“28% manage payroll in house”
Is this sustainable if you have growth ambitions?

November 11, 2021 | David Daly 5 Mins read

This is our third article to discuss a significant result from our recent global payroll survey. We took the views of hundreds of global payroll professionals across a range of industries to find out more about their pressing concerns when it comes to global payroll delivery and management.

The headlines statistic above is one of the results that stood out to us. We found it genuinely surprising that’s such a significant number still believe it is possible to manage global payroll in house when they are also operating in a high growth company that has huge scaling ambitions.

Essentially, they know and understand that they need to recruit and pay new employees in several new countries very quickly, but still seem to believe that it is possible to get this done using an in-house system.

In this article, we will outline the reasons why this is very likely an unsustainable approach and that companies with genuine growth ambitions can only achieve the level of growth efficiency they desire when they digitize their global payroll operations and deliver multi country global payroll via a global payroll control platform.

In-house payroll; desirable but not practical

Companies choose to manage their global payroll in-house for very understandable reasons-most of these are to do with cost-keeping things in-house is simply a cost-effective alternative to outsourcing to a third-party provider. Some companies or individuals also like to assert a certain level of control over their global payroll operations add feel that the best way to do this is to manage everything in a single location, usually in a head office building.

The decision to do this can work out well in theory but an in-house model usually only works for either a very small organization or a company that is fortunate enough to have all of its workforce located relatively close by. For those organizations with a geo-dispersed global workforce as well as a workforce made up of diverse groups of employees such as contingency workers, gig economy workers, freelancers and contractors-things can understandably become quite complicated and difficult to manage. In these situations, an in-house solution is highly unlikely to work in the long term.

Growth efficiency ambitions

There is also the question of the company’s broader ambitions in terms of growth efficiency and expanding into new regions and territories to take advantage of opportunities and create new revenue streams. To do something like this, you need a global payroll operations model and technology platform that is capable of keeping pace with your ambitions. You need a process and technology platform that is flexible by nature and scalable by design so that when decisions are made at leadership level to move into new territories, the global payroll technology platform can be scaled and there is no need to hire a lot more payroll professionals to handle the additional workloads.

So, it is clear then that large organizations with thousands of employees spread across the globe cannot operate with an unsustainable in-house model. They require a cloud deployed global payroll control platform to meet their needs right now while also being in a position to grow on their own terms.

Also, high growth organizations who are experiencing periods of hyper growth or rapid expansion can only do so with a global payroll technology stack that is flexible enough to move with speed. High growth organizations are very common these days-anybody who is not high growth certainly has ambitions to become high growth as quickly as possible. It is very important that these organizations with big ambitions do not overlook their global payroll technology stack. Many high growth companies who have done so, have become a cautionary tale of how not to expand their global workforce without making payroll technology foundational to the very growth they desire.

Avoiding the choke point

Chokepoints or barriers to growth efficiency are common ailments at many high growth organizations who move too fast without thinking about payroll. A choke point occurs when the foundational technology to support growth in an operational capacity has not been put in place.

These high growth companies want to scale at speed and take advantage of revenue generating opportunities but find themselves unable to swiftly pay the new employees they are hiring in these new territories. Without these employees, they cannot carve out market share, without payroll technology they cannot easily pay their employees-the result is reputational damage and stifled growth.

Companies end up doing the opposite of what they dream of, they stagnate and find themselves stuck with legacy technology and non-standardized payroll operation processes across the multiple countries they have employees in. They are also in a very unsatisfactory situation of not having in place, processes which can be duplicated rapidly on a global payroll technology platform- they end up having to piece it together bit by bit in any new country and it takes months and months to get where they want to be-in the meantime, their competition may have swooped in and took their market share.

The aggregator service model limitations

Sometimes, in an attempt to grow with greater speed, multinational organizations recognize that they are unable to make it happen via an in-house model and instead turn towards the aggregator service models. These models tend to have several different local country payroll providers in their network, enabling them to say to global employers that they can take care of all of their payroll needs across a range of countries.

But, such is the level of globalization and rapid growth today, that no single aggregator can cover all of the countries that a multinational company is either in or wants to be in. There is also a visibility gap when working with local payroll providers who are contracted to an aggregator-the global employer has very little visibility or control over how these vendors operate (because the relationship is managed exclusively by the aggregator) and this tends to result in limited reporting and difficulty achieving full control over their compliance obligations.

Overall, it has proven to be an unsatisfactory situation for global employers who want visibility and control over their global payroll process across all of their countries. They also want to choose their own local country providers, swap out or change them if they are underperforming.

What they want most is a scalable global payroll process that enables them to rapidly on-board new country providers in days instead of weeks and months-this way they can set up payroll processes for new employees quickly and hit the ground running in new territories to take advantage of opportunities. This way they are growth ready or growth deficient, everything is in place for them to take advantage of opportunities and scale on their own terms. This cannot be achieved with technology that was only designed to process in house payroll.

A sustainable, future proof approach with Payslip

A technology solution in the form of a global payroll control platform is needed for this to happen and increasingly these days, global employers are looking for a technology driven solution that helps them put in place a repeatable process that can be scaled quickly, ensuring they move with speed and agility into the new countries they want to be in.

This is why high growth, digitally focused organizations are approaching Payslip-they want to run their global payroll operations on a digital cloud platform, empower their payroll professionals with digital tools and have standardized processes in place that can be duplicated quickly when they need to move into new countries.

The Payslip platform helps them do this in a fast and agile way. We work quickly with clients to standardize their data and automate any repeatable and recurring processes. We are provider neutral, so global employers can bring with them any local country vendors they have built positive working relationships with.

We take them on a journey away from legacy technology and non-standard processes, to centrally managed, standardized global payroll that facilitates rapid scaling. An example of this would be on boarding a new local payroll provider in a new country in just a few days-this is something that is impossible when using an inhouse payroll system or even an aggregator service model, but it is a reality on the Payslip global payroll control platform.

With Payslip, multinational companies go on a journey to growth efficiency and reach a point where they’re always growth ready. This is where they want to be, always ready to move quickly into new countries and seize opportunities, safe in the knowledge that they have a scalable and sustainable multicounty global payroll process that can keep pace with their ambitions.

 

For information on the Payslip Platform contact us today.

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Using Payslip, we can manage all our payrolls across nine in-country vendors on one platform. When the global Covid-19 pandemic arose, it was not an issue from a payroll perspective, and critically getting everyone paid. The Payslip platform enabled continuity for our international payroll service including the fast and seamless implementation of the Payslip Employment Self Service during this time.

Colin Smith

Payroll Manager, LogMeIn

Payslip as a technology platform has added a missing piece in our payroll set-up. As an international company with offices in 16 countries, it’s important to us that every employee at GetYourGuide has the same great experience when accessing their pay data.

At the same time, we work well with smaller local payroll providers, supporting us with direct local expertise in their countries. We were able to combine those two elements by placing the Payslip platform in the middle, to simplify reporting and communication with local providers, and to have one simple employee-facing solution across all locations.

Julian Fichter

Head of HR, GetYourGuide

With business and employee growth rates of above 50%, we rely on our vendors to deliver on time, every time. Payslip’s workflow automation, enables Phorest to manage our payroll provider process – data driven, real time and transparent. Payslip saves us time so we can focus on our business growth.

Ana Kelly

International Payroll Manager, Phorest

Payslip positions your team for success, and allows you to onboard hundreds of people when you need them very quickly and efficiently, in the same way for each country. The uniformed approach empowered our payroll teams to keep pace with our business.

Payslip also made our payroll process entirely transparent, which is invaluable to our payroll teams as we continue to grow and scale at such a rapid pace.

Travis Saville

HR Systems Lead, Wave