As our business world has expanded, so has our need to manage human resources (HR) more efficiently and intelligently across the globe. The sophistication of a firm’s HR and payroll technology can make or break how a business copes with ventures into new territories. In fact, a recent ADP study on global payroll revealed that nearly nine out of 10 (87%) payroll leaders see payroll information as a fundamental part of their commercial growth strategies.
It's clear that the pandemic helped catapult HR and payroll from what was once back-office functions into the frontline of business growth. As a result, today’s talent shortages are leading employers to find good people across geographics, no matter where they live. Building better business resiliency is another reason companies are reaching into new countries. With global expansion comes the need for businesses to ensure they’re paying people accurately and in accordance with local laws.
Global pay systems, however, are about more than just payroll and compliance. They have the power to deliver data that can influence business decisions. To have visibility across the company’s entire footprint helps organizations identify important workforce trends like where workforce investments are higher or lower, changes in demographics, and human capital management (HCM) costs in general. For example, in one country, the population may be aging, which makes finding new talent difficult and expensive. This could affect decisions about where to expand the business. With these kinds of data-driven insights, payroll can be a partner in strategic discussions to deliver the data optimization, agility, and visibility that will drive productivity and profitability.
What a Global Payroll System Should Provide
Let’s start with the basics. Can your payroll system tell you how much you’re spending globally on payroll? If your answer is “no,” then you’re not alone. Many companies struggle to answer that simple question even though it’s a very important metric. Any global payroll system should provide that and much more, including these key elements:
- Insight: If your company is like many organizations today, you’re collecting a lot of data. Your payroll system should be able to crunch that data and provide actionable insights—the view from 10,000 feet—that you can use to improve and better serve employees, managers, and executives.
- Trends: Whether it’s headcount, tenure, turnover, time, or benefits, you should be able to quickly access the information you need. A good global payroll system can show you real-time trends in these numbers by country so that you can act immediately. If tenure is high, for example, should you start planning for a wave of retirements? In which countries is payroll going up? Are there benefits that employees are not taking advantage of? Knowing the data can help you to answer these questions and to inform you of where the business should go.
- Integration: A truly global payroll system isn’t a hodge-podge of software programs. The goal is a shared function, not a country-by-country system with an assortment of providers. Further, it should connect payroll to other business applications like the HR system. Once you’ve captured the data, it’s more efficient and accurate to use that information in multiple places rather than collect it again (with possible errors). Also, if you’re going to spend the money for these systems, why not share data between both and realize greater ROI?
- Expertise: Multinational businesses might have support staff in every country, but if you’re running a mid-size business with a global multi-country implementation, you probably don’t have a compliance or legal officer or even an HR partner in every country. A global payroll system should provide confidence that your payroll is always compliant, updating your system as changes occur in the external legal environment.
- Payroll support services: Centrally managing payments in other countries should be a seamless part of your payroll process. It’s especially important for companies that have employees, but not necessarily finance departments, in every country location. Also, payroll operations increasingly need dedicated IT, data security, analytical/reporting, and compliance resources as these skills are also in short supply around the world. According to ADP’s “The potential of payroll in 2024: Global payroll survey” this level of support takes IT teams approximately 22 hours per week, per country. By entrusting payroll to a global partner armed with local payroll knowledge and technical expertise, a company can address skills deficits and draw up expansion plans with confidence.
- Country-specific support: When you need help, you don’t want to wait for someone on the other side of the world to wake up. A good global payroll system offers local support, in your language, time zone, and with an understanding of your unique payroll challenges.
- Unified employee experience: Payroll touches every employee and payroll is probably the most important thing to every employee. A unified, consistent interface—like a mobile application or portal—is essential so that employees have the information they need at their fingertips. It should have the same access, look, and feel globally, while also offering country-specific self-service features, such as year-end processes.
- Flexibility: A comprehensive global payroll system should flex, scale, and accommodate varying sizes and locations of employee populations, and grow with your business.
- Data security: The movement of payroll information across offices, territories, and time zones makes it vulnerable to data breaches. Like payroll itself, cybersecurity is impacted by skills shortages. In fact, data security concerns are preventing some companies from completely moving to a global payroll model. That’s why data privacy, security, and recovery should be an intrinsic part of any global payroll system.
Global Payroll Is a Strategic Asset
Unlocking the value of payroll data is critical. It’s not just about compliance and payroll anymore. HR has so much useful information available that can help the organization plan and operate more successfully. Global payroll can be a strategic asset to organizations, informing business decisions. Payroll leaders can bring that data and unique perspective to the table and be a strategic partner in the business.
Any business expanding internationally (through merger and acquisition, fresh or consolidated regional facilities, or local agreements), ideally needs to hit the ground running. That means focusing on doing what they do best, in every location. Most everything else can be achieved by outsourcing to trusted partners who can make up for any local capability or skills shortcomings in functions such as payroll or technical support.
By working in this efficient, low risk way from the start of a new enterprise, productivity and profitability are maximized while operational and financial vulnerabilities are minimized. This enables a business to attract customers, partners, shareholders, and investors, while keeping the local regulatory authorities satisfied. But, most importantly, it can improve the employee experience.
To achieve these objectives, it makes commercial sense to utilize beneficial business partnerships with others who are also best in what they do: relationships built on quality, service, value, trust, and respect.