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The Growing Prevalence of Global Designs for Expatriate Payroll

Introduction

For global companies, having employees live outside of their native countries for extended periods of time is to be expected.  Navigating the complexities of tax and legal issues regarding being paid and or taxed in either or both the home country and host country adds complexity and cost to the employer, and is another source of concern for valuable employees who are already facing stresses from being in a new location.  Having expatriate processes that are cleanly defined and administered, and easy for the employee to understand, is increasingly important for companies to achieve global synergies where human effort is required.  

iPollingTM Results Review

A recent Peeriosity poll created using the iPollingTM technology evaluates the approaches member companies take to administering the Expatriate Payroll process, with a focus on where the process resides and the degree of standardization achieved.  The results indicate that 72% of member companies either have the process in Shared Services or centralized, with 14% reporting the process is decentralized and the remaining 14% indicating that the process is outsourced.  Here are the details:

Where possible a global design can create efficiencies and reduce unnecessary complexity, and, most importantly for the Expatriate Payroll process, ease the burden on impacted employees.  This consideration is evident in the poll results with 54% reporting that the process is standardized globally and an additional 31% indicating the process is standardized across multiple regions, with no companies reporting that Expatriate Payroll was standardized on a country-by-country basis. 

Achieving global administration for Expatriate Payroll processing is in sharp contrast to the degree that the overall Payroll process is standardized.  As the following chart illustrates, for 39% of member companies a country-by-country model is used, with an additional 19% indicating a design that is multi-country.  Only 10% indicate they are following a global design for the overall Payroll Process. Here are the details:

Closing Summary

For companies to create the greatest impact from having either global operations or providing products or services to many countries around the world, being able to easily shift employees between geographic locations is a critical component.  While local regulations and laws complicate efforts to standardize the overall payroll process, most companies have made the effort to ensure the Expatriate Payroll process is standard either across the entire company or, at a minimum, through as much of the company as possible.

How does your company administer the Expatriate Payroll process?  How easy is it for your employees to travel internationally for long-term assignments without having to worry about payroll issues?

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

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