The global pandemic has had a major impact on global business and resulted in a lot of debate and analysis - some of which has focused on what might be the best global payroll model to follow and should organizations look to change their current international payroll services providers so that they better meet the needs of the company.
Many multinational companies look to outsource their global payroll services in an effort to manage resources within the organization - feeling that global payroll is a somewhat complex and time-consuming service delivery that may be better suited to outsourcing. This leads to a contract with an outsource provider who agrees to pay the employees of the multinational who are likely spread across different countries and continents.
In theory, the model can work but the reality is somewhat different. Companies are expanding at a faster rate than ever before, and they have been forced to engage with multiple different vendors to ensure they have enough coverage to pay all of their employees in all their locations. The result of this is a complex multivendor landscape populated with a wide range of payroll vendors, disparate payroll systems & technology platforms and high-volume non-standard data flowing into increasingly burdened global payroll and human resources departments.
This has resulted in too much complexity and legacy systems within multinational companies struggling to cope with the broad ranging requirements of multi country global payroll. Some are now looking around to see if there is a better way to manage and deliver global payroll across all of their key countries -in this article, we will examine some key considerations they should be looking at before making a decision around switching payroll providers.
Long-term needs
It goes without saying, that large multinational organizations need visibility and control over their global payroll as well as a technology stack that is fully capable of delivering accurate and on time paychecks to a geo-dispersed global workforce.
But it would simply be shortsighted to stop here and look for functional technology that delivers the bare minimum - many organizations already know that this does not work out in the long-term, so it is best to examine long-term needs when changing payroll providers.
Essentially, this means looking at the strategic goals of your organization - what are your plans, how do you want to grow and where do you want to grow? What will this mean in terms of employee recruitment and in what locations will this recruitment be focused on? Answering these types of questions will help project managers and global payroll leaders to arrive at a global payroll solution that meets their needs both now and in the future.
If you can carefully predict employee numbers, nail down employee locations and get a handle on the kind of reporting and technology stack that will be needed to manage all of this - then you will be armed with very useful information when doing your market research around what kind of global payroll technology best fits your organization. It is very likely that you will require a global payroll technical stack deployed in a digital cloud-based platform that features a range of innovative tools designed to help you manage complex multi country global payroll processing.
A key consideration is asking honestly if your current payroll provider or their competitors out there in the market are capable of delivering what do you need in this area? If not, you may need to go in a different direction, one that is digitally focused and designed specifically for scaling organizations with complex needs.
Payroll software technology stack
It is becoming absolutely crucial to understand the technology capabilities in place at any payroll provider. Global payroll managers should be speaking to senior IT people as well as project managers who can help assess the quality and long-term sustainability of a prospect payroll vendor’s technology stack.
This technology stack will be needed to meet a range of different requirements and will very likely need to be capable of scaling in line with the organization's growth levels. It will likely need to be a cloud deployed technology stack, with digital and integrated connections with HCM, finance and other human resource technology and applications. There is a growing need for smooth and secure data flows between HR, finance and global payroll and a secure technology stack or digital platform needs to sit at the center of these three departments.
Strong and wide-ranging reporting functionality will also need to be a part of this technology stack -organizations have seen a surge in stakeholder reporting requests as a result of the global pandemic. Members of the C-suite leadership team are keen to get a handle on costs and have proven to be particularly interested in multi country cost comparisons that show money is being spent, in what location and where can savings be made. Everybody is now cost conscious as a result of the pandemic, and detailed, comprehensive and consolidated multi country reporting is needed to answer important questions when it comes to how money is being spent in an organization.
Compliance proof
Multi country compliance is another important consideration - while this will always remain the responsibility of the global employer, any payroll provider who can provide assistance with proving international compliance is likely to be looked upon favorably. In the past, global employers have struggled to prove compliance, and many have found that their vendor network were unable to help them with crucial compliance issues.
If a vendor network technology is only focused on payroll processing and delivery, then this will only get you so far. It also needs strong reporting capabilities as well as digital innovation that can help a global employer meet regulatory requirements and prove international compliance.
Digital compliance calendars and transparent audit trails need to form a part of any technology stack so that global employers can get a handle on this delicate yet hugely important obligation- we continue to hear alarming stories in the media about significant fines handed out to organizations who have been a bit too complacent in their approach to international compliance. A technology stack will be needed to avoid financial penalties and the reputational damage associated with compliance breaches- and global employers now need to consider compliance when appraising any international payroll vendor.
Speed and efficiency
The days of global payroll service delivery being reliant on spreadsheet data entry and emails is coming to an end. This is simply not a secure way to move highly sensitive and important global payroll data around the world. It is also likely to be in breach of strict information security and data privacy policies being implemented at organizations everywhere. Payroll data contains sensitive information around tax returns, bank accounts, social security numbers, payroll tax and employee information- this payroll information needs to be managed securely at all times.
The manual processes associated with spreadsheet entry and validation for global payroll data need to be phased out of organizations as a matter of urgency. They need to be replaced with robotic process automation, a machine learning technology which can be introduced to any repeatable and recurring data entry and validation process.
When automation is a part of global payroll data processing, things immediately become faster and more efficient- they also tend to become more accurate as the risk of human error is eliminated from the process. Valuable time is added back into multiple run cycles as global payroll professionals are no longer forced to do time-consuming manual entry - instead, they have time to do much more business-critical work like reporting and analysis.
For this to become a reality, the global employer needs to deliver global payroll via a digital platform that features robotic process automation. If their global payroll vendor of choice does not offer this or it is clear that they are still relying on spreadsheets and manual data entry, then this will leave worrying question marks around data security along with whether or not the provider can deliver the kind of agile and responsive system needed in a modern payroll solution.
And the rest:
The above is a broad strokes outline of some key considerations that global employers should be asking when looking to implement a new payroll vendor into their network. Other questions to consider include:
- How does the vendor keep track of changing legislation and regulation?
- What data security and information protection measures are part of their technology stack?
- What contract flexibility can they offer?
- What countries do they operate in, what is their geographical reach?
- Can they customize or build new pay elements as needed?
- Can they offer an employee facing self-service portal so international employees can access their payroll data?
- Can they offer a live demo of their services?
- What is their customer support function like- format, language and availability?
Many global employers are taking another look at their long-term multi-country payroll needs and questioning if their current payroll providers are best positioned to help them meet their strategic goals. Key questions around reporting functionality, standardized processes and international compliance need to be considered along with what is the correct digital technology stack that will prove sufficient enough to handle current and future global payroll complexity.