Is Standardization Truly Possible in Global Payroll?
Jun 11, 2019 | Topic: Optimization
For many businesses that operate across borders, there’s only one goal in payroll: to get it right. Unlike more ROI-driven business functions, meeting the minimum requirements of global payroll delivery often equals success for stakeholders. Opportunities for standardization and operational improvement are rarely on their radar.
Unfortunately, taking a passive approach to payroll management leaves many multinationals without the benefits of more optimized, automated processes — which makes them less able to adapt quickly when regulatory and legislative changes come.
The truth is that standardization is possible in global payroll. In fact, it enables greater use of payroll data and powers more actionable insights for the broader organization. Making the change does require a decision to modernize the payroll function, with benefits that can add up quickly. The key is to standardize payroll data and processes not just at the country level, but across the global footprint.
Is ‘Good’ Really Good Enough?
Sensitive by its nature, payroll is one area of your business with very little margin for error. Nobody wants payroll to go wrong, as the costs of mistakes can be massive, both financially and reputationally. This reality often prevents organizations from overhauling processes that are in any way functional, with stakeholders content to accept “good” payroll performance as good enough.
However, executives’ motivations to stick with the payroll status quo are rarely well-founded. Some fear that optimizing payroll processes will tamper with pay schedules and create unnecessary risk. Others believe the potential benefits of standardization aren’t worth the perceived effort it would entail. Still more think that standardization in global payroll is unattainable given the complexity of the country-specific laws, evolving regulations, and conflicting schedules involved.
As a result, a mentality of “if it’s not broken, don’t fix it” often prevails. Yet, standardization is more achievable than many business leaders realize, thanks to recent advances in global payroll technology. Although challenges to standardization exist, they seem small compared to the value of benefits like improved payroll performance, decreased redundancy, reduced human error, lower overall costs, and increased data visibility and security, to name a few.
The Challenges to Standardization
Overcoming the fear of change is arguably standardization’s biggest hurdle. The reluctance to interfere with a payroll system that is “not broken” means the majority of multinational companies persist with payroll processing workflows and data management protocols that are not as efficient or effective as they could be.
While the most common objections to process change may be valid, they must be considered against the reality of maintaining disparate systems and workflows. For organizations on a global level, there’s even more consider: Every country or region they operate in has its own local legislation, cultural issues, market practices, workforce demographics, and (of course) language.
However, the complexity shouldn’t deter companies from pursuing global standardization. Rather, it should make clear just how much work is involved in running separate systems and fragmented, siloed processes in each territory.
A standardization initiative presents the opportunity for organizations to address the areas of their payroll operation that have evolved without systemization or careful planning. Additionally, standardization enables companies to consolidate processes across related functions.
For example, payroll relies on data input from human resources, which is just as likely as payroll to operate different local systems in each country or region. A comprehensive, well-planned standardization project can streamline data and processing workflows throughout global operations for both functions. The latest integration technology lets companies take the project a step further by introducing seamless, automated data synchronization across HR and payroll platforms, minimizing the need for manual intervention and reducing the opportunity for error.
Where to Start with Standardization
The first step toward payroll standardization is the creation of an ‘as is’ process map that reflects how things work today. In the case of global payroll, it means generating several different process maps to show how tasks are executed in each country.
Process information should be gathered from the payroll practitioners themselves, rather than by relying on written guidelines or managerial understanding. It is common for various aspects of the process to be done differently across borders (or even within them), and it’s critical to document every variation.
The next step is to identify the most efficient way of completing each step. Once this is done, a new best-practice process map can be used to create a standard, overview process. The aim is to define an approach that works across all regions, but can be monitored and adapted to the needs of each country. An experienced global payroll services partner can help define a smart global process that drives error reduction and boosts efficiency over time.
Measuring Standardization Success
Critical to understanding the full value of standardization is understanding how access to standardized, real-time data can boost the quality of payroll analytics. Building on the performance feedback offered by SLAs and payroll reporting, today’s advanced payroll analytics tools enable teams to monitor process-based KPIs to better understand the efficiency of their payroll processes.
The insights gained from this analysis can help guide standardization and other initiatives toward the areas most in need of improvement. When data and processes are standardized, the information collected for analysis is more complete, offering a more precise and comprehensive picture of payroll processing efficiency, accuracy, and results.
Ultimately, no matter how decentralized their starting point, multinational companies can achieve the benefits of global payroll standardization by leveraging the right technology — and take their payroll operations from good enough to truly great.