Monthly Measures: Why payroll costs vary from country to country Monthly Measures: Why payroll costs vary from country to country

Monthly Measures: Why payroll costs vary from country to country
15 Jan 2018

This metric shows how payroll costs vary across regions depending on the complexity level of countries in the region.

Why it’s important As multinational companies set targets for payroll operating costs, it is important they recognise differences across countries that must be factored into the cost of the payroll process. This presents challenges when trying to set global targets making it regional and/or country targets more realistic.

Strategic implications

Payroll costs differ drastically across regions, which are reflective of the complexity level of the countries included in the region. As we measure payroll costs across the Americas, EMEA and APAC region, we factor in complexity factors that include legislative requirements, currency blocs, geopolitical climate, work council and/or bargaining agreement influences, language requirements, pay frequency and a host of other considerations. Most agree the EMEA region, which includes Europe, the Middle East and Africa is the most complex. The cost per payslip can range anywhere from €4 to more than €30 in a given region.

From a regional perspective, even though there are more complex countries like the United States, Argentina and Brazil in the Americas region, we rate the region at a medium level of complexity.

With countries like Italy, Germany and France, the EMEA region has a high level of complexity and the cost is reflective. Japan and Australia coupled with a few other countries also earn the APAC region a medium level of complexity.

As a payroll leader, when setting cost and FTE targets, complexity must be taken into consideration because the variances are important and can be the difference between a good forecast and budget and a bad one.

Do your payroll processing cost targets reflect regional variances? f they don’t, you may want to consider benchmarking to understand how to create more realistic targets.

 

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

This metric shows how payroll costs vary across regions depending on the complexity level of countries in the region.

Why it’s important As multinational companies set targets for payroll operating costs, it is important they recognise differences across countries that must be factored into the cost of the payroll process. This presents challenges when trying to set global targets making it regional and/or country targets more realistic.

Strategic implications

Payroll costs differ drastically across regions, which are reflective of the complexity level of the countries included in the region. As we measure payroll costs across the Americas, EMEA and APAC region, we factor in complexity factors that include legislative requirements, currency blocs, geopolitical climate, work council and/or bargaining agreement influences, language requirements, pay frequency and a host of other considerations. Most agree the EMEA region, which includes Europe, the Middle East and Africa is the most complex. The cost per payslip can range anywhere from €4 to more than €30 in a given region.

From a regional perspective, even though there are more complex countries like the United States, Argentina and Brazil in the Americas region, we rate the region at a medium level of complexity.

With countries like Italy, Germany and France, the EMEA region has a high level of complexity and the cost is reflective. Japan and Australia coupled with a few other countries also earn the APAC region a medium level of complexity.

As a payroll leader, when setting cost and FTE targets, complexity must be taken into consideration because the variances are important and can be the difference between a good forecast and budget and a bad one.

Do your payroll processing cost targets reflect regional variances? f they don’t, you may want to consider benchmarking to understand how to create more realistic targets.

 

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