Implementing a global payroll solution is a tall order for all involved and most professionals often underestimate the effort required for ensuring the solution is sustainable. A key reason for that is they often don’t consider what operational readiness looks like and what the barriers to success are prior to embarking on the project.
When planning your global payroll implementation, one deciding factor for success is to identify key issues that could prevent you from achieving success. Being able to understand and recognize potential barriers will help you break through them if/when they arise. Here are five potential barriers to success and the best practices for overcoming them.
1. Data integrity
Payroll is a back-end process with multiple employees inputting multiple data sets, and while the system has integrity, it is only as good as the data it receives. Compliance issues typically present themselves in the data integrity, and projects and compliance issues fail or succeed in the data integrity. That’s why it is important to keep compliance at the forefront of both your implementation project and your operational model going forward.
In addition, reconciliation processes must be appropriately integrated to support your compliance activities. For example, as you hire a new group of employees, can you show how you track and reconcile all 15 new hires in both the HR and payroll systems to ensure they match? You can’t if you don’t have reconciliation processes in place.
Best practice: Make sure your detective audits are a part of your routine operational model and processes are in place for issue resolution.
2. Underutilized use of payroll data
Payroll data is some of the most powerful yet underutilized data in the organization. Key metrics such as overtime analysis, tax benefits and wage recovery can give the organization important insight, yet it can also provide a major barrier if it isn’t utilized properly. For example, the payroll organization can investigate and identify where the big overtime expenses are occurring and help the organization work to resolve. The issue arises, though, when nobody in the organization asks for it, mostly because they aren’t aware it exists. Thus, it becomes a lost opportunity to address important factors that help shape the bottom line of the business.
Best practice: The owners of your global payroll should actively educate the rest of the organization and its key leadership on the power of the payroll data.
3. Mergers and acquisitions
Because it is a back-end process, payroll is rarely included in the mergers and acquisition process. As a result, non-standard processes often become realized causing issues and inefficiencies across the organization. For example, if you acquire a company in Switzerland and don’t consult the payroll organization responsible for that company, you will have no insight into their operations, software or operational model. You will likely be inheriting non-standard business practices that conflict with your SOPs. And worse, you likely won’t discover it until it’s too late, disrupting the entire payroll organization with very little notice or time to rectify.
Best practice: Minimize “surprises” by ensuring the payroll organization has a strong voice in the merger and acquisition process.
4. Recruitment and the melting pot
The reality of the payroll organization is this: It is a melting pot. None of the people in your payroll organization studied payroll in college—the degree doesn’t exist. They likely studied human resources, accounting, business administration, finance or another “related” field. So, while a majority likely have an accounting/finance background, your employees come from all types of roles and responsibilities with all types of experience. As such, it can be difficult to recruit a specific payroll employee to be a part of your operational team. If you’re lucky you may be able to find one from another company looking to make a move, but that is not always the case.
Best practices: Mitigate knowledge gaps with training, education, conferences and “lunch and learns.” Ensure the payroll team is knowledgeable about the business they support as well as payroll-related statutory requirements, compliance, pre-implementation audits and financing systems involved.
5. Global shared services
Many organizations want to set up global processes for everything from accounts payable and accounts receivable to HR and payroll. And while a Global Shared Service (GSS) model can work for certain aspects of the business, it simply isn’t ideal for global payroll. Not all payrolls are created equally as each country has different laws and regulations, data security requirements, fines and penalties, statutory reporting requirements, etc. It is extremely difficult to leverage technology, people and processes in a GSS model because there is no uniformed, “cookie cutter” approach to global payroll. As a result, you’re setting your organization up for potential failure and a high cost both in dollars and other losses.
Best practice: Diligently work to educate the organizational leadership on the complexity, challenges and implications of a GSS model and how it can have a ripple effect on an organization for years to come.
With careful planning, a global payroll organization can be successful and sustainable for decades. But just like any other project, there will be barriers that must be overcome. Considering those barriers ahead of time and planning for them will help you build a compliant, integrated, scalable and sustainable global payroll ecosystem.
