Why Global Payroll Matters for Every Multinational COO
Feb 9, 2017 | Topic: Strategy
‘What role does the COO play at your organization?’ If you were to pose that question to five different CEOs, you could easily get five different answers.
The role of the Chief Operating Officer (COO), who is often the ‘second in command’ for a multinational organization, has long been a moving target. While the function of the COO is ostensibly focused on managing a company’s day-to-day operations, the scope of what that entails is largely dictated by the company’s unique business objectives, as well as by its industry and the expectations of its CEO.
That’s partly why individuals from very different business backgrounds – spanning sales, finance, tech, or otherwise – can ascend to the COO role and succeed in it. Yet no matter what backgrounds they hail from (or what responsibilities fall on their plate), all multinational COOs have an impetus to prioritize the Payroll function.
Or rather, they all should have an impetus to prioritize the Payroll function. In the shifting enterprise landscape, the role of the COO is evolving into one of the most dynamic and influential positions in the C-suite – increasingly focused on helping organizations lay a firm foundation for growth and success amid significant business challenges.
Whether today’s COOs realize it yet or not, laying that foundation requires a keen respect for the success and scalability of the global payroll function.
A Strategic (yet Situational) Focus on ‘Operating the Business’
No matter a global company’s size or sector, the COO is its top operational leader. The purview of “Operations,” of course, varies widely depending on the organization’s focus; for example, a carmaker’s Operations function may be far unlike that of an e-commerce company.
Certain departments of an enterprise also often have “ops” functions all their own – sales ops, development ops, and so on. In an earlier era, a COO’s role may have been entirely focused on overseeing each “ops” area from a managerial perspective.
Today, the expectation isn’t just for a COO to ensure that business functions operate successfully in respective operational areas. Rather, it’s to ensure that those functions operate efficiently and effectively together, and that the enterprise systems and strategies behind those functions are integrated, scalable, and supportive of the organization’s broader objectives.
In that sense, the COO role today is more about ‘operating’ the business (from a strategic perspective) than about ‘managing operations’ globally. Yet beyond the strategic operational focus shared by all COOs, the role remains incredibly situational – so much so that there may be few day-to-day similarities linking one COO to his or her counterpart at a similar organization.
Researchers say that broadly, there are seven types of COOs – including the ‘Executor,’ who leads implementation of company strategies; the ‘Change Agent,’ who spearheads organizational transformation; the ‘Mentor,’ who leads fellow team members (or advises a less seasoned CEO); and the ‘MVP,’ a top internal performer who was promoted up the ranks.
The other COO types are defined by the individual’s relationship with the CEO (as his or her right-hand ‘Partner,’ ‘Heir Apparent,’ or complementary ‘Other Half’). Most COOs fill more than one of the seven types: MVP & Heir Apparent, Executor/Partner, and so on.
Regardless of which ‘types’ they align with – or how many – all COOs have a vested interest in the success of the Payroll function… and not just ‘operationally.’ When it comes to establishing, achieving, or maintaining enterprise systems and strategies that are integrated, scalable, and forward-thinking, global payroll is a more important focus area than some COOs may realize.
Payroll as a Foundation for Operational Excellence
As global enterprise stakeholders increasingly recognize, Payroll is on the cusp of a shift from a primarily tactical function to something more strategically valuable. With more and more organizations adopting cloud-based Software-as-a-Service (SaaS) solutions, Payroll is growing more efficient and data-driven – helping it earn greater significance as a resource for business intelligence.
Yet the value that Payroll (and payroll’s data) can deliver for business decision-making purposes is only one reason it matters for today’s multinational COOs. As the link between an organization’s administration and its people, Payroll supports every operational function of a multinational company. The more effectively that global payroll supports the strategic goals of the organization and its COO, the more efficiently and effectively those “ops” functions can work together.
With stronger cross-functional alignment and integration, powered by a comprehensive global payroll solution, can also come increased opportunities for COOs to deliver value to the enterprise. As examples, here are four scenarios for four types of COOs: Executor, Change Agent, Mentor, and MVP.
The Executor COO: Implementing an Expansion Plan
Especially among companies in highly competitive or rapidly changing industries, it’s common for CEOs to put strategic plans in place and task their COO ‘executors’ with making those plans a reality. In today’s global business marketplace, a key growth strategy may be cross-border expansion into emerging markets or other areas of opportunity.
With every border a multinational company crosses come a wealth of operational considerations that connect directly to the Payroll function. How will the organization onboard and pay its workers in a new location? How will it understand and satisfy all required tax obligations and statutory guidelines? How will headcount costs and payroll performance at the new location be assessed against business outcomes?
With a comprehensive global payroll solution, Executor COOs can manage those challenges more easily than with an assortment of local payroll vendors (who typically provide minimal, if any, transparency into payroll’s operational processes or performance). With a cloud solution collecting standardized payroll and compliance information across both their existing and new locations, COOs can establish a scalable foundation for cultivating and utilizing payroll data for benchmarking and process-improvement – helping them inform future expansion strategies with accurate payroll intelligence.
The Change Agent COO: Transforming Outdated Operational Functions
To stay relevant in these rapidly changing (and economically tumultuous) times, multinational organizations need to make continuous change a key element of their corporate DNA. But change rarely comes easily for global companies – especially those large organizations mired in bureaucratic processes or helmed by traditional, ‘old guard’ leadership teams.
Global companies that are struggling to evolve or innovate their enterprise functions may appoint a ‘changemaker’ executive as COO to foster new ways of thinking about existing objectives, strategies, or approaches. As a Change Agent COO looks for areas of the enterprise that can benefit from transformative change, Payroll should be near the top of the list.
Why? Because when it comes to Payroll, organizations tend to believe that there’s one ‘right’ way to do things… which is the way things have always been done. Even when soliciting new solutions, enterprises often focus on finding systems they can configure to mirror existing processes rather than those that can adapt those processes for the better. By spearheading a transformation to comprehensive global payroll, COOs can make highly beneficial change happen (and back up the value of the change with tangible efficiency improvements and measurable cost savings).
The Mentor COO: Making Informed Leadership Choices
When CEOs opt to embrace a public-facing leadership style, they often lose the bandwidth they could otherwise plug into governance and organizational leadership initiatives. When that happens, a Mentor COO may be expected to step into the role of internal ship-captain – spearheading the entire C-Suite’s approach to management and leadership. (Alternatively, a Mentor COO may be brought in to provide guidance and advice to a more inexperienced CEO.)
Mentor COOs are typically very seasoned, veteran executives – making them a valuable source of cross-functional guidance on high-level talent and workforce decisions: compensation, advancement, leadership strategies, management gaps or weaknesses, and so on. But in order for that guidance to be truly useful in driving organizational outcomes, it must be backed up by verifiable enterprise data.
Mentor COOs at multinational companies can make the strongest impact when they support their leadership strategies with trusted information on headcount, benefits, payroll costs (versus revenues) across locations, and so on. By investing in a global payroll solution, they can ensure that reliable administrative data and real-time analytics are always available to support proposed workforce changes, management shifts, succession plans, and more.
The MVP COO: Maintaining that ‘Most Valuable’ Status
Whereas the ‘Heir Apparent’ COO archetype is expressly appointed to the position as a test run for succeeding the CEO, the ‘MVP’ is often placed in the COO role because he or she is too valuable to lose to a competitor. Promoting a top internal performer to COO wards off poachers while giving the MVP an opportunity to prove his or her mettle as an executive – potentially leading to ‘Heir Apparent’ status down the line.
Shifting from senior-management standout to C-level leader changes everything for a professional; suddenly, the job responsibilities and expectations become far more focused on top-line concerns such as cost containment, growth strategies, and business opportunities. As a result, remaining the organization’s ‘most valuable player’ gets more difficult.
A few ways for MVP COOs to prove their value: Find ways to lower costs, drive improvements, or achieve innovation in underserved areas of the business. Payroll is one of those, as is its common parent function of HR. Launching two-tiered transformation initiative of those functions can drive sustainable, long-term improvement: Deploying a cloud-based global human capital management (HCM) system and integrating it with a complementary global payroll solution is a smart way for MVP COOs to drive cost, performance, and efficiency improvements across the administration.
Ultimately, the COO will remain a highly situational role and ‘moving target’ for multinational organizations. But when you ask a CEO ‘what role does the COO play at your organization?’ their answer should be that the COO creates value and supports business success. By prioritizing Payroll transformation, global COOs can lay a strategic foundation for their organizations' long-term success.