Rationalising global payroll

Apr24

Posted in Payroll

A new report suggests that, no matter what synergies are in place elsewhere in the business, most international companies have distinct and disparate payroll arrangements.

For any business operating in multiple territories, ensuring your products or services are delivered consistently is a constant challenge. Yet, whether it’s an IKEA coffee table, a Nissan car or a McDonalds burger, standardisation – in terms of what you buy and the service standards you can expect, are remarkably similar globally.

So why can’t the same be said for payroll?

According to a Global Payroll Association report, 7 out of ten international companies have no global payroll policies.

Local payrolls for local people

It’s not hard to see how this can arise. From taxation to pensions arrangements to local regulations regarding sick pay, maternity leave, shared parental leave, retirement ages and more, the rules from country to country vary. It’s hardly surprising that a payroll policy designed for the UK might not be suitable for Sweden, Saudi Arabia or South Korea.

It’s also the case that organisations, during their formative years at least, tend not to count the rationalisation of payroll arrangements as a priority when entering new territories.

Yet, for all the differences, there are commonalities to be found in most countries’ employment systems. The specific details and amounts may vary, but it is possible to create a global payroll designed to accommodate regional variances.

It can also be highly beneficial.

Benefits of global payroll

Consistent policies and standards: The rules imposed by governments may change, but your organisation’s policies need to remain consistent. A piecemeal approach to global payroll makes it all too easy to fall into PR traps – from gender pay imbalances to (potentially) disputes and grievances resulting from conditions in one territory not being replicated in another. Global payroll arrangements aid transparency, protect equality and shield a company from the fallout caused by the application of inconsistent policies.

Processing costs: There’s an economy of scale to be found in global payroll processing – providing your payroll provider understands the idiosyncrasies of each territory. One supplier with local expertise will inevitably be more cost effective than multiple providers, each operating their own systems.

Reporting simplicity: One of the advantages of outsourcing payroll is the insight independent payroll reporting can give, helping you boost efficiency, cut costs and protect quality. But multiple providers will inevitably provide payroll reporting in multiple formats, making it hard to achieve realistic comparisons, and gain a true, global understanding of your company’s payroll.

Payroll costs and governance: It’s hard to retain a feeling of control over your payroll when every element of it is handled remotely. And when you use multiple providers you can find that the costs of managing currencies and transferring funds across borders increase. Consolidate the payroll and you consolidate costs while you improve governance.

Want to explore new ways of managing your payroll? Talk to our experts now.