Implementing global payroll: Specifying solutions Implementing global payroll: Specifying solutions

Implementing global payroll: Specifying solutions
31 Jul 2014

Last month I wrote about blueprinting for a global solution by thoroughly reviewing the status quo for each payroll and assessing it against the global payroll strategy.

This stage produces a number of documents that define the requirement in detail and highlight the scope of the solutions sought. Principally a data directory, a per country checklist and a gap analysis or matrix grouping the payrolls by their characteristics and requirements. The next step is to identify the tools, components and services needed to plan and implement a global solution.

There are two layers to a global solution. Firstly there is the corporate layer, which is ostensibly the level at which the global payroll strategy has been defined.

Secondly there is the payroll delivery layer which is where the individual payrolls are processed. The former of these is payroll and country agnostic; the latter will be at least per country and possibly even more granular.

Corporate layer

My previous definition of global payroll in the previous issue was: A single strategy for managing and integrating all the payrolls within your organisation.

Therefore any global solution must include an infrastructure into which all these payrolls will slot.

The presumption is that the payrolls are currently a local function and the blueprinting will have shown up how inharmonious they actually are. But, when laid out side by side, it also becomes apparent that there is more underlying similarity, particularly in data and basic process, than assumed. This makes it possible to set a consistent standard for interacting with payrolls both upstream and downstream.

The million dollar question is where to draw that line? What tasks and data are part of the central processes and infrastructure and what will be delegated to the payroll delivery layer?

There is no standard answer to how deep this layer should go as the cost benefit will depend on both the circumstances and the objectives of the strategy. Once the boundary between the two solution layers has been set it is possible to specify the elements of the corporate framework, including workflow management, data management and document management.

More specifically it is likely to require changes or enhancements to shared systems, reapportionment of responsibilities and an audit plan.

Payroll delivery layer

We now need to consider what solutions will best fulfil the needs and obligations of payroll at individual level - a combination of what is required to deliver the payroll and what is required for it to adhere to the strategy.

It is highly unlikely that there is one answer that fits all payrolls and it is equally unlikely that wholesale change or replacement is that one answer. Conversely it is highly likely that there is at least one payroll that is such a mess you not only have to completely change how it is run but re-run it historically to see the full horror.

There will be payrolls where the current, local solution meets the strategy and can easily interface with the new corporate layer and some that could with a little work. In these cases consider carefully the cost, effort and risk of changing the solution just to fulfil a common wish for fewer suppliers or systems. Particularly where the wish is based on assumed benefits and the management of the supplier could be delegated locally and still comply with the strategy.

At the other extreme there may be payrolls that can never live up to the strategy and quite often this relates to security and compliance. You might not find a SOX compliant, SAS70 accredited payroll service provider in some countries or the local provider may not be able to make statutory submissions on your behalf.

In these circumstances the very worst reaction is to declare these countries out of scope. Accept that they will not be fully compliant with the strategy and mitigate and introduce parallel checking, audits and firewalls to limit the risks.

For the bulk of payrolls the approach is fairly standard. Define the requirements of the solution and identify types of solution that might be appropriate by:

• Defining the input: Both the corporate standard and the payroll specific

• Defining the output: Both the corporate standard and the payroll specific

• Defining the deliverables and responsibility: Both for the provision of payroll but also for the local interaction with that provider

• Defining KPIs and how they will be measured and audited.

• Considering the types of solution: For example, in-house, outsourced, fully managed or a shared service centre

When identifying types of solution it is important to look back to the status quo review and see if there are any pertinent factors as to why it is currently processed the way it is. For example, is it standard practice in country, processed in-house on the global ERP system, or locked into long term contract with accountant or HR provider?

Another layer

The purists would do this for every payroll but a more popular and pragmatic approach would be to group the payrolls based on their character and needs. Typically this will be a combination of size, geography and in-house versus outsourced.

Whilst requiring some compromise at individual payroll level it will still allow flexibility to choose the best local solution but has the big advantage of limiting the number of solutions and suppliers to choose, implement and manage.

This will also allow for the more standardisation per solution. There will still be payroll level requirements but these can be pushed further down into the payroll delivery and allow fewer variations in the interaction between the corporate layer and groups of payrolls.

Choose your weapons and plan the implementation

Now that you know what you need, rather than what you think you want and the types of tools and suppliers you will use it is time to start making those final selections. Meanwhile it would be expedient to start developing the corporate layer so that you have something for the new solutions to plug into. 

Piers Lambert is an international payroll specialist with experience and expertise in the integration and implementation of processes and systems for managing multi-country payroll. Find out more at alambert.ltd.uk.

Last month I wrote about blueprinting for a global solution by thoroughly reviewing the status quo for each payroll and assessing it against the global payroll strategy.

This stage produces a number of documents that define the requirement in detail and highlight the scope of the solutions sought. Principally a data directory, a per country checklist and a gap analysis or matrix grouping the payrolls by their characteristics and requirements. The next step is to identify the tools, components and services needed to plan and implement a global solution.

There are two layers to a global solution. Firstly there is the corporate layer, which is ostensibly the level at which the global payroll strategy has been defined.

Secondly there is the payroll delivery layer which is where the individual payrolls are processed. The former of these is payroll and country agnostic; the latter will be at least per country and possibly even more granular.

Corporate layer

My previous definition of global payroll in the previous issue was: A single strategy for managing and integrating all the payrolls within your organisation.

Therefore any global solution must include an infrastructure into which all these payrolls will slot.

The presumption is that the payrolls are currently a local function and the blueprinting will have shown up how inharmonious they actually are. But, when laid out side by side, it also becomes apparent that there is more underlying similarity, particularly in data and basic process, than assumed. This makes it possible to set a consistent standard for interacting with payrolls both upstream and downstream.

The million dollar question is where to draw that line? What tasks and data are part of the central processes and infrastructure and what will be delegated to the payroll delivery layer?

There is no standard answer to how deep this layer should go as the cost benefit will depend on both the circumstances and the objectives of the strategy. Once the boundary between the two solution layers has been set it is possible to specify the elements of the corporate framework, including workflow management, data management and document management.

More specifically it is likely to require changes or enhancements to shared systems, reapportionment of responsibilities and an audit plan.

Payroll delivery layer

We now need to consider what solutions will best fulfil the needs and obligations of payroll at individual level - a combination of what is required to deliver the payroll and what is required for it to adhere to the strategy.

It is highly unlikely that there is one answer that fits all payrolls and it is equally unlikely that wholesale change or replacement is that one answer. Conversely it is highly likely that there is at least one payroll that is such a mess you not only have to completely change how it is run but re-run it historically to see the full horror.

There will be payrolls where the current, local solution meets the strategy and can easily interface with the new corporate layer and some that could with a little work. In these cases consider carefully the cost, effort and risk of changing the solution just to fulfil a common wish for fewer suppliers or systems. Particularly where the wish is based on assumed benefits and the management of the supplier could be delegated locally and still comply with the strategy.

At the other extreme there may be payrolls that can never live up to the strategy and quite often this relates to security and compliance. You might not find a SOX compliant, SAS70 accredited payroll service provider in some countries or the local provider may not be able to make statutory submissions on your behalf.

In these circumstances the very worst reaction is to declare these countries out of scope. Accept that they will not be fully compliant with the strategy and mitigate and introduce parallel checking, audits and firewalls to limit the risks.

For the bulk of payrolls the approach is fairly standard. Define the requirements of the solution and identify types of solution that might be appropriate by:

• Defining the input: Both the corporate standard and the payroll specific

• Defining the output: Both the corporate standard and the payroll specific

• Defining the deliverables and responsibility: Both for the provision of payroll but also for the local interaction with that provider

• Defining KPIs and how they will be measured and audited.

• Considering the types of solution: For example, in-house, outsourced, fully managed or a shared service centre

When identifying types of solution it is important to look back to the status quo review and see if there are any pertinent factors as to why it is currently processed the way it is. For example, is it standard practice in country, processed in-house on the global ERP system, or locked into long term contract with accountant or HR provider?

Another layer

The purists would do this for every payroll but a more popular and pragmatic approach would be to group the payrolls based on their character and needs. Typically this will be a combination of size, geography and in-house versus outsourced.

Whilst requiring some compromise at individual payroll level it will still allow flexibility to choose the best local solution but has the big advantage of limiting the number of solutions and suppliers to choose, implement and manage.

This will also allow for the more standardisation per solution. There will still be payroll level requirements but these can be pushed further down into the payroll delivery and allow fewer variations in the interaction between the corporate layer and groups of payrolls.

Choose your weapons and plan the implementation

Now that you know what you need, rather than what you think you want and the types of tools and suppliers you will use it is time to start making those final selections. Meanwhile it would be expedient to start developing the corporate layer so that you have something for the new solutions to plug into. 

Piers Lambert is an international payroll specialist with experience and expertise in the integration and implementation of processes and systems for managing multi-country payroll. Find out more at alambert.ltd.uk.