Local country payroll provider management in 2022

May 10, 2022 | 5 Mins David Daly

Local country payroll provider management is a key aspect of global payroll delivery at multinational companies around the world today. The reality of international payroll is that there are multiple different countries involved-employees need to be paid accurately, on time and in the correct currencies in these countries every pay period- and this means that there will always be a requirement for local country expertise in the form of payroll management providers to calculate and carry out payroll processing.

There is really no way around this because payroll is essentially local and unique to each country-with local labor laws and tax regulations that need to be adhered to as well as payroll related nuances that are individual to each country, making it difficult to find an effective payroll solution. Global payroll departments at large multinational companies need to seek out and establish relationships with trustworthy and experienced local country payroll providers to help with this issue.

These relationships are understandably, quite crucial to the delivery and management of global payroll. In this article, we will look at what is involved and offer some best practice advice around governance and management of local country providers in 2022.

Choose your own providers

It is important to stay in control of global payroll management and delivery- the multinational company or global employer is ultimately responsible for the manner in which its global employees get paid and it is also responsible for local country and global level payroll data compliance.

This means it is of major importance to ensure that they select a local country payroll provider who can deliver what they need on a consistent basis. Quality, customer support and accuracy are essential, but this is really about building relationships as the ideal scenario is to establish a long-term relationship with a trusted payroll company.

The ability to choose your own providers and maintain control over them is an essential part of smooth and effective global payroll services delivery and management in 2022. A lot of companies find that they are unable to do this due to their choice of payroll service delivery model-many have opted for the aggregator services model, which combines several local country providers into one contract. While it may appear convenient and easier to manage, the reality is that a global employer has no control over the local country provider and has very limited communication with them-this is because the aggregator manages them, and the global employer is then restricted to the number and quality of local country providers within the aggregators network. This can turn out to be an unsatisfactory situation if a local country provider is underperforming and failing to meet requirements–there is no scope to swap out or change this provider and payroll system, meaning the employer is likely settled into a long-term contract with the aggregator.

Our first piece of best practice advice would be not to surrender control of your local country providers, you need flexibility- you must be able to swap out or change an underperforming provider. You also must have the flexibility to maintain any existing relationships that you wish to keep in the event that you move over to a new global payroll provider or platform. Surrendering these relationships that you have put time and effort into building, is not what you want to do.

Assess and review their capabilities

Global payroll delivery and management evolves and changes like any other business critical service delivery. When change happens, you need to know that any third parties connected to the service delivery can adapt, change or keep pace. This is an ongoing process of reviewing quality and control to ensure the suitability of the local country provider.

When assessing their capabilities, it is increasingly important to examine their digital processes, if they have them as well as the technology stacks in place. You want a local country provider that you can integrate easily into your global payroll software system, you want to avoid dealing with legacy software services or payroll providers who operate with very limited technology. This is simply not the future of global payroll, instead the future is digitized global payroll platforms for global employers that can manage running payroll, as well as the providers, on their terms.

You also need to access their data security and information protection capabilities- payroll has not escaped the recent data explosion in the business industry – in fact, there is a stronger need to protect payroll data than other forms of data. Global payroll data contains hugely sensitive employee data and personal information that should be protected in line with the highest industry standards when it comes to data protection and cyber security.

Remember, it is the responsibility of the global employer to ensure local and global level compliance around global payroll data. This means, that should the local country provider fail with data security or be subject to a data breach, it is the global employer who is at fault in the eyes of the law-you can expect significant financial penalties to follow on from any reputational damage and fallout from data security failures. You need to have trust and confidence in both the technology and the internal protocols in place at the local country provider as there can be no room for complacency when it comes to information protection, especially when it relates to payroll data.

Observe how they handle challenges

If you process and manage payroll for a large global workforce at a multinational organization that is growing rapidly, then this level of growth is going to lead to challenges down the road. You need reassurance that your local country provider can keep pace with your growth ambitions. You need to observe how they handle and respond to challenges-this could be a key indicator of how they will cope with any future changes you may ask them to undertake.

As a growing organization, for example, you may have a need to onboard several hundred new employees in a particular country or region. You need to feel confident that your local provider can handle such an increase in volume and that there are systems and processes ready for the administrative burden as well as compliance obligations that may come with this. Local pay and compensation packages differ, and the workplace culture has changed, with remote and hybrid now the new working normal due to the pandemic- this can result in different types of pay and working hours-new pay elements and local country nuances can come into play here too. There is a lot of data and a lot of variables at work here, so you need to feel confident that your local payroll country provider is on top of everything, as it is essentially them who take care of the calculations and the processing of the payments on your behalf.

How they have handled challenges in the past will give you some insight into their working model, the capabilities of their staff, their understanding of local language and customs, and their ability to adapt and change direction under challenging circumstances. If they handle challenges well and deliver successful outcomes, while going the extra mile in their service delivery, then you know you can feel comfortable entering into long term contracts with a local country provider that is capable of delivering to the high standards required for effective multi-country payroll delivery and management in a growing organization.

 

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