If you’re introducing more streamlined and standardized procedures to your current payroll or adopting global payroll for the first time, the good news is that the end result will almost certainly be worth it. On the downside, you should expect to face some difficulties along the way.
Every company has its own set of problems, but the five most significant obstacles are common to all multinational corporations.
The central idea that underpins both of these challenges is also common: start your global payroll strategy with a detailed review of your current operations and how they work.
The First Challenge Is Dealing With Transition
For countries where payroll is already working fairly well, any attempt to adjust payroll can be frustrating.
Since a complete global payroll transition entails major organizational changes, some resistance is unavoidable.
And it’s not uncommon for in-country payroll staff or business unit leaders to be resistant.
Why is this the case? Since the advent of global payroll has the greatest impact on the position and obligations of the payroll professional.
They will have to ‘unlearn’ existing procedures and follow a new approach.
There are also worries among business unit leaders about the possibility of unwelcome disruption.
The response is…
The effectiveness of any payroll transition, including calculating payroll, depends on open and transparent communication.
Project leaders must explicitly and vocally communicate the project’s advantages to both the company as a whole and individual countries.
A kick-off event that brings the foreign payroll teams together will help boost engagement right away.
In addition, starting with a “simple” country will help the project become a global champion, allowing it to demonstrate its progress to other teams.
Use the project to provide creative learning opportunities for your high-potential foreign team members. If you’re worried about key workers quitting during a project, talk about it now.
If there is a high risk of losing key employees, project incentives or retention benefits may be implemented.
The Second Challenge Is To Strike A Balance Between Local Flexibility And Global Standardization.
An effective global payroll project would strike a fine balance with standardizing processes and preserving local flexibility.
If you over-simplify payroll processing, the in-country personnel will be compelled to work from outside the system to meet local regulations and cultural nuances.
Establishing a form of local accounting systems that cater to each of those country-specific criteria, on the other hand, can be unnecessarily complex and expensive to manage, not to mention prohibitive for longer-term benefits such as global auditability and benchmarking research.
The response is…
Making the best decision about the type of system for calculating payroll that your company needs, requires a thorough understanding of your payroll requirements and scope, both now and in the future.
Off-the-shelf software won’t be able to meet any local requirement in-house for a complex or large-scale project, so you’ll need to integrate with a local system or create a custom interface.
Both of these scenarios necessitate a substantial investment in a custom solution that must be sustained in the future.
With a new global payroll infrastructure, the provider would have already invested in the technology to build the core framework, reducing, if not eliminating, the need for additional reach to cover the local needs.
Today’s innovative global payroll systems, for example, use unified, cloud-based data processing and processes to implement best-practice standardization that can be modified to your particular needs without needing extensive customization, which is costly.
The other choice for calculating payroll is to outsource, which comes in many varieties. As aggregators, some vendors will provide managed payroll services in specific countries while sending some services to local partners. Determine the reach of your project, then find the best solution for your specific needs.