A new global payroll processing and delivery year is well underway and workforce management could turn out to be a key factor this year.  The makeup of the workforce has changed significantly due to the pandemic- location is no longer a defining factor in recruitment and retention policies, the work from anywhere concept and hybrid work is firmly embedded in the business world and global organizations are now sourcing labor market talent to fit roles rather than worrying about where the employees will deliver their duties from.

Needless to say, this has significant implications for global payroll and the future of work. An organization’s workforce in a post pandemic world today could be made-up of a range of different employee types: permanent workers, contractors, remote workers and teams, ex-pats and temporary employees. This makes up of employee type is likely dispersed across multiple different locations around the globe. They all need to be paid accurately and on time, but it is sometimes the nature of global payroll to treat these employees differently from a payroll perspective-this is certainly the case with contractors.

In this article, we are going to examine why this can introduce significant headaches to global payroll departments and how workforce management technology will be needed to keep a tight control of all of the various moving parts that make up a modern workforce in a post COVID working environment.

The extended workforce

It was always pretty commonplace for multinational organizations in the business world to operate with an extended workforce-by this we mean specific employee subsets outside of permanent employees, typically contractors and expats or subject matter experts and project managers in a specific region of the world.  This was always viewed as a positive for businesses and hr leaders in terms of cost management and the recruitment of specific skill sets, but at the same time, it usually resulted in complications for the global payroll team who could not treat the extended workforce in the same way due to the nuances and tax related differences from a payroll perspective.

In a post pandemic, remote working environment-the extended workforce has grown to include specific remote workers, remote digital teams, digital nomads and various specialist employees. Organizations find a way to pay them all because they have to-global payroll teams get the job done because that is their nature. Where things become very challenging is in terms of visibility and control: it is very difficult for global payroll teams to group them all together from a data and reporting perspective- payroll calculations often happen in a different hr technology system from the main centralized system if they have one. Local country tax, labor laws and regulation need to be accounted for and fully accounting for these extended workforce employees inside a global payroll system that is not really global in nature is something that is quite difficult to do.

There is a real need today for a global payroll technology platform that can cover all workforce types and include the extended workforce in global payroll cost reporting, insight and analysis.

Managing the vendors paying the workforce

Payroll is always local in nature and that is why there will always be a requirement for local country expertise and local country payroll providers to process payroll calculations and pay a globally dispersed workforce in their country of residence.

The nature of the modern extended workforce is that the actual employees can deliver their duties in any location around the world, but labor laws and local regulations mean they need to be paid in the country in which they are located. So, when extending the workforce due to global expansion and recruitment needs and adding/ onboarding new types of workers to a globally dispersed employee population, there is a follow on need to engage with more local country payroll providers to ensure that they are paid in a legal and compliant manner-this workforce management is the responsibility of the global employer.

You can therefore see that an organization that already engages with a significant number of local country vendors, will face complexity when adding even more vendors to their local country payroll network. They will need to source and vet these vendors, find ways to ensure that the data produced at these vendors finds its way into some form of central platform so they can review and analyze it. And, they will also wish to apply some form of global framework over the entire process-this is about the ability to see what is happening in each payroll country, report on both the globally dispersed extended workforce as well as the performances of the local country payroll vendors and manage everything on a global level.

These needs strengthen the case for workforce management technology in global payroll delivery and processing in 2023. New technologies like a global payroll control platform can allow them to manage all people, processes, technology and vendors in a single location is the kind of workforce management tech that they need. Business leaders need to make management systems a top priority and even view them as something that can help with employee retention initiatives.

Bigger picture reporting needs to include multiple workforce types

In the past, extended workforce members such as contractors and expats were treated differently from the main workforce in terms of payroll and reporting. Now that multiple extended workforce types are likely to be part of a globally dispersed employee base for the foreseeable future, it is no longer practical or even feasible to report on them as separate entities.

These employee types must be included in the country labor cost comparison reporting/metrics and they also must be included in workforce type reporting so that business leaders have a clear view of exactly where all of their employees are located as well as the ability to drill down into the details and find out the exact numbers of contractors in a specific country for example. Only detailed multi-country reporting, consolidated at a global level can provide this kind of valuable business insight into staffing and the work environment.

For this to become a reality, global workforces containing all types of workers need to be managed on a global payroll control platform. This is workforce management on a global level-covering all worker types, all countries and consolidating all data on these worker types from local country payroll providers into a single location. This paves the way for standardized data extraction and comprehensive reporting on both labor costs as well as the makeup of the globally dispersed workforce.

Workforce management technology in the form of a global payroll control platform is needed to overcome the data related challenge faced by global payroll teams. They require a way for all of the data from the disparate systems containing information on the extended workforce (HCM, human resources systems, finance applications, benefits systems and local country payroll providers) to flow into a single location for data extraction and reporting along with workforce management operational control.

This is simply necessary especially when an organization has employees dispersed across 30 countries and engages with multiple local country providers to manage and pay the extended workforce. In the absence of workforce management technology, information is likely to slip through the cracks, and global payroll managers will struggle to answer basic questions about the number and location of various different extended workforce employee types. This would be an unacceptable situation when senior leadership teams require this data and reporting to make strategic decisions about the future direction of a business. Global payroll tends to be an organization’s largest expense so accurate data and reporting on costs and workforce makeup is essential.

For more information about our Global Payroll Control Platform contact us today.