Establishing a Global Payroll Strategy: Where to Start

In this blog, we discuss the major drivers and trends that are driving the global payroll industry in 2022:

• The role of data and automation to reduce risk and improve accuracy.
• An even higher adoption of cloud-based services and need for centralization.
• Increased data protection legislation in the digital era.

So, you know what to expect in 2022 and you’re preparing for the challenges ahead? Good! In this blog, we look at taking the next step and establishing a Strategy for Success to ensure you and your organization are ready for the rest of 2022 and beyond.

A Global Payroll Strategy: What Do I Need to Consider?

Your Global Strategy will be shaped by a combination of your goals and the current state of your Global Business Landscape. Goals will vary from industry to industry, and business to business, and hopefully you and your organization have given significant thought to what those goals are or should be. For this blog, we’re going to focus on the state of your global landscape, and the areas that are going to have the greatest impact on forming your global payroll strategy. We see these four key areas as the bedrock of consideration for starting your strategy:

1. Your Global Employee Population – Who are they, what are their needs, and what is their Payroll Experience?
2. Existing Global Systems and Processes – How well are they fulfilling their purpose?
3. Business flexibility and Scalability, Employee Experience, and Compliance and Governance – Is the Current Landscape Managed Comprehensively?
4. Structure, Hierarchy, and Resources – What are the Limitations of the Business?

1.     People

Payroll is a business-wide subject, and entire global population impacts and is impacted by it. At its most fundamental level, payroll is about getting your employees paid accurately and in a timely manner. However, when you start to consider that your population is spread over multiple countries, each with its own unique laws and legislation, the environment becomes more complicated. Your Global Strategy has to allow for all the varied differences in country legislation in every location in which your population is based.

To address this in your Strategy you must start with the basics:

• Who are your Employee Population – Blue/White Collar Workers, Full-time/Part-time, Contractors – and what are their requirements and expectations?
• Where is your Employee Population – What are the prevailing conditions, both legislatively and culturally, in those locations, and what is considered ‘normal working practice’ in those locations?
• What is the State of your Employee Population – are your employees happy with the current payroll set up, do you meet all your obligations regarding employee payroll easily or is it a manual process which sees errors, and are your employees benefitting from the way you approach payroll?

2.     Systems

Whether easily visible and understood or hidden in the background and managed by specialist teams, your systems – hopefully a smooth combination of technology and process – underpin your entire payroll approach. It’s also one of the easiest areas for mistakes and burdensome payrolls to begin. Whether it’s old and manual processes or technology that requires manual intervention to remain compliant, or a thousand and one variations, getting a smooth flow between your systems should form a core part of any long-term payroll strategy. This doesn’t mean starting fresh every time though – your existing systems represent a major investment of time, cost, and resources and are a great springboard to greater things for your organization. Consider how this investment might fit into your future goals as part of your systems considerations.

To incorporate your systems into your Strategy, you need to consider how you want to manage your payrolls (more on that below), and ensure they are aligned. It’s crucial to ask if they are fulfilling the purpose for which they were implemented. If your Strategy evolves over time, as it should, your systems need to be considered and flexible for scalability; preventing the increase of overly manual processes, the need for large dedicated Global Payroll teams, and the significant increase in risk for human error, all of which lead to employee dissatisfaction.

3.     Existing Strategy

Building your future Strategy on a shaky old strategy foundation is a recipe for disaster, but just because your strategy is built on an old foundation, it doesn’t always mean you need to start again. Strategy is an evolving process; chances are your existing strategy has gotten you to this point and may well be fundamentally sound, resulting in an adaptation exercise rather than a total restart.

Your existing strategy is just that; how you are approaching and managing payroll today from a high-level global perspective to ensure consistency across your Global Landscape. That strategy encompasses some of the most important aspects that can drastically affect your future strategy. Your existing strategy will have been established to achieve a certain set of objectives, based on conditions at a certain period in time, and it is important to challenge whether those goals are still current, and if the overall strategy is a) reflective of your current intent, and b) is going to deliver against your goals in line with your existing systems. Your Strategy will govern how flexible the business can be, how responsive your teams can be, and their readiness and ability to support Global Change, making it a great foundation to spring forward from – or a terrible pitfall if it is in poorly planned.

The simplest way to evaluate your existing strategy is to ask two key questions:

• Why do we manage our payroll in this way? Just because it doesn’t detract from current or future plans, doesn’t mean it’s benefiting them either.
• Does this strategy align with your organization’s goals in the short, medium, and long-term?

4.     Business Architecture

A nebulous term, business architecture refers to organizational forces inherent to your company. For example, resource limitations for in-country payroll support, multi-system structure, or decentralized offices requiring manual processes, etc.

When contemplating a Strategy to deliver on your payroll vision, it is equally important to consider the areas in which you have restrictions, as well as those where you have strengths. This will allow you to construct a truly Global Strategy that sets out reasonable objectives that won’t leave the business disadvantaged against resources or gains it never had.

One of the easiest ways to secure an appreciation of realistic business limitations is to engage with a broad demographic of employees from all levels of the business in the planning of your Strategy. The views and perceptions of a Head Office Executive compared to an In-Country Payroll expert are vastly different but both important in planning your Strategy.

What’s Next?

By considering these four initial areas, you have hopefully gained some clarity around the areas you may wish to consider. This will help give you and your organization the best opportunity to construct a robust, compliant, and resilient Global Strategy to take you through 2022 in line with your organization’s short, medium, and long-term goals.

If you’d like to learn more about establishing a Global Payroll Strategy, feel free to contact us at iiPay.