GLOBAL PAYROLL STRATEGY: FACT OR FICTION?

Computer2

The global payroll environment is evolving and a global payroll strategy is becoming more fact than fiction, Mary A. St. Cyr, managing director of advisory services at KPMG LLP, said Sept. 22.

Payroll used to be more aligned under multiple organizations around the globe and companies tended to decentralize, St. Cyr said. When payroll was outsourced, it was delivered either by different providers, a single provider with  country-specific contracts or providers clustered around a subregion, all with divergent technology platforms, she said.

Now there is pressure to build global payroll solutions. With growing regulatory constraints, more specialized expertise is needed to reduce compliance risks, St. Cyr said.

However, enterprise resource-planning vendors have yet to deliver on costly global payroll systems, while single-sourced service providers lack the depth and scale across all geographies, said Jay Conforti, director of management Consulting at KPMG LLP. 

St. Cyr and Conforti, who spoke at the American Payroll Association’s fall forum in Las Vegas, highlighted several trends in global payroll. Strategies for increased agility, cost, compliance and reporting purposes are becoming more global, they said. Outsourcing is growing in appeal while providers still work to refine the aggregator model, they said. And providers are heavily investing in data automation and integrated reporting. 

As far as service-delivery models, hybrid delivery models are becoming the norm because aggregator models still have limitations on size and quality, they said. Automatic Data Processing LLC, CloudPay Inc., iiPay Ltd. and SafeGuard World International Inc. all represent hybrid delivery models, St. Cyr said.  ADP also is an aggregator, as are ActivPayroll Ltd., Celergo LLC and Ceridian LLC, she said.

There are numerous implementation costs involved that payroll professionals need to consider when developing a global payroll strategy, including vendor implementation fees, intergration, data conversion, consulting support, training, communication, recruiting, bringing on new hires, and shared services, Conforti said.

To manage the global strategy, companies are starting to invest more in implementation of formal governance models to ensure sustainability, Conforti said. And the ownership of payroll governance is changing to support global requirements, he added.

Some may question the value of global payroll, Conforti said: “Why do it?” 

Developing a global payroll strategy may help with risk management by avoiding financial penalties and can help professionalize the payroll function. A global initiative also helps to reduce the number of vendors, centralize relationship management and standardize performance metrics. In terms of data management, employers also may leverage human capital management as a system of record for employee data and improve real-time reporting, Conforti said.

Take a free trial to Bloomberg BNA’s International Payroll Decision Support Network. With more than 90 countries covered, this is your one-stop resource for reliable, up-to-date guidance and analysis in every area of global payroll administration and compliance.   

Join the Bloomberg BNA U.S. and Global Payroll group on LinkedIn  and follow Bloomberg BNA on Twitter @BloombergBNA.