Global payroll can be extremely challenging and incredibly complex. Understanding these challenges and complexities is both essential and necessary. This is because different countries have varied, unique legislation on matters that impact payroll, such as tax which differs entirely from country to country. There are also factors such as multiple currencies to consider, as well as complexities such as different languages and cultures which are thrown in for extra measure – as if the process wasn’t confusing enough already!
Avoid Costly Mistakes
All things considered, it makes selecting the right vendor, project path or solution extremely challenging. Many businesses make the mistake of deciding on a project direction without first investigating in detail what the best fit-for-purpose solution is, or without researching what is available in the market. Subsequently, the final global payroll solution selected will not always be fit for purpose. This can be an extremely costly mistake!
Set yourself up for success
The best solution should only be decided after considerable research and due diligence, which is why it is highly advisable to follow a detailed planning process to set up your global payroll project for success. Doing it this way will ensure that when you do begin your implementation, you will already know what the objectives are, and you can ensure that they remain aligned with the requirements of your global payroll.
As a minimum, you need to document your current processes and the requirements of your new global payroll process at a high level. This will make it much easier for you to understand what your new global payroll solution or provider will need to be able to deliver. Once you have this, you can then consider inviting in global payroll vendors or software solution providers for early engagement discussions and demonstrations. You may think you know what it is you need, but it is always worth discovering what specialist global payroll providers can recommend. Comprehensive global payroll services can vary from software purchases to Software as a Service (SaaS), full outsourcing or fully managed services (and everything in-between). It is, therefore, a good idea at this stage to talk to the vendors about their strategies for the future so that you can ensure your selection is futureproofed and culturally compatible with the complex global payrolls you need to deliver.
Challenges to overcome: Multiple Currencies
There are many problems payroll departments are faced with when it comes to implementing new global payroll solutions. However, dealing with multiple currencies is one of the most significant challenges to consider. The main problem with working across different currencies is that currency exchange rates are not static. They are a moveable beast, and they can be highly volatile. A sudden fluctuation in exchange rates could result in either your overseas employees suddenly costing the business significantly more than budgeted or your employees end up with a much lower income than they anticipated. The good news is that there are global payroll solutions that work to avoid these risks and reduce exposure, so it is worthwhile researching and locating a provider that offers the technology that can manage or at least mitigate the risk of these challenges for you. Once a system is implemented, it becomes much easier to manage local changes in different countries, allowing you to be compliant, cost-effective while also ensuring that you can pay your employees accurately and promptly too.
Immedis is just one example of such a provider that offers this technology. I mention Immedis because Adrian Morrissey recently discussed global payroll and jurisdictional compliance on The Payroll Podcast with me. It is well worth a listen too! Whether it is Immedis or one of the many other global payroll providers out there, I would strongly recommend that you take your time to consider which one can deliver the solution that best suits your requirements. Different providers may have different regional strengths too so if, for example, 90% of your global payroll workforce is based in APAC, it would make sense that you selected a provider with particular strengths delivering solutions across APAC regions. This may seem obvious, but with many providers promising to be all things to all payroll departments, it can pay to investigate areas of expertise like this before selecting your provider.
Challenges to overcome: Existing Technology
One of the most critical considerations is then establishing the capabilities of your existing technology. Unless you want to start again from scratch, and most companies do not, it will be vital to find a global payroll system or solution that can integrate well with the systems you already have in place, such as your payroll, reporting, time and attendance, HR and financial systems. Make life significantly easier by analysing the degree of automation that the system offers, so you can make sure that your payroll operations are as efficient as possible. Making sure the user interface is simple to use and provides self-service options for employees is helpful, as it will save the amount of time that your payroll department has to spend answering questions. Finally, make sure that reporting from the system will be straightforward and consistent so you can have a good understanding of global payroll issues at a glance.
Challenges to overcome: Compliance
Another of the significant headaches associated with global payroll systems and associated payroll processing is compliance. If you are working across different countries, you will need to be compliant in many different jurisdictions, and this can be incredibly complicated. Complying with tax regulations can be particularly complicated. The Global Payroll Management Institute recommends bringing in specialists who understand compliance in different jurisdictions to avoid costly mistakes. Aside from tax, you will also need to comply with social security regulations in the country of operation. Bringing in experts can help you to set your system up correctly from the start, to avoid errors. Of course, locating payroll consulting or project experts is something we at JGA Recruitment can help you with too! If you need help, email me: [email protected]
Challenges to overcome: People Management
Another challenge of implementing global payrolls is dealing with the people side of things. Leadership skills form an essential part of any payroll management remit, especially where large teams are involved. However, going global will often lead to changes concerning responsibilities and job roles too. Managing change is therefore vital, especially if your team is afraid of automation. It is human nature to be fearful of the unknown but with evolution, brings opportunity. In reference to RPA (Robotic Process Automation) and artificial intelligence coming into payroll operations, focus on the opportunities it can bring (you can read one of my previous articles on the subject here). Responding to RPA positively will encourage your team to support the change. Automation (in my view) will require payroll departments to develop significant technical payroll expertise, which means that data inputting payroll roles could become a thing of the past. I believe that automation will raise the profile of the payroll profession because it will force businesses to recognise payroll as being a very technically capable function that contributes high-level reporting and analytics to support strategic decision-making at board-level. Evolution is always challenging, so it is imperative that you support your payroll team to ensure they are not confused or concerned during the implementation process.
Subsequently, I would advise adopting particular change management techniques to help avoid these difficult challenges, and I would recommend communicating openly with staff, so they understand why projects are taking place and how they can also get involved. This can help gain support and buy-in for the project so that it runs smoothly – which is a lot better than dealing with employee resistance or demoralisation. In addition, when managing change, it is also crucial to consider organisational politics to get your stakeholders on-side. This is essential because if you can achieve stakeholder backing then they will not only support you, but they may also free up additional budget or resources that can help the project.
Ultimately, implementing and then managing global payrolls is never going to be a straightforward task. Managing payrolls across different languages, cultures and time zones add layers of complexity to your payroll operation that can be difficult to surmount. Therefore, it is essential to be very diligent when putting in place a global payroll system or when selecting a suitable global payroll provider so that you do not get caught out. Detailed planning from the outset and then making sure you have the right people in place to deliver the project and manage it on an ongoing basis is as important as finding the right technology and maintaining compliance, as well as the change process. The devil is in the detail, and if you work hard to get it right first time, the chances are that your global payroll implementation will be a great success.
As always, whether you love payroll or love HR, love what you do, work smart and work hard – just be careful not to overdo it.
This article was written by Nick Day, CEO of JGA Recruitment – the leading Payroll, HR & Reward Recruitment Specialists.
Nick Day | CEO
JGA Recruitment Group
Payroll, HR & Reward Specialist Recruiters
Email: [email protected]
Tel: 01727 800 377