Global Payroll is not a Myth. It s a Journey. Are you ready to take that first step?

Transcription

1 Global Payroll is not a Myth. It s a Journey. Are you ready to take that first step?

2 Presenter Strategic, global HR leader with extensive, high impact service delivery experience covering payroll, benefits, data management, compensation, policies, budgeting and risk management. CAREER HIGHLIGHTS: Global Payroll transformation (22 countries) Three consecutive years ( 07-09) with no medical plan premium increases for US based employees Richard Pikowski HR Consultant Due Diligence acquisition completed encompassing 160 employees situated in 15 locations globally Implemented a Global On-boarding system (Red Carpet) US & India Launched an internet based self service tool including on-line pay stubs, W-2 s, annual enrolment, etc. Established a company-wide multinational employee insurance pooling arrangement

3 Discussion Global Payroll: Background The Marketplace Service Delivery Models How it Works Global Payroll Challenges & Key Steps to a Successful Global Payroll Program Case Study Q&A

4 Global Payroll Influencers ERP & SaaS based technologies & HCMs Increased Regulation War on Talent & Growth of Contingent Labor Financial Crisis: New Normal Do More with Less Globalization Global Payroll Big Data/ Analytics

5 Three Primary Global Payroll Models Inhouse: Using Payroll systems in each country Hybrid: Partially Outsourced Fully Outsourced Local/Regional Payroll Service Provider Centralized Payroll Service Provider

6 In addition to the providers meeting the criteria and highlighted in this Magic Quadrant, other payroll BPO providers offer services that meet needs specific to the issues mentioned above, such as geographic vertical industry, SMB market or multinational/global payroll needs. Examples of other providers not evaluated in this document include: Accenture Aon Hewitt Genpact IBM Intuit Raet SafeGuard World Int l. Tata Consultancy Services (TCS) Wipro Xerox

7 Global Payroll Challenges & Key Steps to a Successful Global Payroll Program

8 How Global Payroll Works

9 Steps in Global Payroll Processing: Outsourcing Model Centralized Payroll Service Provider Local Payslips 4 5 Tax Payments & Filings

10 7 Global Payroll Challenges 7. Consistency of Process & Reporting 1. Payroll Data Import & Export 6. Change Management 2. Payroll Data Accuracy, Integrity & Security 5. Contingent Labor 3. Payroll Funding 4. Global HR Compliance Risks

11 1. Payroll Data Import & Export

12 2. Payroll Data Accuracy, Integrity & Security Data transitions takes place normally from an organization s HQ to all of the countries in scope Re-keying or duplicate data entry increases the chance for human error and therefore potential payroll mistakes. Requires clearly defined steps for gross and net payroll approval. Proper data flow to your General Ledger, Earnings Statements, Eligible earnings, etc. Adherence to SSAE 16 process requirements

13 3. Payroll Funding -Challenges Paying employees on time Different methods in different countries Few if any banks serve all countries in scope Organization may or may not have local entities Overseeing responsibilities of local entities Ability to test transactions Traceability of funds Administrative burdens of coordinating processes

14 3. Payroll Funding Best Practices Bank files most efficient for large employee populations Alternative is foreign exchange companies Managed payroll companies effective in coordination of transactions, via bank files or foreign exchange companies Fund early to ensure timely payments, to employees and tax authorities Consider all options carefully Plan, Plan, Plan

15 4. Global HR Compliance Risks Local HR knowledge 1. Subscribe to ongoing compliance services and train staff to become subject matter experts 2. Rely on organization s local support-tax, compliance, etc. (if available) 3. Outsource

16 5. Contingent Labor Use of global contingent labor is on the rise due to demand/war for talent The 80/20 Rule 80% of EEs in fewest number of countries. The other 20% can be the most complicated to manage Vendor Management Systems (similar to HCMs & finance & accounting systems) equally critical to the global payroll integration system

17 6. Change Management CEO Total workforce costs Metrics to understand regional disparities Data > Information > Decision making Compliance (all areas) CFO People cost data Range of requirements for granularity of that data Compliance (e.g. SOX/SSAE, etc.) CPO/CHRO (Chief Payroll & HR Officers) Headcount/Org Structure based data Employee Experience Compliance CIO for metrics and data Increased take up of ownership by HR (from Finance) Increasing interest in GMP from companies establishing Shared Service Organisations (within HR or Finance) and even owning the Payroll function Global Payroll Functions (or at least ownership by one individual) is increasing Local buy-in across corporate functions and in-country management is critical to the successful implementation of any multinational payroll system

18 7. Consistency of Process & Reporting Big data and how global payroll can benefit Congressional legislation requirements, SARBOX, SSAE 16 (formerly SAS 70) Specific payroll metrics e.g., labor costs by country, employee specific details, etc. Provide financial and payroll metrics to stakeholders Determine best mix of contingent and full time labor Observe payroll cost drivers and trends Manual, labor intensive processes Outsourcing to centralized managed payroll company

19 Can a well constructed global payroll program actually realize cost savings? A Case Study

20 Value Assessment Case Study Background: 33 countries 7000 employees PeopleSoft shop Decentralized Client Objectives: Little visibility into global payroll processing Payroll and HR systems not in synch Non compliance resulting in fines Hard Dollar & Productivity Return on Investment Client Value: Hard Dollar Savings to Client: 16 Months: Cash Flow Positive 44 Months Payback Five Year ROI 26%, $2.193M Productivity Enhancements: Reallocation of 5.5 FTE, which was discounted by 20% for inexact nature of estimating manual workflows Solution: Outsource to Global Managed Payroll Provider, SafeGuard World International Intellicap Value Assessment Process: Pioneers in Value Quantification Three one-hour client interviews 48 hour turnaround time

21 My Journey with 3,600 employees Solution integrated with existing Peoplesoft HCM & financial systems Phase 4 Go Live: Q Phase 3 Go Live: Q Final Phase Go Live: Q Streamlined management of global payrolls aligned across XL s global footprint In-country compliance managed, mitigating employment risks Phase 2 Go Live: Q Phase 1 Go Live: Q Contract Negotiations: Jan May 2011 Solution Demonstration: Nov 2010 RFP Assistance: Oct 2010 First Contact: Sept 2010 Discovery Aug 2011 Signed Agreement: June 2011

22 Embarking on your journey Ensure that you and your team have a clearly defined outcome; what you want to achieve, why and how. Senior Management Sponsorship (CEO, HR, Finance, etc.) Pre communication to critical stakeholders in the project Vendor Review & Contract Negotiations --Do your homework when looking to find the preferred partner of choice (research, references, cost, financials, meet implementation team, hidden expenses, global footprint, maturity, etc.) Involve main players outside of HR internally (Finance, IT, Procurement, Tax, Compliance, Treasury, Audit) during the Discovery & Project Planning phase Align your end-state strategy to company strategy/objectives Ensure that your contract covers all payroll related needs and speaks to holding the preferred vendor to specific performance expectations. Governance-established SLA s to ensure proper controls, delivery, etc. Cost is a factor but need not be the driver for your Global initiative Audit is your friend/partner People relationships (internal and external) are Critical to the success of a large scale project like Global Payroll

23 Questions

24 Thank you! Richard Pikowski Tel. 1 (203)