Why do we see so much interest in consolidating global payroll management but so little success? Creating a unified system for managing payroll is high on the list for most global enterprises today, but implementing it remains a significant challenge. For one thing, the elements that enterprises need to evaluate are changing. And on top of that, even the savviest of HR departments run into barriers inside their own organizations.
These top 5 strategies will help pave the way for a successful implementation:
1. Ensure executive alignment: First, determine who owns payroll globally, by region and by key country. HR or Finance is likely to own payroll in some or all countries, but, as back-office activities are consolidated regionally, the global shared services group also may be a candidate. If an owner is not identified by the time a global HR system is deployed, IT or procurement may begin looking for a solution to avoid the need for separate interfaces with each country or location.
2. Cultivate buy in and set up a strong governance structure: Early on, build a coalition of regional and local stakeholders to participate in the creation of a centralized governance model for the internal payroll function. Be sure these stakeholders have accountability for securing approvals and funding. Placing too much emphasis on pushing providers and timelines, and not enough on internal stakeholders, when developing a broader vision of the delivery model may hinder your transition plan when it’s time to engage with in-country teams.
3. Set up fair expectations: Buying managed payroll services for your countries will not eliminate the need for staff with payroll expertise. Assemble a payroll project team and carefully outline what the third-party service provider will be doing and how and when it will do it. Then plan for the activities that remain and transform the roles of local, regional and central staff to facilitate these activities. Provider delivery models will introduce new tools and some degree of process harmony; be careful not to underestimate the transformative opportunity these can bring to retained payroll activities. Consider how a shared services operation might help boost efficiency and reduce payroll costs.
4. Build a strong business case: Fewer than one in ten requests for proposal result in a signed payroll contract. To secure approval and funding for a new payroll delivery model, be sure to show the value it will create. Since multi-country payroll is not an aggregation of single-country payroll sourcing projects, it may be difficult to put dollar amounts on current operations, the size and shift of staff required for a transformation, and the value of reduced risk and central visibility. Pricing dynamics, timing, tax and invoicing for a global system behave differently than a local commodity payroll buy. It will be immensely helpful to have an advisor to help procurement, contracting and financial staff understand the behaviors of this particular market.
5. Remain diligent throughout execution: Companies that contract with payroll partners often find the solution falls apart upon execution. Local due diligence will identify nuances that include specific needs for timekeeping, benefits and HR compliance. Even though these specifics may have once been part of the local payroll function, you may not always want to push them to your new payroll outsourcer. Appropriate resourcing and diligent oversight during your transition to global payroll delivery will pay off in the long run.
Many of the world’s largest and smartest global companies have struggled to implement a cohesive multi-country payroll model. The temptation is to spend more time scrutinizing the payroll partners during the procurement phase than creating internal alignment and preparing for change. Begin your payroll journey with a sound strategy so you can recognize the barriers from the outset and set yourself up for a successful outcome.
ISG helps enterprises find effective and lasting global payroll solutions that work for them. Contact me to discuss further.
About the author
Julie Fernandez has more than 25 years of experience helping enterprises evaluate and assess alternatives for multi-process HR service delivery, including workforce administration, payroll, benefits, compensation, recruiting, technology, learning, and talent management. Julie leads complex global HR assessments and transactions around the world. She is a well-published thought leader in her field.