The Hybrid Model Explained
16th February, 4pm GMT
I have found in recent weeks that a lot of people across the industry are coming to the same conclusion when it comes to the long-standing misrepresentation that it is possible to find a “single global payroll services solution”.
More and more companies that I talk to are happy to accept the reality that the complexities of global payroll delivery and management in 2022 means that the existence of such a solution is impossible.
How this myth came into existence and seemed to gain traction is a bit of a mystery. People don’t look for some kind of silver bullet when it comes to a single employment tax law covering every European country-this would be preposterous. But the myth of a single vendor model delivering for all payroll countries has managed to take hold for several years and survive, despite the huge pile of evidence to the contrary.
But myths have always relied more on excited conversation and sensationalist headlines (be it Marketing or Sales) than any form of structured argument supported by data and hard facts.
What is really interesting to me is a new acceptance and understanding of the local nature of payroll delivery. Payroll processing is most definitely local, will always remain local and therefore unique to every country. And if every country is different, with different local labor laws, regulations and compliance requirements, then it stands to reason that payroll delivery in that country will be different too and also be fully reliant on local expertise to make it happen.
The myth surrounding the so-called single vendor solution was focused on the need to find a single payroll services solution to manage and expanding range of local countries on the payroll books. But this single service solution does not, nor has ever existed. This fact was recently recognized by Gartner in their 2022 Market Guide for Multi-Country Payroll Solutions.
Now, the narrative has changed, and companies are realizing that what they really need is a single management solution for payroll operations- a way to manage the multiple local country payroll providers that they will most definitely need in order to pay their local employees on the ground in these local countries.
So, it is not about processing payroll for all local countries from a single location- instead it is about visibility and control-seeing what is happening across all of these countries from a single location, a single digital platform where all of the data from all of the local payroll providers can be viewed in a consolidated way. This is exactly what the Payslip global payroll control platform does and this is the reason why it is also the single management solution that multinational companies around the world need right now to help them meet their payroll needs.
All of what I have outlined above points to a fairly logical conclusion or new normal-companies present in 10 or more countries will follow a hybrid model for global payroll delivery and management.
What might this global payroll solution look like in practice? Well, consider a scenario where you have 40 payroll countries. You might have your largest headcount of employees based in eight of these countries, so you may choose to manage these in-house or choose an option like ADP Globalview. But the new normal means you also require a payroll management solution for the other 32 countries on your books-they are not simply going to manage themselves now are they?
So, you are looking at a hybrid global payroll services model. One for your employee heavy countries and another, separate solution for the countries and jurisdictions where you have less employees who also happen to be spread over different countries and territories. You may choose to manage these on a regional basis -which of course means leveraging local country expertise to process payroll.
The result will be 2 or more models to ensure you have coverage across all of your payroll countries. These models will take care of the payment calculation and processing in those countries, but you still need a solution to manage it all. Otherwise, you will be unable to see what is happening in each of these countries and you won’t be able to get consolidated data which will be required to answer questions from the executive leadership team around how payroll costs differ in each country.
What you need then is a digital platform,a global payroll technology solution that is focused on managing the vendors and the payroll data in a single location. When you have all your local providers sending data to a single platform, you can see what is happening across all of your countries and consolidate all of the multi-country payroll data in a single location. You can then keep all of your local country expertise, but also apply a global framework to the way you manage payroll at the same time. This framework means you can standardize all of the data from all of your countries and global payroll providers at a global level which facilitates detailed and comprehensive multi-country reporting for bigger-picture insights into payroll.
The future of multicountry global payroll delivery is now about finding the best way to manage the multiple local country providers you will end up with as a result of whatever form of hybrid model you choose to pursue. You will end up with a hybrid because the day of the single vendor myth is done and the top analysts in the business now fully agree that there is no single global services solution.
Depending on the size of your organization, you may have two service models to deliver your payroll, or you could have as many as 8. Regardless of what number you land on, you need a management solution that is central and standardized. So now, it is all about the platform you choose to manage everything on.
A smart way to go is to choose a platform that is vendor agnostic like Payslip. This way, you are not tied to any individual vendor, and you can swap out and change if you need to anytime you want. Our platform also facilitates rapid onboarding of new local providers in days instead of weeks and months. The diversity within each country, that cannot be changed, is immediately accommodated. You are working with it instead of against it.
Our platform enables you to apply a global framework to your data, we will standardize it across all of your countries. Now, you have standardized data for all countries flowing into a single location. With data in a standardized format, it can be used to deliver multi-country reporting, displaying consolidated labor costs for your countries.
On the Payslip platform, you can see what is happening across your countries, run the reports that you need for bigger-picture insights and a evaluate the performance of your local country providers. This is a centralized, global management solution in a single location. It is scalable, so you simply add on new countries as you scale and grow.
The day of the single vendor myth has come to an end, but the loss of a myth is no loss at all. This will ultimately help to sharpen the focus towards a system that fully acknowledges the need for local vendors while also providing a framework within which to make them all work in a way that delivers full operational visibility and control to global organizations.
For more information about our Global Payroll Control Platform contact us today.
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16th February, 4pm GMT