Employers with multinational operations should thoroughly examine the payroll processes and technology in the countries where they operate to determine if these elements are sufficient or if changes may enhance compliance and profitability, payroll directors said May 16.
Understanding the payroll processes and technology that a multinational employer has deployed, and examining population and economic trends in countries where the employer operates to anticipate potential future workforce adjustments, may improve a global payroll team’s ability to respond to changes necessitating payroll solutions, said Linda Obertin, CPP, senior vice president at Wells Fargo.
“There are amazing practices, great technology and great systems all around the globe, and the key is to understand the current state of inventory” regarding payroll information and resources in each of the countries where an employer operates, Obertin said at the annual American Payroll Association Congress in Orlando, Fla.
It is especially important for managers of a company’s global payroll operations to thoroughly understand differences among countries regarding how payroll data for employees in those countries is reported to the company, Mary Brumm Holland, CPP, global director of strategy, development and training at the Global Payroll Management Institute, an affiliate of the American Payroll Association, said May 16 at the conference. Multinational employers should keep track of countries in which payroll data for their employees are directly reported to their global payroll team and countries in which payroll data instead are reported to their local or regional payroll teams, she said.
Examining whether there are duplicative payroll processes or electronic systems among those an employer is using in the countries where it operates may empower payroll teams with enhanced knowledge with which to pursue consolidations of processes and systems, Holland said.
Mergers and acquisitions that cause an employer to become a multinational employer or that cause a multinational employer to further expand its operations may result in redundancies in payroll processes or systems, so payroll practitioners should seek to gather data on the payroll processes and systems used by an acquired or merging business entity before the acquisition or merger is completed so that redundancies may be prevented, Obertin said.
Documenting language differences among the countries where an employer operates as well could assist payroll compliance and improve efficiency, Obertin said. For each country where a payroll concept is applicable, it is wise to understand the specific term most frequently used in that country to convey that concept, as agents in that country seeking to assist an employer might inadvertently provide incorrect information to the employer if a less common term was used when the employer inquired about the concept, she said.
For example, while the terms new hire and new joiner both may refer to employees starting work with a company, there are some countries for which it would be more appropriate to use new joiner than new hire to inquire about such workers for accuracy of data, and others where using the term new hire would be more auspicious, and employers should recognize the countries for which these terms are most appropriately used, Obertin said.
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