Global payroll strategy: Buy in from key decision makers

December 22, 2021 | 5 Mins Fidelma McGuirk

Developing a strategy around the best way to deliver and manage global payroll is becoming more and more important as multinational companies look to scale into new countries and territories. High-growth companies are seeking new business and markets to target and penetrate- they want to act decisively and move quickly in order to act on this mandate for growth efficiency. To do this, they need to know that their core business operations are agile and ready to keep pace with rapid and aggressive expansion plans.

The payroll department is a mission critical function and therefore, a strategy needs to be in place, so it is capable of handling the kind of rapid scaling that many high growth companies are keen to pursue. Global payroll is foundational to executing a growth agenda so if you get the global payroll strategy correct, then you are giving your payroll team the best opportunity to respond effectively to the many new demands and burdens which will likely come its way as a result of any expansion into a new country and the general complexities of scaling-up.

If you get the strategy wrong, the payroll department will not be in a position to support any major transitions and it can even end up being a blocker or chokepoint to progress. After all, if you cannot pay new employees in a new country then you cannot hire and offer attractive compensation packages, and things simply stagnate. In this article, we will examine which key decision makers need to buy in to any plans when it comes to establishing a global payroll strategy that is fit for purpose and ready to support the strategic objectives of a multinational company.

Global Payroll Manager

This person should have the largest say and the greatest level of influence as he or she will ultimately be responsible for processing global payroll and meeting all deliverables. This is the person who will outline what is needed for their department to operate at its best. The things they are likely to want to have a discussion around include:

    • the current status of global payroll delivery
    • the key business drivers and targets in the organization
    • the payroll model that best suits these business drivers
    • available budget and financing to acquire and implement this payroll model
    • payroll professional hiring needs
    • investment in platform and technology support

Today v The Future

The global payroll manager will likely begin by assessing how things currently stand and look at employee headcount and geo-location spread, check for long-tail countries and also examine the current payroll vendors and delivery model structure in place.

They will define how the team processes global payroll right now, what challenges they are facing, what challenges are coming down the line in the future along with what resources they require to meet them and deliver on their many obligations. Future challenges will include:

    • Explosion in compensation packages
    • Expansion of Labor and tax laws
    • hybrid working model and ‘work from anywhere’ concept
    • Upsurge in specialized roles and scarce labor pools

They will ask if central control is the best way forward or if the way the company is structured means that a decentralized model and payroll system is a more suitable fit. The company may currently have a shared services hub for the delivery of business-critical functions, and this is something that will be a strong influence on global payroll activity and decision making.

They will also make a list of the key stakeholders they need to engage with for discussions around an overall global payroll strategy. The needs of other key departments in the multinational will play a role in how global payroll is structured. The global payroll manager first needs to understand fully what the company wants to achieve and where it is going in order to map out a process for a payroll function to support. This means getting clear on likely salaries to secure talent, likely location hubs for employees and what local vendors or payroll systems exist in these locations to help.

They may look to define their needs in terms of visibility and control i.e. which global payroll process best helps them to see what is happening across multiple payroll teams in several different countries. They will also want a payroll system that is capable of delivering high-level consolidated reporting which assists with this visibility. Most important of all, they will be looking at how to implement technology that can introduce efficiencies. Smart tech that can automate repeatable tasks and standardize data that is currently arriving into their department in multiple formats from a variety of sources in their payroll provider network.

CFO and Finance Team

Finance operations stakeholders will be able to outline what the key business drivers are for the multinational i.e. where does the company want to be in three years-time and in what locations are business critical support functions needed to support this scalability. The finance team may also have defined and developed the corporate structure of the multinational and the global payroll team will then have to operate within these parameters and align their operations to suit the structure.

The modern CFO needs a strong awareness of the capabilities and skill sets at play in any department related to the financial well-being and stability of the company. The CFO will be well aware that the biggest cost for any multinational is usually payroll and will be keen to access information around cost analysis and predictive analytics for future costs at all times.

They will therefore have a keen interest in the global payroll strategy that can produce this data quickly and efficiently. They will also be interested in what the global payroll manager has to say about operational efficiency and any technology support that can improve processes, save time, and reduce costs.

Any good CFO will always be thinking about present day financial stability and also the ability of the company in general to withstand future business turbulence. A robust strategy for payroll will help this department remain strong during times of economic difficulty or unexpected problems. They know that a global payroll strategy will affect the stability of an organization for the next decade, and they will want to be decision makers in any discussions around what global payroll model is best and what appropriate level of investment should be made.

HR Manager

HR buy-in will be needed from an early stage as the recruitment strategy will influence the process. Human resources will have a process around recruitment, talent management and compensation packages and it will be designed to support the overall business objective when it comes to scaling into new regions. They will be in a position to answer questions around which countries have the available local level talent to meet skill sets requirements and if remote workers or ex-pats can fill crucial team member positions. This will give global payroll a good indication as to which countries will form a part of their country-level payrolls.

Global payroll processing and the business insight it can deliver in the form of valuable data now plays a role in the wider ecosystem within any multinational company. Payroll departments today need to be aligned with the objectives of other departments and their IT infrastructure needs to be able to connect to a variety of HCM, HR and ERP systems. These systems need to be able to quickly extract valuable business intelligence arising from key global payroll data- this data gives a clear picture of the costs of payroll as well as having the ability to predict future costs.

This data can also give human resources managers valuable information around spending costs related to individual employees or clusters of employees. This data will also contain fully up-to-date information on employee payroll elements such as tax and benefits.

The HR manager will be interested in any global payroll strategy that delivers actionable insight and business intelligence to them. They will want to sanction and approve a global payroll strategy that works for them as well. If they come to view global payroll as a partner department rather than a separate business entity, then they will view the strategy as important to their own department's deliverables and objectives.

Compliance Manager

Global payroll teams have obligations when it comes to meeting compliance, legislation, and regulation directives. This obligation is legal and mandatory, and the person in charge of overall compliance at a multinational will be keeping a keen eye on the ability of the global payroll team to meet any compliance obligations which are specific to payroll.

The compliance manager may be aware that several other priorities are demanding attention in payroll departments- they will be keen to ensure that compliance does not slip down the list in terms of what is important. Compliance failures at multinational companies today can result in significant financial penalties as well as bad press.

Any compliance manager will want a global payroll strategy that accounts for and has a plan when it comes to delivering compliance measures. A global payroll model that can deliver visibility, control and accountability will be of value here. The compliance manager will be interested to hear about how the global payroll manager intends to ensure that any new payroll strategy is compliant right from the start. The compliance manager will be aware of company objectives from leadership teams and will be looking to implement structures where compliance is met while meeting these objectives. A compliance manager will also be interested in technology that can produce detailed reporting which quickly proves compliance obligations are being met and also flag any potential location risks.

Procurement manager

It is important to remember to engage early with the procurement team. Multinational procurement processes may be in place for a long time by the time people get around to working on a global payroll model project. Global payroll needs to make sure they are fully aware of these processes as any plans they have for developing new business relationships or outsourcing requirements will need to fall in line with pre-existing procurement stipulations.

The procurement department will manage suppliers and develop strategies which meet financial management and other operational requirements of the company. They may have minimum requirements that external payroll vendors or service providers need to meet in order to qualify. They will have rules around who can sign contracts in what countries.

Payslip

Payslip has always recognized the importance of strategy when it comes to a global payroll solution. The Payslip global payroll control platform can help implement a payroll strategy as it improves day-to-day processes as well as equipping teams with the digital tools they need to meet future challenges

Businesses are better positioned to scale into new territories if they make Payslip technology a key driver of growth efficiency in their payroll eco-system. Our technology helps to automate repeat processes, standardize data, and produce consolidated reporting. Multi-country payroll and international compliance requirements can be managed from a single platform.

This helps global companies scale quicker and more efficiently as they have end-to-end control and full visibility over their global payroll process. The global consolidated reporting functionality in the Payslip platform can provide real-time analysis on the progress they are making in new territories while the cloud-based environment facilitates the secure transfer of data between global payroll and the wider IT ecosystem of the organization.

The fact that buy in for a global payroll strategy requires input and approval from such a diverse range of stakeholders is proof of the complex nature of modern multinationals. Scaling into new territory means a lot of departments need to align their goals, develop common strategies and work together in the decision-making process to deliver results.

A global payroll strategy needs to work for the wider business as well as delivering payroll to employees. Key stakeholders will want a say in what global payroll operations strategy will look like for the next 10 years and they will be interested in learning about any technology that can strengthen and de-risk the overall process.

For information on the Payslip Platform contact us today.

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