May 2023


Transitioning From Domestic Payroll to Global Payroll—A Personal History

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By John Lestock, CPP
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There are significant differences between global payroll and domestic (U.S.) payroll. In fact, global payroll professionals recognize that the two are worlds apart. For this reason, many consider a career in global payroll as both exciting and daunting. A global payroll career is exciting because of the wonderful opportunities to learn about payroll in different countries, and the chance to interact with fellow employees and other professionals located all over the world. However, global payroll is also daunting and can be fraught with the challenges of dealing with unfamiliar tax and labor laws, different languages, different customs, and different business models—in-house payroll versus different types of outsourcing—all while striving to process payroll accurately and timely. Challenges aside, a career in global payroll can be quite rewarding, and it will most assuredly never be boring. 

 

Getting Started in Global Payroll

How does a payroll professional get started in global payroll? How do you transition from domestic payroll to global payroll? Previous payroll experience combined with my Certified Payroll Professional (CPP) certification were helpful credentials when I applied for my current global payroll job. During the interview, I explained to the hiring manager that I did not have specific global payroll experience. In fact, I did not have experience processing payroll in other countries other than a bit of experience with Canadian payroll. He explained that for this role, experience in global payroll was not entirely necessary. Sure, having that experience was definitely advantageous, however, other payroll-related work experience was more valuable and applicable for the position. 

Experience with the full payroll processing cycle was valuable. In addition, having experience with timekeeping systems, calculating gross pay from different earnings components (i.e., hourly rates, salaries, bonuses, allowances, taxable benefits, equity compensation, etc.), understanding payroll taxes, and interacting with a third-party service provider in instances where payroll is outsourced was also valuable. Finally, having my CPP certification demonstrated that I had formal training and a solid foundational knowledge in U.S. payroll. Even though I would not be working with U.S. payroll in the new job, the CPP certification demonstrated that I was willing to continue my professional development and formal training. The interview went well, and I got the job. I was excited for this new career opportunity, but I had no idea what to expect in the new role.

 

Discovering the Differences

One of the first things I discovered in my new global payroll position was the loss of flexibility and control as compared with U.S. payroll. I was more dependent on our service provider because I was unfamiliar with payroll in the various countries our company operated in. Every company administers global payroll differently, depending on the size of the company, the number of countries involved, and the company strategy. 

Global payroll could be processed in-house by local payroll professionals in each country, or global payroll could be outsourced, where a payroll provider in each country processes that specific country’s payroll. Another outsourcing model would use either an aggregator or a business process outsourcing (BPO) provider that functions as a “one-stop-shopping” model, where you only interact with that service provider; you would not have direct contact with the in-country providers (ICPs). 

Some companies have a blend of all these models, which include in-house, local payroll outsourcing, a BPO or aggregator for certain countries, etc. The business model a particular company follows will have a direct impact on your global payroll function.

As a result, you’ll probably need to consider the following:

  • Can you ask the local payroll provider questions?
  • Do you share information directly with the local provider, or do you have to work through your client contact at the BPO or aggregator who sends questions and information to the local provider on your behalf?
  • If you must communicate with the local provider via your client contact, how long does it take to get your questions answered?

Depending on time zone differences, and the complexity of your questions, it could take a few business days. This could be challenging for you when dealing with employee questions if you need to work with your service provider to get the employee’s questions answered or issues resolved.

Although we have pay specifications and pay practices established with each of our countries, I still depend on our service provider to assist with compliance questions and to help us stay current with local requirements. However, I will seek out country-specific knowledge to better understand the unique aspects of payroll administration in a particular country. This knowledge includes attending educational sessions provided by PayrollOrg (formerly APA and GPMI—now united), obtaining compliance updates from our service provider as well as other providers (via internet searches), and asking questions to other payroll professionals in my network. 

When working in global payroll, it is vital to be resourceful. Utilizing professional networks as well as independent research can provide valuable insight into the unique requirements of a specific country’s payroll. This helps me with my interactions with our service provider and allows me to ask more knowledgeable questions.

In making the transition from U.S. payroll to another country’s payroll, it is important to “unlearn” what I previously learned with U.S. payroll. This means taking more time to understand those aspects of a country’s payroll that are vastly different from U.S. payroll. For example, consider the following:

  • Possibly more stringent laws regarding vacation and other paid leave
  • Laws governing unpaid leave (where the employee applies for social benefits with the government during the period of leave)
  • Registration rules with the social security system for new hires
  • Specific notice and payment requirements for certain employee terminations such as payment of a retirement allowance or pay in lieu of notice or severance (as well as the timing of such payments)
  • Unique rules regarding extra vacation pay (i.e., double vacation pay in Belgium or recuperation pay in Israel)

In addition to local legislation, the company may have established pay practices unique to a particular country where certain types of payments or benefits are customarily provided or expected by local employees. For example, the company may provide a 13th month salary payment near the end of the year. Also, most countries pay employees monthly. Fewer payroll runs during the year—monthly versus biweekly—could be challenging when making payroll corrections in a subsequent payment cycle. 

 

Don’t Forget People Skills

Soft skills—particularly communication skills—in addition to technical knowledge and experience are also critically important. I primarily interact with our service provider via email, and I interact with our employees via email and instant messenger. I strive to communicate in my emails in short, simple sentences, and I avoid using slang and contractions. This way, the emails I send to someone who does not primarily speak English can be translated more easily into the recipient’s local language. This helps ensure my communication does not “get lost in translation.” Also, I have more success with my written communications if I use bullet points instead of writing in long paragraphs. Again, this helps with translation, which results in clearer communication overall.

A career in global payroll can be very rewarding. Making the transition from domestic payroll to global payroll can be challenging, but it is worth it. The best advice I can offer is to be patient with yourself. No one person is an expert in all aspects of payroll in every country—it is simply not possible. Give yourself time to learn and master the job. Most importantly, embrace the experience. Working in global payroll provides a unique opportunity to work with professionals all over the world. Very few jobs provide the opportunity to interact with employees in Europe and the Middle East in the morning and Asia in the evening—all on the same day. 

*Editor’s NoteSpend some quality time listening to a conversation on this very topic between this global payroll expert and another during PayrollOrg’s April and May podcasts, Part 1 is available now and part 2 is available 5 May.


JohnLestock
John Lestock, CPP, is a Global Payroll Accountant at The Boeing Company. He has more than 25 years of accounting experience, specializing in payroll and pension plans, and has experience working payroll in many different countries, including Belgium, Hong Kong, Ireland, Israel, Japan, and Turkey. His diverse experience includes payroll administration, pension plan administration, compliance auditing, sales and use tax preparation, and corporate accounting. He is also a former Vice President of PayrollOrg and is currently a PayrollOrg Ambassador and a member of the Government Relations Task Force (GRTF) State and Local Topics Subcommittee.
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