01 October 2019
This article was featured in the October 2019 issue of the magazine.
Jerome Smail, freelance journalist, presents the views and opinions of industry luminaries on global systems, strategy and innovation
It's fair to say reward is going global. In what sense? Well, both in terms of becoming an all-encompassing function comprising remuneration, human resources (HR) and payroll, and spreading its wings internationally on a strategic basis.
This two-pronged attack, however, brings unique challenges. Systems and skills need to be selected and refined and policies need to be polished and implemented. To give an insight into how all this can be achieved, we have counselled the experts:
Jason Davenport, chairman of the board at CIPP
Don McGuire, president, employer services international at ADP
Sharon Tayfield, director of global payroll services, global outsourcing, at BDO
Chris Deeson, UK country lead at Keypay.
Here’s what they had to say:
When it comes to global systems, what are the important aspects from both a payroll and HR point of view?
Jason Davenport: Systems must have the ability to cope with the variants that arise from holding multiple countries’ data. This means allowable personal data and reportable personal data, as what is collected from one country to another can differ widely due to the laws of the land and what is acceptable. The system also needs to be able to be segregated to break down reporting and costing groups into their subsequent parts but also roll up into a regional/cluster view for both high- and low-level analysis.
Don McGuire: Operating a business on a global basis brings about many new complexities and the importance of good systems in managing this can be vital to success. The key point in regard to payroll and HR is the need for varying systems in different geographies to work together; yet many HR systems are not able to manage international payroll rules. When this is the case, greater resources are required from payroll and HR teams which ultimately impacts on the company to focus on wider issues. It can also lead to a higher number of payroll errors and inaccuracies – something that can have a large impact on employee engagement. For this reason, HR and payroll standardisation is hugely important in global systems, allowing global businesses to be freed from the burden of managing different payroll regulations, employee policies, currencies and languages.
Sharon Tayfield: Any system should support the heart of an organisation and be capable of adapting to changes within an organisation. An important aspect is to have complete visibility and control of the entire global payroll or HR process. It needs to be flexible and support the business both in its strategies which are likely to be diverse, as well as enabling employees to work how they want to in the 21st century. Other critical aspects for a global system is to be housed on a fully compliant and secure platform, provide a single truth on all global payroll or HR data while incorporating intuitive search and reporting functionality. All sensitive data fields must be fully encrypted, as well as complying with GDPR (General Data Protection Regulation) legislation or the equivalent globally.
Chris Deeson: From a system perspective, an overarching cloud-based system is critical to enable consistent processes: local components can then be fully integrated and used to plug the gaps if required. While consistent systems enable consistent processes and outcomes, a hotchpotch of desktop systems cobbled together, swapping data, is a recipe for reducing visibility, consistency and compliance. Far cleaner to have a single cloud solution acting as a hub and, if necessary, integrating local software solutions to plug any local gaps. No manual intervention and global management of data and processes.
...HR and payroll standardisation is hugely important in global systems...
When developing a global strategy, what are the most important considerations for payment delivery, HR and compliance?
JD: A strategy underpins what the business wants to achieve, so whatever that goal is, the systems in place and the collection of data from each area should be sufficient to deliver on the strategy. How is the data to be used, what is it enabling? For example, in HR is it the learning and development and skills of the workforce that you want to be able to see and manage across broader territories to support the global mobility of the workforce, to support movement across business areas? Within payments, is it to be able to deliver low-cost financial transactions quickly and, wherever possible, electronically and to have visibility of international exchanges? And in compliance, is it reporting of all quality and control measures and ensuring each is effective in its own territory with as few hand-offs as possible?
DM: From an HR point of view the key measure for everything should be employee engagement and trust, something which has a huge impact on another key business area: employee productivity. Paying your employees accurately and on time is the foundation of trust in the employee/employer relationship, which is why ensuring your business develops strong global payroll systems is key to both payment delivery and HR. In addition to this, employers should consider how they are meeting changing employee expectations and demand in regard to payroll. Regarding compliance, businesses face larger and continually growing responsibilities. Just in 2018, more than 600 new labour regulations were enacted worldwide. This is only set to continue in response to the changing world of work, and we’re also likely to see the introduction of real-time reporting where governments will ask companies to share data more regularly. Ensuring that companies have adequate systems in place to address requirements is key to business efficiency and success in the long-term.
ST: Baseline transactional services must be delivered without errors therefore system integration is critical. Poorly defined processes and policies coupled with lack of integration results in staff being pulled away from strategic priorities and dragged back into the delivery of administrative services. Payroll and HR providers need to take heed of the growing demands of zero defects and first-time pass rates. HR must deliver services that comply with local labour laws and workforce regulations – a challenge that is magnified as a business expands its global footprint and employees become more fluid both in physical location as well as how they do work today and how they want to work tomorrow. HR must therefore comply with broader business regulations which are trying to catch up with how we work, such as those which would have been initially targeted towards to the ‘gig economy’ as well as ensure data privacy and security. These regulations often have a greater impact than was perhaps intended and they often have significant HR implications due to the highly sensitive nature of HR’s work. HR also plays a valuable role in helping a company manage the change associated with developing a risk-intelligent, compliant culture – a culture where employees understand the full impact of their actions and take smart risks that are consistent with the organisation’s policies and objectives.
CD: The key here is to think globally and plan locally. First, be very clear on what that global strategy is trying to achieve, before considering the local requirements. Is it appropriate to have broadly equal packages in each country, or is the aim to match the median or top 10% packages locally? Then plan locally to implement that strategy (utilising local expertise/advice where required) to ensure full compliance with labour and market requirements in each, ideally using global software solutions for consistency. Finally, there needs to be consideration of how global mobile employees (GMEs) will be treated. If they fall under local rules while on assignment then compliance with these need to be accounted for, but at the same time the GME will require a package that takes account of their long-term residency plans. For example, are ten small pension pots accrued in ten different jurisdictions a good outcome for any party?
...be very clear on what that global strategy is trying to achieve, before considering the local requirements
Is it possible to implement a truly global strategy from an HR and reward point of view?
JD: Yes, in terms of roles and how you would want a total reward package to be equivalent and appropriate to each country. However, in each country there may be individual allowances, or other factors of benefit that are expected, so they need to be factored in. For example, I previously held a role in charge of the global payroll processes, and an exercise was conducted for the managers in each region across the globe, Americas, Europe and Asia, to ensure the overall package was commensurate with the seniority expected of the individual. This gave balance, but did not mean everything was the same value, due to other factors such as cost of living etc.
DM: It is absolutely possible to implement global objectives from an HR and reward point of view; however, that does not necessarily mean a global strategy. All divisions of a global business should be aiming to achieve the same results in regard to employee engagement and productivity, but they might have different ways of achieving this. In the modern world, the key aid in creating a powerful strategy is data, and HR systems help companies to utilise the power of their own data.
ST: With the correct design and development it is possible to achieve a global strategy from an HR and reward perspective. Use of technology as an enabler is key to ensuring that the global strategy can be successfully implemented, monitored and controlled.
CD: It’s always dependent on the individual business requirements and practices. But yes, acknowledging that there will be local variants within that strategy to meet local compliance, the strategy itself can absolutely be global with the successful utilisation of global mobile employees epitomising that strategy.
...houses information no other enterprise application holds, and therefore has huge strategic value and importance
What are the latest innovations in global payroll and HR?
JD: Utilisation of RPA (robotic process automation) and AI (artificial intelligence) is all around us to help streamline the collection and management of data. However, the war for talent is also ensuring businesses have credible frameworks for individual progression available to staff and differentiate themselves from the competition.
DM: We live in a data-driven world and HR professionals often hold a company’s most valuable data, yet its potential is so often under-utilised. The data available in both payroll and HR divisions is key to gaining rich insights about a business’s people, something that ultimately informs global decision-making. Improving the way in which a company harnesses and uses data is key to success, and so using AI and machine learning is imperative. Both technologies allow companies to collect, organise and use ever more data to inform their global business strategy.
ST: Innovations in technology within payroll and HR have included multi-lingual bots and HR analytics. Payroll had in the past been dominated by outdated legacy systems and technologies as well as inefficient and manual processes but recent years have witnessed huge advancements in technological solutions for both payroll and HR. Inside the payroll industry, payroll professionals recognise that payroll data is a high-value resource for the kind of ‘people intelligence’ that is useful in business decision-making, especially with regard to capacity planning, cost-cutting, resource allocation and productivity tracking. Payroll is a unique data set that houses information no other enterprise application holds, and therefore has huge strategic value and importance. The HR analytics tools enable pooling of employee data into a single source to analyse the data and therefore to make better and faster workforce decisions.
CD: The latest innovations are being driven by cloud solutions. A global HR system enables consistent hiring and onboarding with the system taking care of the local contract requirements and compliance. Systems can identify candidates, compile shortlists, manage offers and qualifications without having to have HR departments in each locality. Successful candidates can self-onboard, undertake required company training and provide evidence of their qualifications/right to work documents etc. Similarly, payroll can be in regional centres rather than having someone in each jurisdiction and increasingly using one system. Automation of a number of the calculation tasks means that the dependence on local knowledge is reduced and compliance is enhanced by setting rules at the outset. The other significant enhancement (although not an innovation), is that API (application programming interface) integrations mean that the HR system can become the single hub of all data management, with local payroll software being integrated to a level where the systems are seamless, there is real time data exchange and reporting comes globally from within the central system.