Building a Global Payroll Model Charlotte N. Hodges, CPP Virginia Statewide Payroll Conference October 9-10, 2014
Agenda Challenges Strategic Factors Global Payroll Strategy Global Payroll Model Key Partnerships Expatriate Pay Delivery Resources Wrap-Up & Questions
Challenges Diverse Global Payroll Delivery Varying levels of quality and controls Skilled payroll resources are limited in smaller countries Large range of tools supporting Payroll and HR processes often not integrated Limited or no growth potential Multiple data input sources increasing risk of errors and compliance issues
Challenges Diverse Global Payroll Delivery Global visibility of payroll controls Achieving economy of scale Total cost of delivering payroll unknown
Strategic Factors Global Payroll Profile Single Country vs Multi-Country Number of Countries Number of Employees Per Country Localized Employees vs Temporary International Assignees Payroll Schedules by Country Compensation Collection Method / Schedule Centralized Processes
Strategic Factors Define the Global Payroll Operating Model What does this mean to your organization What is Payroll? Consistent global payroll definition Determine Required Capabilities Future payroll operating model Create Roadmap Document the vision and build the roadmap Identify Quick Wins Determine objectives that can undertaken quickly and easily Develop Business Case Reasoning for initiating the project and articulating the benefits
Strategic Factors Align to Overall Business Strategy Corporate IT HR Provide evidence and justification for continuing with the investment proposition Does it make economic sense? Will the organization obtain economies of scale? Will it be suitable in terms of the corporate environment and capabilities? Align with IT infrastructure and support structure Support HR transformation strategy Finance Support ongoing efforts to provide financial analysis and insight to support corporate decision making, while also meeting legal and regulatory requirements
Strategic Factors Service Delivery Options Outsourcing Options Aggregator Model Single Vendor sub-contracted payroll services through the prime contract Could be considered within a global or regional hybrid model for smaller population countries Regional / Cluster Vendor Approach aligned to existing business structure
Strategic Factors Service Delivery Options Internal Approach Utilize organization s ERP payroll module Provides a standard platform and integration across HR and Finance Leverage regional service centers Take advantage of internal capabilities
Global Payroll Strategy What is a Global Payroll Strategy An internal structure that supports paying employees globally Why implement a Global Payroll Strategy Minimize risk, streamline internal processes and support the organization into the future Align global payroll objectives and strategies with company initiatives Support company s strategic global vision
Global Payroll Strategy Getting Started Outline desired future-state payroll operating model Required Capabilities Roles and Responsibilities Core Processes Compliance Factors Technology Requirements Financial Metrics Global Standard or Hybrid Model
Global Payroll Strategy Understand Current Position Create list of current payroll processes Further develop incomplete documentation and create any missing documentation Update or create process mapping documents Visual representation of entire process from start to finish Research Best Practices Look at other companies of similar size, market sector, footprint, demographics Outline Next Steps In alignment with the overall organizational objectives
Global Payroll Strategy Develop Business Case & Roadmap Provides understanding of current state operating model Captures the reasoning for initiating the project Documents the vision and approach Outlines the benefits and risks
Global Payroll Strategy Develop Business Case & Roadmap Defines a delivery framework that provides a prototype payroll strategy in each region Details assumptions Includes a gap/needs analysis Concludes with recommendations and next steps There s no shortage of remarkable ideas, what s missing is the will to execute them. Seth Godin
Global Payroll Model Considerations Corporate Culture Shared values, attitudes, standards, and beliefs that characterize members of an organization and define its nature Language & Communication Some limited accommodations may be needed Written communications may require translation
Global Payroll Model Considerations Time Zones Keep a matrix of time differences Take time differences into consideration when scheduling conference calls be flexible
Global Payroll Model Payroll Best Practices Central Governance Standards Policies and practices by which an organization is directed and managed at the executive level, with particular focus on the executive board's accountabilities to shareholders and other stakeholders Risk Management and Mitigation Minimize risk within the department through mitigation measures as outlined in documented controls
Global Payroll Model Payroll Best Practices Process Standardization Provides a means to ensure consistency and accuracy and enforces checks and balances and internal controls Process Ownership - Global - Regional - Country - Local Global Standards - Guidelines - Standards - Policies - Rules Self Assessment - Standards - Guidelines Audit Readiness - Process - Segregation of Duties - Reporting - Risk Management - Accounting - Transaction Execution
Global Payroll Model Consistent Governance Model Global Approach Works for varying markets and local requirements Standardization driven by a single source of data Technology Platforms and Processes Leverage technology to reduce or eliminate manual intervention Develop global process blueprints - define standard methodologies and approaches A means to streamline and reduce overhead costs Scalability Ability to act quickly to changing business landscape Mergers & acquisitions Cost Containment
Global Payroll Model Dependencies Payroll as an end-to-end process has a foot in both HR and Finance (Corporate Accounting) Technology Platform Integrated solution versus interface to separate in-house payroll solution or outsourced payroll solution Time and Labor Staffing Resources Skilled payroll resources limited in small countries Operate within global payroll model Operate within framework of distributed service model Identify Key Partnerships Build Strategic Alliances
Global Payroll Key Partnerships Accounts Payable Payroll System IT Support Finance Treasury Global Mobility Banks HR Business Analysts 3rd-Party Vendors HR Benefits Gov't Agencies HR Business Partners Payroll Taxing Authorities
Global Payroll Key Partnerships Vendor Consolidation Make certain that products and services that are purchased meet certain quality and performance standards Reduces the company s efforts to manage vendor relationships Control Costs costs become a known quantity by dealing with the same pool of vendors on a repeat basis Vendors become more than just simple suppliers or service providers they become partners and have a vested interest In making sure the company succeeds
Expatriate Pay Delivery Shadow Payroll Employee receives 100% of her/his pay in the home country Payroll is shadowed or mirrored in the host country for the purpose of calculating, remitting, and reporting host country taxes Split Payroll An arrangement under which funds are paid to an employee from both home- and host-country payrolls Split Delivery Payroll An arrangement under which funds are delivered to the assignee in the host country, but not necessarily from the host country payroll
Expatriate Pay Delivery
Resources Where can you find information? American Payroll Association Webinars Guide to Global Payroll Management (ebook) Global Payroll Management Certificate Program Annual Congress Local APA Chapter Affiliation Strategic Payroll Leadership Task Force (SPLTF) Global Issues Sub-Committee Subscription Services Bloomberg BNA International Payroll Decision Support Network Custom Research, Country Primers, Strategic White Papers, News & Updates, Vertical Search, International Payroll Webinars
Questions Charlotte N. Hodges, CPP Virginia Statewide Payroll Conference October 9-10, 2014