Successfully Consolidating North American Payroll Operations

At many companies, the Payroll function is carried out in several locations and often on disparate systems.  In numerous cases, this type of structure can be the result of mergers and acquisitions, as well as the desire of the business units to be more autonomous.  Regardless, the benefits of having a consolidated Payroll function ^[1] are significant which is why, in addition to Finance & Accounting processes, it is one of the most frequent processes delivered using a Shared Services ^[2] model. 

One common consolidation effort for companies operating in North America is to merge Canadian and U.S. payroll operations.  Advantages of this type of consolidation effort that was shared on a Peercast^TM by a Peeriosity member company that moved Canadian payroll operations to the U.S. include the following:

• Accelerates process standardization
• Elevates the level of customer service
• Enables transparency via metrics
• Leverages an experienced workforce and existing organizational infrastructure ^[3] to reduce overall headcount
• Increases internal controls

However, our feature company’s transition had a number of challenges that needed to be overcome, that included:

Challenge	Resolution
Retention of Canada Resources	The expedited transition of impacted process areas
Lack of Process Documentation	US Project Team developed documentation based on SME interviews Canada SMEs visited the US to transfer specific job knowledge Included a rigorous process review as part of the transition (accuracy, completeness, validation)
Cultural Differences	Considered impact on project plan and timeline Facilitated open and honest dialog about cultural differences
French Speaking Expertise Needed in U.S.	Hired a French-speaking Employee Services Representative

A recent Peeriosity poll utilizing the iPolling^TM technology provides some interesting information regarding the status of companies in consolidating Canadian payroll services into their U.S. operations and the system used to process Canadian payroll.  Looking at the results of the first poll question, the vast majority (84%) of the companies participating in the research have consolidated Canadian payroll processing to the United States.  The remaining 16% are currently evaluating this option (5%) or have not yet evaluated doing so (11%).  Interestingly, a similar poll was conducted six years ago and only 50% of the companies had completed the transition at that time.

The second poll question then identified the primary Payroll system ^[4] utilized for a processing Canadian payroll.  The responses were fairly evenly distributed among the major ERP systems and the major outsourcing providers, with none standing out as clearly dominant in this space.

Some of the member company comments made as part of this poll include the following:

Consumer Products & Services Member: Canada payroll operations are actually delivered from Costa Rica, which is the same for the U.S.

Real Estate & Construction Member: We have a person that is physically in Canada who knows Canadian payroll.

Manufacturing Member: For our company, we have 2 payroll administrators who can process Canadian payroll from the US office for about 1,000 Canadian employees in 5 provinces.

Where is Canadian payroll processed at your company?  Are there potential economies of scale to centralize payroll processing in North America (either in Canada or in the U.S), or in a country outside of North America?

Who are your peers and how are you collaborating with them?

“Peercasts^TM” are private, professionally facilitated webcasts that feature leading member company experiences on specific topics as a catalyst for broader discussion.  Access is available exclusively to Peeriosity member company employees, with consultants or vendors prohibited from attending or accessing discussion content.  Members can see who is registered to attend in advance, with discussion recordings, supporting polls, and presentation materials online and available whenever convenient for the member.  Using Peeriosity’s integrated email system, Peer Mail^TM, attendees can easily communicate at any time with other attending peers by selecting them from the list of registered attendees. 

 “iPolling^TM” is available exclusively to Peeriosity member company employees, with consultants or vendors prohibited from participating or accessing content. Members have full visibility of all respondents and their comments. Using Peeriosity’s integrated email system, Peer Mail^TM, members can easily communicate at any time with others who participated in iPolling.