Issue link: http://www.e-digitaleditions.com/i/94708
HRO Today Forum Europe carefully chosen few—payroll providers as the source of employee data and changes. Sadly for many countries, there is no history of an HRIS, nor is there a reason to update it separately as long as data in the payroll system is correct. Once a single HR system is a reality, there is a much greater interest in "global" integration with payroll to enforce its relevance and ensure its use. 3) See things for what they are. It is hardest perhaps to be both pragmatic and a visionary, and yet nothing is more sobering to a global payroll vision than a business case. Local payroll operations are seldom the fat cat of corporate spending, so consolidated payroll outsourcing across many disparate countries will almost certainly fail to yield a business case for savings. There are two emerging best practices that clients use to ensure they are not just spinning their wheels on a payroll project doomed to go nowhere. First, define and quantify—the recent practice of broad, undefined requests for information to market in hopes of an arsenal of country-level pricing is finally slowing. Clients and payroll providers alike have been frustrated by the inability to compare broad capabilities and pricing based on a simple list of employee by country, for which no current state cost comparison has been prepared. New tactics for client success: Figure out what you need before you ask for a price; have a realistic idea of your as-is; face the business case challenge early on; and get help to articulate an actionable scope and related business value. 4) Bite off just what you can chew. Payroll scope comes in different sizes and shapes, which makes it important to define what model of services you want to outsource. Quickly, it becomes apparent that only the largest countries might consider full scope platforms and services, leaving a long "tail" of countries that need narrower payroll services that are right-sized just for them. Clients chasing cost savings of large payroll operations commonly focus on a handful of large countries, but there is a newfound trend to "tackle the tail." Regional or global payroll outsourcing for tail countries will certainly require an investment—in-house manual efforts that pay fewer than 100 employees in low cost Europe, Middle East, Africa, and Latin America require little operational cost. More and more clients are deciding that having no visibility, coordination, or control over the payroll services provided to their most obscure and emerging geographies is a risk worth solving now. Though the investment cost to implement an aggregate payroll model in any given region seldom comes in below five or six figures, many clients now recognise that similar costs would be required to build HRIS and/or general ledger interfaces to each country and are willing to offset the expected cost outlay to achieve a greater value to the enterprise. 5) Define a menu, countries opt in. Until recently, solving for a whole world of payroll has been a lofty ideal without mandate or conviction of the local business or country. Multi-country payroll contracts were astonished when they met with local resistance to make a change that might disrupt employee pay, displace a trusted local solution, and even add cost to the bottom line. Regional and global deals that struggle to nail down a list of countries to commit are now seeking ways to create an off-the- shelf solution with some committed countries and others that will fold in opportunistically by "opting in" at some future time. To do this properly, the client must identify a truly actionable scope of countries, define a core menu of payroll services, and then invest time to carefully craft scope, pricing, terms, and service-level structure with a legitimate partner(s). Clients seeking to expand shared services beyond the United States and United Kingdom welcome the chance to have a vision and a solution to offer the next country to ask for help with a payroll solution. Rather than coerce local country participation, why not achieve the same regional or global vision by adding countries opportunistically? Build a better mousetrap and they will come. 6) Value visibility and control. Financial and compliance risk of local, in-country payroll operations motivate global clients today. For many companies, employees are considered to be their greatest asset—and cost. So, while you might already run a very tight ship when it comes to your local payroll operations, payroll itself is all about delivering the much larger cost of your labour force. Seldom do companies have any real visibility to the "leakage" of payroll dollars that corresponds to manual employee and pay changes or missed compliance with ever-changing legislation. But when something goes wrong, it generates noise and unrest in HR, finance and procurement offices, where clients increasingly realise the potential for similar risk compounded by the number of unique countries in which they operate. Quantifying that value for the organisation is a seemingly impossible feat for many global clients, but many experts in the field recognise that experience across many clients brings structure and lends credibility to help make the business case. There is a world of interest by regional and global clients to rationalise payroll sourcing. As an industry, much more progress can be made in finding the right value proposition for each unique client footprint and situation. Watch the above trends for more progress and stay tuned for others that develop and prove successful. Julie Fernandez is the director of global payroll lead for ISG. She will be sharing her insights at the HRO Today Forum Europe in Dublin (November 13-15). FALL 2012 | www.hroglobal.com [21]