Introduction
Payroll is a process with high visibility where the highest quality and accuracy are required for each and every employee payment. Payroll also has significant complexity with an ever-changing landscape of local laws and regulations that make standardization and consistency difficult. For companies who have outsourced payroll processing [1], the history for many has been to work with multiple suppliers with expertise in specific countries or regions, rather than select a single vendor to process payroll for all locations globally. That concern appears to be less of an issue today for large global companies, with examples of companies who have successfully implemented global payroll outsourcing [2] with ADP.
Company Experience
A recent Peeriosity PeercastTM featured a large global company with over $15B in annual revenue [3]discussing their experience with consolidating to a single payroll vendor as one component of a large-scale HR transformation project. Other components of the HR transformation included implementing Workday as an enabling platform, implementing an employee portal to provide access to tools and information, designing and implementing an HR Global Service Delivery model to streamline, standardize, and simplify processes, and finally an overall redesign of their pay and performance review processes.
Before the transition payroll was performed using a decentralized approach with payroll processed locally; often on a country-by-country basis, with very little process standardization. The new process resides in one centralized location in India with a greater level of standardization, using ADP as the payroll processing vendor. The transition took place with one or two counties going live at the global location per month, using a lift-and-shift approach with a month of work-shadowing prior to the actual move of the work to the global center.
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 examined the Payroll geographic model being used at companies today. The results were evenly split with half using either a global or a multi-region model and the remaining half using a multi-country or a single country model.
The second poll question asked about the most significant challenges Peeriosity member companies face regarding moving to a global model. For 21% the question wasn’t applicable, since they weren’t a global company. 23% of members cited difficulty in adhering to global standards [4] as the greatest challenge, and 22% selected differing legal and regulatory requirements for payroll across the globe as the most significant. The lack of global systems solutions to fit all of our needs was most significant for 17% of member companies. Here are the details:
A few of the comments from members include:
- Payroll is currently run individually within each country. The business case for creating a global payroll operation hasn’t been prioritized.
- Our biggest challenge was insourcing the operation while keeping our global footprint. The nature of the global operations is more than 10 years old, keeping it globally standard as we bring operations in-house is the larger barrier still.
- We currently have a regional-based payroll and are moving towards global.
- We are in the process of reviewing our global footprint.
Closing Summary
Pursuing a global design for Payroll has many challenges, including difficulty in defining global standards and the number of legal and regulatory requirements for Payroll across the globe. A global design can yield many benefits including lower overall costs and reduced complexity. An increasing number of Peeriosity member companies are implementing global Payroll, and for those who have outsourced Payroll and want to limit the number of vendors, ADP is the vendor likely to be selected.
What is your long-term objective for Payroll geographic design? What about delivery options, are you insourcing or outsourcing your Payroll process?
Who are your peers and how are you collaborating with them?
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“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 of 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 [5] 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 [6].