A Definitive Guide to Uncomplicate Global Payroll
Do you think global payroll is a complex process for enterprises?
The short answer is that most global enterprises would respond with a resounding YES.
The long answer is as follows. As organizations expand their footprint across borders, they make greenfield investments in new countries, identify supply chain partners, and understand customer behavior. Companies have evolved enough to provide a reasonable payroll and HR experience to their employees in their primary and secondary countries. But that is not the case with ‘long-tail’ countries that exhibit skewed distributions of employees.
What is global payroll, and why ‘long-tail’ payroll is complicated?
Global payroll can be defined fundamentally as the management of the entire payroll function of an organization across all countries of operation. Organizations use a single solution capable of doing this from one central location. As multinational organizations choose to expand as a step towards market development, customer proximity, or vendor management, their scope of operation gradually increases.
Number of Employees
Long Tail Countries
At times, the tail of some constantly-expanding organizations can be overly long due to the scattered distribution of employees across countries, which results in difficulties in managing payroll across all countries of operations. This can be because of the lack of knowledge of payroll regulations in select countries, especially the long-tail region, and the inability to achieve economies of scale. These two factors manifest into challenges in global payroll management which get classified into three broad categories:
Finding two countries having the same payroll and benefits regulations is a rarity, with in-country regulations evolving. As organizations expand geographically, they must keep track of the ever-changing HR-specific state & federal laws and ensure compliance even if the employee count is comparatively low in these countries.
When companies operate across many countries, paying employees distributed based out of these countries may entangle due to different payroll technology in other regions. Furthermore, with the need to deal with multiple languages, companies might get caught in a cleft stick.
Managing Input Data
Ensuring accuracy while gathering payroll inputs is critical, as this process would control overall payroll accuracy. The probability of encountering errors in this process is relatively high because these errors could arise due to incorrect or incomplete payroll data, which can easily evade the eyes of a payroll processor. Inaccurate payroll data can lead to alarming issues such as payroll fraud and local compliance violations.
Now that we have an eagle’s eye view of the challenges witnessed in global payroll about long-tail countries, let’s look at the critical strategies that help un-complicate it.
Unified global payroll solution
Integrating the organization’s HCM with a unified global payroll solution supports operations worldwide. It opens doors for reduced global payroll processing costs and strengthened data compliance. In such a solution, all data related to the solution is routed through the global platform to ensure consistency. In addition to consistency, another noteworthy benefit of a unified global payroll solution is data accessibility. With payroll information stored on a ‘single format single platform’ basis, it can be accessed anywhere with the help of real-time reporting. This will offer organizations complete visibility and understanding of their global payroll operations.
Learn more: What is unified multi-country payroll, and how it benefits businesses?
At the surface level of an organization, the role of payroll is to compensate employees in terms of salary. But in addition to salary, payroll also shapes an employee’s overall experience (Employee experience). EX is significantly affected by factors like payroll cut-off period and paycheck accuracy. These factors, in turn, rely upon the seamless data movement between various disparate systems.
Organizations can manage employee data from recruitment to retirement through seamless data flows achieved with API integrations. Forward-looking enterprises are leveraging artificial intelligence to automate the input process that allows data to flow into the payroll platform and get intelligently validated by artificial intelligence, producing impeccable output. This entire framework is supported by a single application that offers employees a seamless experience and complete visibility over their payroll data.
The ‘single provider’ strategy
A single provider can offer an out-and-out payroll to help global enterprises avoid tremendously investing in managing a complex network of vendors. The single global payroll provider model ensures a streamlined, standardized payroll process and positive employee experience in an organization’s long-tail.
Global approach vs. Local approach
A single global HR database covering all global employees will be ideally suited to global payroll – as it is a centralized, global source of payroll input data.
A local approach is more appropriate for organizations that rely on multiple HR data sources and manual reports. Payroll operations in organizations with conflicting data sources, such as financial data on salaries that are not reconciled to payroll data, will function better with a local approach.
Now, imagine a solution that handles both global and local payroll needs. This is where the ‘glocal’ approach would come into play. Incorporating global and regional market capabilities within global payroll gives enterprises a strategic advantage as they gain local knowledge and understand legislation across long-tail countries. An outsourced payroll provider will ensure organizations choose the right approach by balancing global and local payroll, making it ‘glocal.’
Assessing the strengths and weaknesses of global projects
Organizations that showcase a proven commitment to increased centralization will find managing payroll easier across their long-tail countries. International payroll processing will pose an achievable target when there is a proven strong record of implementing successful global projects. Before HR leaders start their boardroom discussions regarding global payroll strategies, it becomes paramount to assess the strengths and weaknesses of these global projects.
Managing global compliance
An organization must understand and possess an in-depth knowledge of laws, rules, regulations, and policies enacted in the countries where it operates and those it expands into. Global compliance is one of the main reasons why organizations outsource their payroll management to a single vendor. This will enable compliance experts to monitor dynamically changing policies and maintain a compliance library of laws and statutory regulations that affect the global payroll industry.
DOWNLOAD | 10 Tips to ensure remote work compliance
Enhanced employee experience
Incorporating a well-defined UI/UX design in the ESS will have a far-reaching impact on the overall employee experience. A user-engaging solution interface will help employees self-navigate without any inconvenience. A predictive helpdesk with multilingual capabilities gives employees their corresponding payroll & tax information in a language they understand. Progressive organizations employ tax filing simulators for better planning and ‘on the go‘ mobility of payroll information.
An organization’s global payroll operations in its long-tail countries will be stable, provided it has an accurate payroll solution that is agile enough to help the organization respond to changing and challenging market conditions & legal requirements. Ultimately, such a solution would support the overall growth of the organization.
Stay informed with latest updates
If you're curious and have a thirst for knowledge pertaining to the HR, payroll, and EOR universe, don't miss out on subscribing to our resources.