Global payroll has evolved a lot in recent years in terms of the significance of the role it plays in overall company strategy at multinationals around the world. Of course, it goes without saying that payroll delivery and execution was always mission critical and absolutely vital for employee morale and company reputation.
At the same time, global payroll senior professionals or managers were not a common sight when it came to leadership meetings around developing strategy and vision for the future. Payroll services were considered an essential but ultimately back-office function-it had to work successfully or there would be consequences, but it was never viewed as a potential strategic tool.
That view is now changing, especially at some of the more progressive organizations who are beginning to look at international payroll in a new light. There are a number of reasons for this change in attitude and perception, and in this article, we're going to examine a few of them.
Changing perceptions
Perceptions change when the world changes, and there is no doubt that the global pandemic that began in 2020 and swept across the world, has changed the world, and also changed working culture. Nobody could have predicted the impact and there was no set playbook to follow- the world was suddenly pushed indoors, and remote working became the new normal.
Those lucky enough to be prepared for it or have the level of technology innovation that could support it, adapted reasonably quickly to remote working. Others struggled and found major challenges when delivering business critical services like global payroll management and human resources.
While the full ramifications and consequences of the pandemic are still being played out, some of the changes are clearly permanent. Working culture is one of these changes- remote and hybrid working are here to stay and we are never really going back to the full time nine to five office life of the pre-pandemic world.
There is a changing perception of payroll and the role it plays now in the recruitment strategy. Global companies are looking to move into new countries and create new revenue streams, they want to get there quicker than the competition and the reality is that they need a global payroll strategy that can keep pace with their ambitions. Such a strategy needs to be underpinned with agile, powerful, and innovative payroll technology designed to get people paid in these new countries quickly and accurately, but also to manage the complexities associated with delivering and managing payroll across several new countries.
A new perception has emerged of payroll as being a potential strategic advantage, i.e., companies with payroll professionals who manage a digitized payroll process in a cloud platform are in a stronger position to strategically prepare themselves for growth and scaling. Global payroll now has a seat at the table when it comes to strategic planning around entering new countries, territories, and markets.
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Paying the extended workforce
It's a changed world, so therefore it is also a changed recruitment and retention world- HR and global payroll departments are collaborating more with leadership teams on an executive level to define a recruitment strategy. The makeup of the global workforce is continually shifting and changing as companies get a handle on their recruitment needs into specific regions that they want to do business in.
They need to hire people quickly and pay them, but there is now an extended workforce containing a diverse mix of permanent employees, temporary staff, contractors, and employee of record (EoR) workers. It is not hard to see how things could quickly become complex when attempting to pay and manage all of these different types of workers, spread out across the globe.
There now needs to be a clearly defined strategy in place for hiring, retaining, and paying an extended workforce. Human resource managers are recognizing more and more the need for global payroll expertise to be at the table when it comes to decision making around the extended workforce. Global payroll teams will have the knowledge, and the ability to access local country insight around labor laws and taxation-the kind of crucial information needed to ensure smooth and effective payroll delivery and management.
It is a war for talent out there among global employees who have more options now than they have ever had before when it comes to choosing which employer they wish to work for. Compensation packages are changing all the time in this war for talent, labor laws and remote working legislation and regulation is ever changing and there is a stronger need than ever for global payroll professional’s expertise to be involved in the strategy side of things, so that companies can develop a clear and cohesive plan around recruiting and paying a new kind of global workforce.
Payroll data and strategy
A third reason why global payroll can be viewed as a company strategic asset is data. Global payroll data has a lot to say about the financial health of an organization, but it needs to be extracted and released via smart reporting tools and analytics.
A lot of organizations are facing an ongoing challenge around accessing the kind of payroll data they need for bigger picture insights and a true understanding of the cost of labor. If the leadership teams that these organizations have access to consolidated, comprehensive, and detailed multi-country reporting, then they will have data at their fingertips for strategic decision making. Payslip client, AMCS Group have strong reporting requirements in their financial operations team and really value access to reports that can answer the essential questions they have.
“We now have reporting on fully loaded consolidated payroll costs broken down by departments in a constant currency”
Ronan Conlon – Finance Operations Manager at AMCS Group
Companies also need the data for cost management-this means they require reporting that can show them country cost comparisons and help them identify financially and strategically attractive locations for recruitment. They also need reporting data and predictive analytics that can give them insight into what their labor costs will be at their organization for the next five to ten years. Essentially, they require comprehensive reporting that can tell them what is happening on a micro level with pay elements but also how things are looking on a macro, global level.
When the global payroll department operates on the kind of technology platform with digital tools that can supply leadership teams with easy real time access to this essential global payroll data, then the global payroll team becomes a strategic partner capable of adding genuine value outside of their day-to-day responsibilities of paying a global workforce.
Overall perceptions of the role that global payroll plays in the strategic goals of an organization is changing. Perhaps slowly at some of the more traditional and established companies out there, but we have seen evidence of it happening a lot quicker at some of the more progressive and digitally focused market disruptors and out performers. These out performers are recognizing the potential of global payroll operations and data to significantly help them scale with growth efficiency. There is an opportunity to leverage the operational power of a well-executed payroll system as well as the bigger picture insights of payroll data reporting to move quickly, seize opportunities and stay one step ahead of the competition. Global payroll can easily be viewed as a strategic partner within the organization, it might just be a simple case of altering how you perceive it.