is not without its challenges. The company’s organisational design may need modifying as new operational workflows and ways of working are likely to be different to the past. Comments such as “but we’ve always done it this way” will require project leaders to react sensitively and provide constant reassurance that change is not always a bad thing.

The implementation support provided by third parties during such a shift is crucial. Because it is often quite a different way of operating, unless all levels of management embrace the change, the success of the implementation will be compromised. In other words, executive buy-in is key to a successful SSC deployment.

Another challenge relates to local recruitment. As more and more companies go down the SSC route, the demands placed on certain locations in terms of talent are outstripping supply. Therefore, careful thought must be given to personnel issues, which includes staff training, to ensure that service levels are not compromised.

Technology training is another important consideration. Moving to a SSC model is usually associated with technological transformation, which includes more data being transferred electronically. As a result, employees at both the SSC and ‘home locations’ must receive adequate training to ensure they are up to speed.

One challenge that is often overlooked relates to the cultural implications of running a SSC. Wherever it is located in the world, the SSC team will need to interact with colleagues in other geographic locations.

This means that training them on how to deal with people from different cultures is vital. If not done correctly, it can result in ‘home locations’ feeling that service levels have dropped or their needs and requests are not being fully met. Equally ‘home locations” should be educated on the cultural norms associated with the place in which the SCC is based.

Communication styles and methods are important in this context too. SSC staff will require training on how to communicate effectively with teams based elsewhere and vice versa.

Can you leave your SSC to get on with it once it has been set up?

The answer here is a definite “no”. Once your SSC is established, it is necessary to embark on a journey of continuous improvement. Customers will require higher levels of service than ever before as leaders look for cost efficiencies and best practice approaches based on the introduction of standard processes.

As a result, the focus will need to move towards one of business partnering. This is because customers’ commitment levels to the concept will make a tangible difference to the initiative’s outcome.

So it is important to be aware that the biggest complaints tend to relate to poor response levels in terms of service and a perceived inability to support the business remotely. Inadequate work quality and costs that are higher than initially predicted are also commonly pitfalls.

So what can you do to address these issues? Firstly, ensure you have the correct performance metrics and service level agreements in place. It also makes sense to set up a governance management team to ensure that service levels are up-to-scratch.

Another key area that constantly requires work relates to language and communication skills, but the good news here is that practice makes perfect. As South African golfing legend Gary Player often said: “The harder you practice, the luckier you get.”

Conclusion

SSCs definitely have a role to play within global payroll operations. To succeed, they must have buy-in from the senior management team during the implementation and delivery stage. Cultural training for SSC and ‘home location’ teams is also essential to ensure that mutual communication is a positive experience. Because when managed effectively, SSCs can make a positive contribution towards creating a successful global payroll operation.

Sharon Tayfield

Sharon Tayfield is a senior manager, with extensive experience in global outsourcing and a special interest in payroll. She has undertaken senior management roles at a range of multinational companies, including a wholly-owned subsidiary of Anglo America where she was financial director. Prior to her current role, Sharon was chief operating officer for a payroll service company specialising in outsourced services to Africa and the UK.

OTHER ARTICLES THAT MAY INTEREST YOU

How a multifunctional shared services centre benefits global payroll

Ask the Expert: How to ensure your global payroll project gets off the starting blocks

The importance of innovation