Multinational companies are always looking for ways to improve processes and economize scaling up their infrastructure. Efficiency requires systems that are centralized and standardized, whether within a shared services environment or specialized locations. One new approach to this goal is the move to centralizing payroll operations so that disparate local systems can be integrated into one global operation optimized to yield performance and cost savings. A global payroll system is not without challenges, but there are several benefits, as well.
1. Ensure Compliance
One of the primary concerns with implementing a global system is ensuring compliance with legislation in any country of operations, such as the Sarbanes-Oxley (SOX) regulations in the U.S. or the Data Protection Act in the UK. Meeting different sets of regulations has always been a barrier to one centralized system, leading to very fundamental applications that have to be tuned to each facility or office - not much of an improvement over separated systems, if at all. But improved technology along with the "hub-and-spoke" architecture of shared services and the rise in outsourcing IT and payroll services has led to demand for systems that can be more customizable and responsive to different regulatory criteria. Now global payroll systems can be integrated with other platforms such as HR software for companies wanting to keep payroll services in-house.
2. Accurate Reporting
The need for detailed, real-time reporting is one of the major requirements from a global payroll system. With a centralized approach, the organization can produce timely reports for branches in various parts of the world at any location with a minimal expenditure of human effort. This data makes it possible for organizations to make crucial labor decisions for any of its operations around the world. Labor costs, head counts, relative production numbers, and other factors can be aggregated and compared to allow regular tracking and decision making for improving return on investment.
3. Pay Scale Confidentiality
Protecting data is always a concern, especially when it comes to payroll figures which could lead to protests, demands, and bad press, all of which can seriously undermine profitability. Normally a central location for all payroll data can create concern as a single breach or leak could compromise all the data. But having information in one centralized, properly-secured system actually reduces exposure and consolidates security measures. Standard roles and permissions can be applied to determine who has access to what data. Automating translation between various systems such as currencies, banks, and local legislation, and encrypting all transmission and storage of information, is a safer and more secure way to implement global payroll processing.
4. Lower Technology and Maintenance Costs
The implementation of a global payroll system isn't simple or free. But when done correctly, returns accrue over time through cost savings. A centralized system means less effort in monitoring and maintain the payroll systems across locations that could be scattered around the globe. This frees up employees to focus on other tasks. The various technologies involved in transitions between disparate systems will be eliminated and combined in one platform, and maintenance thus reduced from a dozen or more systems to one. System acquisition, implementation, and training will involve additional capital outlay, but all new systems do. A single comprehensive system actually reduces these costs, as well. Outsourcing to a payroll system can also mean additional support and upgrades without the unforeseen cost of handling any issues that may arise.
5. Prioritize Location Transitions
A global payroll system doesn't have to implemented world-wide from the outset. That could actually be near-impossible expectation leading to loss of business functions and compounded problems. If payroll operations are a mess at even one location large-scale integration becomes impossible to implement. Various locations, be they large production facilities or small sales offices, can be integrated one at a time once the central system is in place. These ensures that requirements for each location can be fully realized, tested, and optimized. Phasing in various locations could be scheduled by region, associated costs, and particularly by their impact on corporate operations as a whole. Careful, strategic planning to generate the quickest benefit and the minimal loss of business functions is more readily accomplished through integration with a single, centralized platform.
Those organizations looking to take advantage of global payroll systems will find that the potential advantages far outweigh the obstacles. Of course, this depends on both the structure of the company and the resources of the vendor or provider they choose to partner with. There are other unavoidable factors such as time zone differences, language barriers, taxes, and other issues that may influence final choices and the ongoing relationship between provider and buyer. It's important to understand upfront how the architecture of any new system will fit into your existing infrastructure and impact your organization's needs.
