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Can Your HR Support International Growth?

Manufacturing brief

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Introduction

Headline

The HR challenges that arise as international expansion gathers pace become central to an organisation’s success or failure. HR is a company’s backbone with payroll being the key way to recognise the most important asset.

As such, core HR touches every aspect of a business, and the health of an organisation depends on how well core HR data and functions are integrated with company systems. According to the 2011 ADP paper, ‘A worldwide employee view fosters good decisions and better results’ where 89% of companies believe that having a complete view of their employees is “critical.” Yet only 30% of them actually have that complete overview, meaning that they are in turn exposed to risk and compliance issues.

A lack of standardised HR or integrated payroll fast becomes a problem for multinational corporations. The dream is of harmonised payroll in an organisation’s subsidiaries throughout the world. Yet in practice, companies operating in several countries worldwide have to cope with very different payroll rules. The complexity of international payroll can slow down the pace of expanding into new lucrative markets, thus limiting the speed to take advantage of new opportunities for growth.

The challenges and barriers to succeed internationally therefore come down to standardisation. Yet, few organisations know how to do it, or dare to even try. It is helpful to understand the main challenges, see where organisations are going wrong, and identify where HR can step in to put it right.

89%of companies believe that having a complete view of their employees is “critical.”

Only 30% of companies have that complete view.

CEO: Can your Human Capital support your international expansion?

CFO: Can your finance efficiently manage the impact of international HR?

CIO: Can your IT implement an effective multi-country HR strategy?

CHRO: Can your HR support an international workforce?

Other reports include:

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Challenge 1: CostsMany manufacturing companies pay employees different rates based on the type of work they do, when and where they do it. Some manufacturers seek to boost productivity by paying a piece rate. In addition, employees assigned to different jobs or shifts may be entitled to several different rates within the same pay period. On top of that, international manufacturing companies need to comply with different country regulations and withhold the right amount of tax in each location where they have production plants. Dealing with all these complications is time-consuming and, of course, adds costs.

Challenge 2: Flexibility Demand for manufactured products fluctuates, so employers in the sector need to be able to manage labour flexibly. As cited in recent ADP Time and Labour Challenges report1 “Being able to assign the right people, with the right skills, at the right time, and at the right cost directly supports an organisation’s ability to respond to fluctuating production goals without compromising quality.”

Challenge 3: Control To attain this level of flexibility, time and attendance systems must be able to handle changing schedules, with data on the hour’s employees have worked flowing seamlessly into payroll. However, many manufacturing companies, even global ones, have not yet adopted such systems. A survey by Sierra-Cedar2 found that while 92% of manufactures were using administrative HR and payroll software, for workforce management solutions the adoption rate was far lower at 64%.

Manufacturing brief

Manufacturers have many challenges to overcome - access to raw materials, sustainability, incremental costs of water, fuel and energy costs, global and local trade regulations to name a few. In addition, technology advances, and higher expectations on service, quality, and price are factors forcing all manufacturing companies to turn their attention to ways of becoming fully efficient within development cycles.

Moreover, it’s never easy for organisations to ensure their employees are all paid accurately and on time. But for manufacturers, with their large number of hourly paid workers, the task gets much more complicated than any other sector. And it’s especially complex for manufacturers operating in more than one country.

Manufacturers turn to the cloud to simplify payroll services

1. “ADP Time and Labour Challenges: HR at a crossroads 2016”, quote from Sambartolo, M.

The SolutionResearch has shown that automated workforce management solutions improve employee engagement by increasing both transparency and communication between managers and employees. Companies that use these solutions also increase productivity by making better use of their workforce.

But standalone systems, however sophisticated, cannot deliver all the potential benefits of automation. For manufacturing companies that need to manage communication, scheduling and reporting across scattered production facilities, the ideal solution integrates HR administration with payroll, time and attendance and scheduling.

A unified, cloud-based solution of this kind can give managers access to the data they need from any location, but typically relies on employees inputting their own time and attendance data. This can be difficult for people who do not spend their working days in front of a desktop computer, which is why a growing number of manufacturers tend to offer employee self-service access to payroll and benefits information via mobile HR apps.

In today’s highly competitive manufacturing industry, no company can afford to ignore the cost savings and efficiency improvements that come from using cloud power combined with mobile technologies to reduce the complexity of their payroll operations.

“Being able to assign the right people, with the right skills, at the right time, and at the right cost directly supports an organization’s ability to respond to fluctuating production goals without compromising quality.”

2. Sierra-Cedar, 2015-2016 HR Systems Survey White Paper

IAC ON GLOBAL LEADERSHIP IN HCM

International Automotive Components, a leading global supplier of vehicle and truck interior systems and components has around 32,000 employees in over 100 locations in 22 countries. They had over 30 payroll systems and were looking to move to one global payroll system to standardise processes and procedures while meeting local and global compliance requirements across the globe. Hear how International Automotive Components partnered with ADP’s payroll and HCM solution that was scalable to handle the volume of their employees and ensure employees receive accurate and timely pay across the globe to support their organisation’s growth.

“All HR transactions are processed in real-time capacity, rather than pieces of paper flying around the world.” Fiona Jonasson, VP of Corporate HR, Administration and Compliance, International Automotive Components

Case study

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Workforce management solutions adoption rate is at

64%2

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CHRO

No time to loseDid you know that when asked if they expect to expand their business globally, more than half (52%) of all businesses in a recent multi-national survey answered “YES”?1 However, when asked if HR is ready for such challenges, there is a general lack of confidence. Both HR and business leaders, on average, rate HR’s performance as low; business leaders rate HR’s performance 20% lower than HR leaders do themselves.2 Similarly, whereas nearly 6 in 10 companies are planning to increase HR spending in the next 12–18 months, only 8% describe their current HR analytics team as ‘strong’. The coming year could be crucial for HR to prove its worth by aligning HR technology with global expansion strategies.

Challenge 1: The impact of invisible costs on payroll Payroll combined with personnel and benefits administration account for 35% of total HR costs.3 The administrative burden of managing multiple systems or vendors in multiple countries requires constant consolidation of information and reports. The resources required not only add to the cost but also impacts the ability to make good and timely business decisions.

Challenge 2: Effective HR processes providing flexibility for multinational businessesThe international growth of businesses is limited by HR’s ability to cope with local regulation and the flow of new people into the business. Change is therefore much more fluid and effective when implemented across an entire organisation. HR standardisation offers the potential for increased flexibility for CHROs, offering more efficient and cost effective processes. Multinational companies can free themselves from having to deal with a host of different regulations, employee policies, labour conditions, currencies and languages. As they globally outsource payroll, companies can consolidate consistent processes for all the countries in which they operate, sharing best practices across all subsidiaries using the same HR policies and reference data.

Challenge 3: Increasing control of HR with better dataWith 37% of mid-sized companies core HR data left sitting in Excel or similar databases, talent management and payroll data often remains unconsolidated and inaccessible.4 International CHROs need systems that free up their time for strategic issues, with global payroll and training information online and accessible for all employees, managers and directors. This includes central Business Process Management (BPM) systems to monitor payroll and human resources administration data workflow, allowing for benchmarking of internal divisions and business units against strategic objectives and HCM indicators.

1. Global Payroll Survey (2014), Ernst & Young2. Global Human Capital Trends (2015), Deloitte3. Payroll at the heart of HR Outsourcing, ADP White Paper4. ADP Global HCM Study, January 2014

CHRO

Payroll combined with personnel and benefits administration account for

35% of total HR costs3

Strategic international HR Directors offer consistent policy and practices across all the countries that their organisations operate in. To provide the visibility and tools required to align with the business strategy increasingly requires a transformation of talent management and payroll technology.

Make sure you address the 3 most important international HR challenges.

Can Your HR Support an International Workforce?

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Why now?Did you know, according to the 2015 Multi Country Payroll Outsourcing Service Provider Landscape research by Everest Group, multi-country payroll will grow by 20-25% between 2014-2016? This is on top of an already strong 30% growth in recent years. However while the latest Global Payroll report by Ernst & Young finds that 89% of all executives believe a global view of their workforce is essential, only 30% have the information they need. The forces of global expansion and internal technological processes are currently working against each other, not together.

Challenge 1: Multiple platforms increase technology costs of HRThe cost to IT of internal payroll systems cannot be underestimated, with software fees, maintenance and upgrade fees, system integration and interfaces, hardware and subcontracting costs, and time spent by staff on payroll systems. For multinational companies with multiple local payroll systems, data consolidation adds to the cost. The PwC 2011 Total Cost of Ownership study found that in-house multiple platform payroll administration systems cost 32% higher than a single source, outsourcing solution.

Challenge 2: Leveraging the flexibility of cloud computingAccording to Deloitte, the “on demand” and “on tap” talent markets continue to grow and challenge companies’ ability to effectively manage their total workforce.2 Yet as the importance of workforce capability builds among corporate leaders, organisations’ readiness to address it has slipped (with Deloitte’s readiness index dropping from 46 to 43).

An international IT Director needs the flexibility to scale systems according to changing needs and capabilities – this requires a standardised and automated platform. In a recent CIO survey, 60% of respondents said cloud computing reduced the need for the IT team to maintain the systems, freeing up more time to focus on strategy.3

By transforming talent management systems, CIOs can offer consistent processes and practices across the organisation, providing C-suite colleagues and departments with the visibility and tools required to align talent management to global business strategy.

Challenge 3: Enhanced control over HR technology systemsWithout leveraging cloud computing for HR, CIOs are left to worry about managing data centres, scaling capacity, configuring and aligning servers, and other maintenance tasks in addition to complications, significant costs and upfront investments along the way without the control needed to support HR in different locations. A truly integrated global HRIS system would provide a true overview of the business’s entire organisational HR systems and consolidate employee data, providing HR with the time to analyse it.

1. State of the CIO SURVEY (2015), CIO magazine2. Global Human Capital Trends (2015), Deloitte3. State of the CIO SURVEY (2015), CIO magazine

CIO

CIOs want to spend more time on driving business innovation and identifying opportunities for competitive differentiation.

Can Your IT Implement an Effective Multi-Country HR Strategy?Most international CIOs want to reduce the need for their IT team to manage multiple local payroll systems in order to free up time to focus on strategic work. The most frequently cited tasks that take up a CIOs time include improving IT operations and systems performance (50%) and implementing new systems and architecture (44%).1

When asked where they would like to spend more time in the future, CIOs point to more strategic global activities such as driving business innovation (55%) and identifying opportunities for competitive differentiation (42%).

Make sure you address the 3 most important international HR challenges.

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A matter of urgencyWhen top executives were asked by Ernst & Young to identify the primary issues they currently face regarding global payroll, the top three answers were ‘legislative compliance’ (29%), ‘organisational consistency in payroll processes’ (17%) and ‘administration costs’ (12%). Put simply, a company needs to know who is being paid, where, how often, and how much, prior to each pay cycle. A lack of the right tools and infrastructure however make it difficult to consolidate data in different currencies, from multiple vendors, to derive a company’s total headcount and cost.

Challenge 1: Manage cost transparency while improving budgetingHalf of global executives say that they are devoting more time and money to employee development than they were just two years ago.1 Understanding and managing the volume of multi-country personnel changes is a monumental task, taking up staff time and resources. Global Finance Directors need to monitor the cost challenges associated with talent management and make strategic contributions to business decision-making. A single vendor with a single contract provides transparency on costs, making budgeting and financial planning easier, while relieving companies of the burden of large back-office functions. This enables the CFO to focus on business expansion and other operational strategies while controlling costs.

Challenge 2: Remain consistent and provide financial flexibilityRecent research confirms that 61% of leaders plan to add headcount outside of their home country in the coming years, and 57% of global organisations see outsourcing to one single vendor.2 HR cloud solutions are helping organisations transform traditional IT structures into more nimble, flexible and affordable architectures. Findings from a study conducted by CFO Research in collaboration with ADP show that more than 60% of CFOs surveyed agree that companies have experienced increased pressure to respond to tax, employment and payment-related regulations in increasingly shorter timeframes during the past two years.3

Challenge 3: Having control with real-time finance metrics Multinational payroll services help companies support their global workforce with optimised investment in infrastructure, software maintenance and systems consolidation. A single data repository enables financial reporting and analytics by means of integrating employee data, policies, and processes into one platform. Visibility into the overall workforce requires such standardisation of processes in order to track key metrics and provide insights. Having a single global supplier working across many countries provides access to real-time consolidated compliance data while simultaneously increasing efficiency and productivity.

1. The Global Talent Index Report (2015), Economist Intelligence Unit2. Multi Country Payroll Outsourcing Service Provider Landscape (2015), Everest Group3. Managing Compliance in a Changing Environment, CFO Research, in collaboration with ADP, January 2013

CFO

61% of leaders plan to add headcount outside of

their home country in the coming years2

International CFOs require consistent processes and practices across their organisation that provide them with the visibility and tools required to take unnecessary costs out of talent management. The Finance Director’s ability to measure how Human Capital Management decisions affect the business and how business decisions affect Human Capital is crucial to international business expansion.

Make sure you address the 3 most important international HR challenges.

Can Your Finance Efficiently Manage the Impact of International HR?

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A timely strategyDid you know that the majority of CEOs believe that investments in digital technologies have created value for their business, with around 80% saying that mobile technologies and data analytics are key strands of their business strategy?1 The rapid pace of technological change – cited as a challenge by 58% of CEOs – is also highlighting a shortage of key skills that could derail global expansion. Ensuring that technology and expansion plans work together will be a matter of urgency in the next two years.

Challenge 1: Increasing profits by monitoring HR costs A survey of 1,300 companies by the Manchester Business School found that 88% of cloud users experienced cost savings and 56% found that cloud services actually helped them to boost profits.2 Jeitosa Group International’s Global Benchmarking Study 2013 found also that high-performing organisations are far more likely to have a global payroll team that has both visibility to and accountability for the functioning of payroll at the country level across the entire enterprise. By moving HR into the cloud and by having a consolidated global payroll, CEOs are able to increase their profits and shareholder value.

Challenge 2: Flexibility as a driver of business success

Over half (54%) of CEOs have entered a new sector or sub-sector, or have considered it, in the past three years3. Expansion abroad will attract by far the largest amount of investment capital in the next three years, with two-thirds of CEOs now expecting foreign revenues to be greater in three years than they are now.3 Global payroll outsourcing offers multinationals of all sizes additional flexibility as they grow. Expanding businesses are relieved from acquiring local payroll knowledge as they settle into new markets and territories. Forty-three percent of CEOs also foresee greater movement of skilled labour between markets. CEOs therefore want a strong connection between digital investments and business objectives; 86% say a clear vision of how digital technologies can help achieve competitive advantage is key to success.

Challenge 3: Having control with accurate and standardised Human Capital dataCEOs need to have a snapshot of the talent within the organisation and a direct link with KPIs and business objectives to ensure employees are working towards the same organisational goals. Amongst the highest rated concerns for CEOs in 2015 are ‘Cyber threats including lack of data security’ (61%) and ‘Speed of technological change’ (58%).4 By transforming Human Capital and payroll, CEOs are not only able to align their talent management to their strategy through effective monitoring, analysis and reporting. They can also increase the security of their Human Capital data and keep up with latest technology.

1. 18th Annual Global CEO Survey (2015), PwC2. Rackspace Survey in conjunction with the Manchester Business School and Vanson Bourne (2013)3. 18th Annual CEO global survey (2015), PwC4. Global CEO Outlook (2015), KPMG

CEO

86% of CEOs say the key to success is a clear vision of how digital technologies can help achieve competitive advantage.3

Can Your Human Capital Support Your International Expansion?International CEOs are increasingly rethinking and redesigning their human capital management strategy. According to the 2014 PwC CEO Survey, 93% of CEOs recognise the need to change, or are changing, their strategies for attracting and retaining talent. However, 61% have not yet done so. The three factors CEOs see as vital for success are: creating new value through digital transformation; developing diverse and dynamic partnerships; and finding different ways of thinking and working in multinational environment.

Make sure you address the 3 most important international HR challenges.

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The administrative burden of managing multiple systems or vendors requires endless consolidation of information and reports. The resources required not only adds to the cost – it also impacts the ability to make good and timely business decisions.

Local Systems for Global UsePepita Morales Saldana, Global Payroll Manager at TomTom, a provider of GPS navigation which has gone from having a few offices in The Netherlands in 2006 to being operational in 40 countries today, recalls, “We were using a local Dutch payroll system and were using it as an HRIS system which you can imagine gave us a lot of difficulty. We had one local Dutch system and in there we had to register all the information of all the employees worldwide. There is a lot of local information that you need to store but your system is not built for global information - it’s just built for the local Dutch information.” Running international payroll in this way is time consuming and increases the costs of IT infrastructure, support and regular maintenance.

Is There a Better Way?The Webster Buchanan Research report, ‘Multi-country Payroll: Analysing the Business Benefits and Challenges’, argues that the cost will be a key component of most multi-country payroll business cases, and where “organisations automate manual systems or streamline processes, there will be a potential for direct cost-savings.”

Jeitosa Group International’s Global Benchmarking Study (GBS) found that “High-performing organisations are far more likely to have a global payroll team that has both visibility to and accountability for the functioning of payroll at the country level across the entire enterprise.” TomTom have developed a shared services centre where payroll has been outsourced, providing standardised processes and services with a better management of costs. “The fees are very clear so we have a good understanding about the costs that are involved with payroll. It is also not possible to have an expert in each country. So that’s why we also need to buy in that knowledge because we have a lot of countries with a few employees and it’s not cost effective to have a local payroll specialist in each country,” say Morales Saldana.

BENEFITS OF STANDARDISED PROCESSES TO TACKLING COST:

• Predictable and scalable fees

• One pricing scheme per region with a single invoice and single currency for invoicing

• Reduces Total Cost of Ownership (TCO)with managed services that eliminate maintenance and infrastructure costs

• Simplifies workflows by automatically updating country payroll data from central ERP or HRIS

• Strives to reduce costly errors that stem from lack of knowledge or visibility

• Provides awareness of overall payroll costs with a single invoice for all your countries

• Keeps systems updated with changing national statutes and payroll legislation

• Facilitates regionalisation or shared services initiatives by providing a single platform and user interface for global payroll processing

Dierk Russell, HRIS Manager EMEA at Covidien, a medical devices company that went from a fragmented payroll to a standardised outsourced model in EMEA, comments, “Before outsourcing we weren’t able to review or analyse the costs. Now it is very simple as it’s one contract.”

A single vendor with a single contract provides transparency on the costs making budgeting and financial planning easier, while relieving companies of the tedium of back-office functions. This enables them to focus on business expansion and other operational strategies while controlling costs.

Multiple Local Payroll Systems Increase CostHR departments are under constant pressure to contribute to overall company savings and to find ways to reduce costs. The ADP white paper, ‘Payroll at the heart of HR Outsourcing’ finds that payroll combined with personnel and benefits administration account for 35% of total HR costs – or approximately $525 per FTE.

International Challenge 1: Costs

“Buying competitors gives us huge integration challenges – everything from getting new people to understand how we work, to getting them integrated into our HR and payroll systems.”

Philippe Mennrath, KNAUF

Payroll costs represent nearly half of this, reaching an average of $250 per Full Time Equivalent (FTE) per year with variations by country. There are invisible costs too which are often over-looked as part of the due diligence process but impact the companies’ bottom-line. IT components form the greatest part, with software fees, maintenance and upgrade fees, system integration and interfaces, hardware and subcontracting costs, and time spent by staff on payroll systems. Multiply this with the number of countries HR serves and the costs can be substantial.

As organisations expand internationally they typically will either implement multiple local payroll systems (in-house or outsourced to multiple providers), or leverage the existing tools.

A single vendor with a single

contract provides transparency on

the costs.

Pulling Together Fragmented Systems For companies with multiple local payroll systems, data consolidation adds to the cost. Pulling together reports generated by different systems is time consuming. Philippe Mennrath, HR Director at KNAUF, a global supplier of building materials, explains, “Buying competitors gives us huge integration challenges – everything from getting new people to understand how we work, to getting them integrated into our HR and payroll systems.”

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“In one calendar year, there were over 20,000 changes in payroll regulation globally.”

Downsizing and GrowthPapyrus, a merchant in paper, supplies and industrial packaging, is operating in a declining industry where competitiveness is the key to success and is restructuring the organisation accordingly. “The big challenge for Papyrus is to adapt our structure. We are starting to adapt our HR tasks and payroll to be more competitive, stronger, efficient, and to take the time to implement other HR tasks and not to use all our time on payroll. It will provide more flexibility and responsiveness to the business to help it adapt to market changes” says Karima Cherifi, HR Director at Papyrus France.

In contrast, Yankee Candle, a manufacture of scented candles, has been experiencing global growth of 30% per year with “HR systems that could not cope” according to Rachael Merrett, Financial Controller at Yankee Candle. “There was a very poor HR system, and the payroll system, didn’t give us any of the management information we needed – even things like holiday records, which were all kept manually. Nothing was linked up.”

Out of the 161 respondents to the Ernst & Young Global Payroll Survey, 68 are considering expansion into new

Local Expertise is Critical As organisations move into new geographies, they typically also lack local expertise. If there is no knowledge of local payroll practices, this creates risk. Regulations may vary by region, by city, by business activity with collective agreements, or by company with company agreements. When all these factors are combined, things start to get extremely complicated. Brazil, for example, has more than 10,000 union agreements and Japan nearly 300 different minimum wages, which vary from branch to branch and from region to region. In France, legal changes in 2014 impacted all aspects of HR: payroll with DSN (registered social statement), labour union relationship with BDES (basis of economic and social data), talent management with training reform, and benefits with CICE (tax credit of competitive employment).

The frequency of legislative changes and the complexity of incorporating them either lessens, or intensifies the first. For example, in one calendar year, there were over 20,000 changes in payroll regulation globally. Adding to this pressure, the time companies have to implement changes required by new tax, employment, and payroll-related compliance regulations is shrinking.

Findings from a study conducted by CFO Research in collaboration with ADP show that more than 60% of CFOs surveyed agree that companies have experienced increased pressure to respond to tax, employment and payment-related regulations in increasingly shorter timeframes during the past two years.

Understanding and managing the volume of changes is a monumental task for HR, taking up staff time and resources. Greater complexity and risk often results in reduced flexibility and strategic input.

markets within the next year. Only 11% of these, however, were in the process of actively pursuing a global payroll solution implementation as part of their expansion. The growth of these businesses will be limited as HR will try and cope with the local laws and getting new people into the business.

Adapting to Market Conditions and a Changing Business World

International Challenge 2: Flexibility

Having systems and processes that make change very difficult limits the organisations’ flexibility and reactivity to market conditions. Poorly managed HR and payroll can crush any such desire for flexibility as internal teams find all their time and resources become devoted to simply keeping up with the monthly (or weekly) pay rounds instead of supporting the business.

Only 11% of companies will

implement a global payroll solution

when expanding internationally.

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International Challenge 3: Control

Simplicity and Standardisation is Key to True FlexibilityThe Jeitosa Group International report, ‘Driving Globally Strategic Payroll: The Paradoxical Journey to Efficiency and Innovation’, argues that, “A key characteristic of the International model is that it is especially adept at understanding the needs of its local business units and sharing best practices and innovations across the global organisation.” At Papyrus they understand that investments in HR and payroll is important, “We had to change our policy. It’s a cost saving policy but it’s to also share best practices between the countries” says Karima Cherifi of Papyrus France.

HR standardisation offers the potential for increased flexibility for HR, offering more efficient and cost-effective processes. Companies can free themselves from having to deal with a host of different regulations, employee policies, labour conditions, currencies, languages, and directives. As they globally outsource payroll, companies consolidate consistent processes for all the countries in which they operate.

Global payroll outsourcing offers multinationals of all sizes additional flexibility as they grow. Emerging businesses are relieved from acquiring local payroll knowledge as they settle in new countries. They simply ask their supplier to “open another country”.

BENEFITS OF STANDARDISED PROCESSES TO ENHANCING GLOBAL FLEXIBILITY

• Service offerings and operating models that align all sizes and types of organisations

• Extended geographical coverage

• Responsibilities and risks transferred to the third party provider

• Compliance with local legislation worldwide

• Internal alignment and the sharing of best practices across all subsidiaries using the same HR policies and reference data

• Everyone speaks the same language: company management obtains consistent indicators, resulting in easy-to-consolidate reports and greater accountability

• Multinational payroll services helps companies support their global workforce with optimised investment in infrastructure, software maintenance and systems consolidation

• Having a single supplier for many countries reduces vendor technology costs

Poorly managed HR and payroll can crush any desire

for flexibility.

Are You in Control or Being Controlled?Having a global view of the workforce is essential for executives managing their business, but only very few actually have this. Fragmented systems will not provide that single version of the truth, decisions being made based on information from disparate systems will not be accurate or up to date, introducing uncertainty into key decision making processes - making it impossible to provide data for business strategy or monitor key performance indicators for HR.

Rachael Merrett of Yankee Candle recalls that before transforming HR and outsourcing, “We just didn’t know the information we needed about our people. This was not acceptable for the size of our business. Our US office

was asking us for more and more information about headcount, what type of people they were (salaried or hourly paid, male or female, or average salaries). There was no control.”

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ConclusionInternational expansion goes hand-in-hand with ever-changing local compliance requirements, keeping control and visibility of multiple subsidiaries, people-related costs and the need to protect a company’s most sensitive information. An effective multi-country payroll solution would appropriately address platform compatibility, integrate data and centralise multi-country information at both local and global levels. It would also adequately standardise service levels across vendors and integrate knowledge of local compliance.

BENEFITS OF STANDARDISED PROCESSES TO INCREASING CONTROL:

• Consistent SLAs and KPIs across the international organisation

• Central BPM systems to monitor payroll and human resources administration data workflow

• Single systems allows for multi-country consolidated HR reports

• Responsibilities and risks transferred to the third party outsourcing provider

• Compliance with local legislation worldwide

• Change is much more fluid and effective when implemented across an entire organisation

• Moving all regions to a single platform means teams feel the impact only once, with no extended reaction over time

The value of having all data accessible to HR, leadership, managers and employees, cannot be underestimated.

Centralisation is the key to streamlined service delivery and an HR operating model which world-class organisations are seeking to embrace. A network of in-country payroll specialists with deep knowledge of local legislation and HR details would lighten the load of shared services centres or local subsidiaries. By finding new ways to help maintain compliance and mitigate risk, improve business process efficiencies and, ultimately, help to drive organisational growth and international expansion, HR can demonstrate the strategic value they provide to the company.

The least innovative or agile organisations will see this as a fearful prospect. Those that will succeed in the global marketplace and expand globally, however, will embrace the benefits of standardised core HR and payroll – and will do so with HR leaders at the helm.

Too much time is spent by HR getting the right data before they can make decisions or before they can assess the impact of decisions that have been made. Not only is time taken up in getting and collating that data, but also making sure that the data is accurate. For Karima Cherifi of Papyrus France, “Because we’re in a cost-cutting environment, each month we have to rate ourselves against set rules on errors in payroll. My objective is to have 99% payroll efficiency, and these have to be achieved in parallel with other KPIs around severance costs, numbers of full-time employees, etc. Now we have extremely good visibility on things like this. We can exchange lots of data between management teams thanks to our outsourcing of payroll.”

Data visibility and a standardised set of processes enables companies to make real time critical business decisions and focus on the strategy of your company. Dierk Russell of Covidien notes, “With consolidated reporting we know obviously a lot more about our payroll than we ever were able to do. Even with a good finance system and good chart of accounts the type of analysis we have today is far beyond what we used to be able to do.” Visibility into the overall workforce is key and requires common policies and standardisation of processes to track key metrics and provide insights.

Internationalisation Needs StandardisationA single data repository that enables reporting and analytics requires an integrating of HR data, common policies, processes, and tasks into one platform. With 37% of mid-sized companies’ data left sitting in Excel (ADP Global HCM Study, January 2014) or similar types of databases, the value of putting all data in one system, accessible to not just HR, but also leadership, managers and employees, cannot be underestimated. This was the case for Yankee Candle, “Payroll was incredibly time consuming, so when it was manual we used to have to collect manually, put it into a spread sheet, send the spread sheet to payroll, get a spread sheet back, analyse it - it was just ridiculously time consuming.”

37% of mid-sized companies’ data is in

spread sheets

HR standardisation offers the potential for increased flexibility.

The Webster Buchanan Research report, ‘Multi-country Payroll: Analysing the Business Benefits and Challenges’ identifies that “every international payroll function is geared up to meet unique local regulatory and business requirements, they tend to evolve on a country-by-country basis, with little standardisation around best practices and processes.” Most multinationals will use a mix of in-house and outsourcing. “In a large company operating in a dozen countries, for example, you could easily find 15-20 different processing partners.” It can be difficult to get visibility into individual payroll operations, ensuring they’re all compliant and guard against fraud. For Yankee Candle there has been a massive impact, “Now, I can run ad-hoc reports, I can write reports, and I can interrogate the data all of the time. We can now extract reports that talk to our finance system. This has paid dividends because now we can easily put wage data into our ERP system,” says Rachael Merrett of Yankee Candle.

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