Global payroll can be time consuming, and complex-it is just the nature of the business. Multinational organizations around the world are expanding at a faster rate than ever before-this is also the nature of the business-companies now have mandates from boards to enter new markets and territories and scale in line with business objectives.
Other companies have simply been hugely successful and managed to carve out significant market share in a short space of time, after which they simply enter a period of rapid growth which enables them to move into new countries and markets.
The result of all of this is a sharp increase in the number of employees who need to be paid on time and accurately every month. There is a corresponding increase in the number of countries where employees are located and also an increase in the number of local country providers who need to be engaged with in order to make these payments happen.
This often leads to an organization deciding to pursue a multi-vendor global payroll strategy-it is relatively commonplace, is often simply a necessity and comes with a number of key advantages. In this article we will look at what is involved in a multi-vendor strategy and also point to the need for a strong technology platform to help manage and future proof it.
“Multi-country payroll demand is being driven by the need to: improve payroll consistency, consolidate solutions globally, improve compliance and access globally consolidated analytic reporting”
Next Generation Payroll Services, Nelson Hall HR Services
Employer control
Global payroll is a major business expense, often it is the single largest expense at any organization. Understandably, global employers want access, visibility and control when it comes to such a large expense.
This means they want to feel in control of their global payroll strategy and process and have hands on access to the local providers who are paying their employees in international locations around the world.
Pursuing a multi-vendor payroll strategy facilitates this level of control- employers do not want to be dictated to by third parties when it comes to which payroll providers they develop business relationships with. They want the freedom and autonomy to choose their own, they want to be able to change to a different provider as in when they need to, and they want the flexibility to be able to bring this provider onto a new platform or system should they choose to focus their resources onto a new digital platform for example.
This strategy offers them visibility and control over their global payroll as well as the flexibility to change things if they feel they are not working in the way they want them to. So, they select a range of different vendors, establish working relationships and use this network of individual local country expert vendors to process payroll for their workforce who may be scattered in different locations around the world.
Other organizations choose to pursue the aggregator model- this is when they turn over payroll responsibility to a third-party aggregator, who in turn outsources the payroll processing to their specific network of local country providers. The issue with this model is that the global employer is then surrendering control of global payroll over to the aggregator, and crucially, they are also restricted to the number of providers within the aggregators network-they sacrifice the ability to choose and work with their own vendors. This is not an attractive proposition for some global employers who have a preference for the autonomy and control offered by a multi-vendor strategy.
The best local expertise for compliance
Global payroll delivered on an individual country basis is nuanced, localized and specific. Global employers often have a strong desire then to seek out and work with the best local expertise and payroll vendors. These are specialist vendors with specialist knowledge of local employment laws, tax and social security, compensation and benefits-basically anything and everything to do with the on time and accurate delivery of payroll in their country.
Pursuing a multi-vendor strategy gives these global employers the opportunity to engage with experienced and specialist local providers. This is becoming increasingly important in one specific area of global payroll management and delivery-compliance.
Compliance is a thorny and complex issue and there is nothing easy about it. Local legislation and regulations around tax and payroll have a tendency to change and therefore there is a strong need to have on the ground, local and specialized knowledge to ensure you remain compliant. Overall responsibility for compliance on a global level will always remain with the global employer and therefore the employer needs to have total confidence that they are being compliant in a specific country. Financial penalties and reputational damage for non-compliance are on the rise, and it is also becoming rapidly clear that the future of work involving a hybrid mix of remote and office-based working is only going to add to the complexities around compliance as local authorities and local governments in specific countries may end up having very different regulation to manage any new hybrid working model
Access and reporting
Global employers want access to the payroll vendors and the global payroll professionals delivering payroll on their behalf. This is about insight, control and transparency-it is also about accountability. Under a multivendor strategy, global employers are looking to establish long term relationships based on trust and quality performance. Often, under the aggregator model, they have limited or no contact at all with the actual people who are processing the payroll on their behalf.
Reporting is another important issue to global employers-demands for nuanced, detail and comprehensive multi country comparisons are on the rise. Employers do not want to be restricted to the technology stack deployed by an aggregator-they much prefer to be able to choose a vendor who may have better capabilities when it comes to detailed multi country reporting.
A strategy to manage it all
Above, we have outlined the valid reasons why numerous multinational organizations choose to pursue a multi-vendor strategy for their global payroll delivery. There are many advantages to this strategy, but it is also very important that they consider how to manage, control and future proof such a strategy.
The reality of a multi-vendor strategy means that the global employer is interacting with several different vendors located across different countries and continents-this will likely also mean disparate technology systems and non-standard data. All of this requires a level of control to ensure full visibility and a future proofed global payroll process.
It is a good idea to engage with a global payroll technology partner who can help the global employer to standardize all of the data in use across there multi-vendor network. This partner can also automate processes and ensure that repeatable and recurring events are automated for faster processing and better operational efficiency.
This partner can group all of the vendors onto a single platform for full visibility and control-this partner can also deliver strong reporting capabilities and ensure that multiple stakeholders within the global employer organization have self-service access to run the kind of detailed and consolidated reporting they need for analysis and strategic decision making.
This partner can ensure that the entire multivendor global payroll delivery strategy is managed in a secure cloud-based environment with strong information security protocols and data protection. When global payroll is managed on a digital platform in the cloud, the global payroll professionals can then benefit from a range of digital tools such as digital calendars, workflow alerts and notifications and digital audit trails for compliance. They will be operating with standardized data which is processed via robotic process automation, and they can run their own reports whenever they need to. This introduces much needed control, digital innovation and overall operational efficiency where multi-country global payroll is both delivered and managed from one single platform.
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