Making the Transition to a Global Payroll Operation
Globalization of the Payroll function is a high priority for approximately 40% of the companies with global operations that participated in recent Peeriosity research on this topic. While the benefits of a global design can be significant, being able to overcome the obstacles to transitioning to this type of structure can be very challenging, especially in a number of countries in Europe and Asia with complex regulatory environments and limited technology alternatives.
A recent Peeriosity PeercastTM featured a large global company, with over 100,000 employees and operations in more than 50 countries across the globe, and they shared their experience in making the transition to a global payroll operation. Prior to its global transition, it had 14 independent payroll teams and over 30 suppliers of payroll services. Some issues they faced included a lack of standards and best practices, limited scalability, a higher cost of ownership, and slower decision-making for global initiatives.
Utilizing an independent transfer team and a predefined project methodology, the effort began with the overall business drivers of cost and user experience being of the highest importance. Their strategy included having zero-to-gross offshored and gross-to-net being performed in a global end-to-end center of excellence that is outsourced, while US Payroll remained in-house. Utilizing two strategic vendors, the “lift and shift” implementation approach was used and the operational foundation was based on Business Process Management (BPM) principles.
There were numerous challenges faced during this global transition, including users and stakeholders adjusting to remote versus onsite payroll support (local language and face-to-face interaction), retaining and developing talent, maintaining an engaged and committed workforce, retaining tribal knowledge, performing remote reporting, and building the right culture and leadership in the receiving location. As always seems to be the case, the silo versus global mentality was difficult to overcome, as well as the almost universal challenge with a project like this of systems integration.
The following are some of the results of the global payroll transition:
- Two Shared Services centers utilized and > 25% headcount optimization
- Kept strategic presence in the regions
- 85% of the population & spending under 4 vendors
- Consolidated and standard operating model
- More negotiation leverage and competitive total cost
- Greater scalability and sustainability
- The more robust career development path
iPollingTM Results Review
The results from a recent Peeriosity poll created using the iPollingTM technology provide a good background regarding Payroll geographic design at large companies across the world. The first question in the poll was concerning what Payroll geographic model was being utilized at companies today. The results are interesting, in that not a single company said they had a truly global Payroll operation. The other four response options, varying from multi-regional to a single country design, were very close in popularity, which clearly shows the wide disparity in geographic design for the Payroll process area.
The second poll question then addressed the current status of creating centers of excellence for the Payroll process. Again, the results were interesting in that no company had yet created a global center of excellence (COE). The regional approach was most popular, with 29% of the companies utilizing that design, and this was closely followed by 24% of the companies that are currently evaluating the global COE design and 23% that have not yet evaluated this approach.
After years of having huge obstacles on the path to a global payroll design, many companies are proving this objective is now within reach. It still remains a significant effort inherent with challenges and risks, but the benefits make this the preferred long-term approach for Payroll geographic design at many organizations.
What is your long-term objective for Payroll geographic design? Is your current structure meeting your needs or is it time to take another look at this important aspect of your Payroll operation?
Who are your peers and how are you collaborating with them?
“PeercastsTM” 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 MailTM, attendees can easily communicate at any time with other attending peers by selecting them from the list of registered attendees.
“iPollingTM” is available exclusively to Peeriosity member company employees, with consultants or vendors prohibited from participating or accessing content. Members have full visibility to all respondents and their comments. Using Peeriosity’s integrated email system, Peer MailTM, members can easily communicate at any time with others who participated in iPollingTM.
Peeriosity members are invited to log into www.peeriosity.com to join the discussion and connect with Peers. Membership is for practitioners only, with no consultants or vendors permitted. To learn more about Peeriosity, click here.