The Road to Global Payroll

The road to global payroll is paved with reactions. Let’s add that it’s paved also with good intentions. We all know where those lead, and an unaddressed global payroll process won’t exactly take you there, but the ride can be rough. This is why, for most organizations, the journey to well-sorted global payroll is long and windy — and bumpy. It is the exceedingly rare employer that sets the table to process global payroll in an efficient way the very first time the need to process global payroll arises. This is what I’ve learned, anyway, from lengthy discussions with executives in this industry. No, almost to the very last one, organizations that become global pretty much never outsource it promptly; instead, they do their best, with best intentions, to process unnecessarily complicated payroll with old-fashioned elbow grease — pay period after pay period. As they grow into an increasing number of locales, regions and countries, they put forth their best efforts to continue crossing all the T’s and dotting all the I’s. And they manage through all the inefficiency to wrestle payroll to its conclusion, compliant with every law affecting it across the globe.

That is, until they don’t. The thing is, it can take a long time for the house of cards to collapse….

Getting into Hot Water

During a recently aired episode of #HRTechChat, Richard Limpkin, chief product officer at the Dublin, Ireland-based global payroll provider Immedis, noted that there is essentially no way to deploy a solution for global payroll until the moment an organization becomes global. This makes the decision to find and implement a solution the textbook definition of a reaction. In another episode of the podcast, aired earlier, David Barak, chief marketing officer at United Kingdom-headquartered CloudPay, another provider of global payroll solutions, made a similar observation. The processing of global payroll eventually becomes unmanageable. This is the flashpoint of reaction for most, and Barak described the  process that eventually leads global organizations to well-sorted global payroll.

A Game of Incrementalism

For many, the challenges in processing global payroll mount incrementally — very incrementally. These challenges are significant. Think of water heating gradually to a boil, but eventually roiling. The global employer is the frog in this pot of H20.

We won’t bother taking this metaphor too far. For any organization that grows organically to become significantly global over time, however, the water finally gets too hot. For the rest, the water scalds them — startles them. Through just one major acquisition, for example, an employer can find itself suddenly processing now-global payroll. A morass of attendant complexity catches the organization flat-footed. It’s another kind of reaction mode, wherein the struggle is much the same. The biggest difference is, those hurtled abruptly into the circumstances are very much aware of their plight, whereas circumstances for the frogs may have become so bad so imperceptibly, that the idea of fixing things may not occur to them, let alone enjoy priority.

What does the struggle look like? Think of it like this: rolling the rock of a heavily manual or low-tech, administrative burden up the same hill every pay period, just to process payroll. The mountain, riddled with pitfalls and demanding much effort to scale it, presents much risk and wastes much labor expenditure, every time.

Global employers’ lot in this particular area is similar to that of a start-up company, if you think about it. At a small business just starting out, leadership gives little thought to HR. But the complexities around managing the employment of people mount, and every small business that grows beyond a certain size eventually realizes it needs a solution for HR, relents, and gets one. Typically, the tipping point comes when a major mistake occurs or leadership finally notices that HR has become close to impossible to carry out without the prosthetics of modern solutions and workflow.

Processing Payroll: A Maximally Concrete and Abstract Necessity

Payroll is a mission-critical function if there ever were one. Regardless of whether it is global, payroll must always be timely, accurate and compliant with all applicable laws. In a global organization, all these considerations amplify exponentially. Beyond this, the security and privacy of the data in payroll must be a top priority, and the effort needed to secure this data and account for its privacy snowballs as an organization becomes global. Some level of regulatory framework governs the handling of employee data nearly everywhere, and in many countries, regions and locales, the rules are understandably strict.

Even in a fictional environment where no laws applied to the processing of payroll and the handling of data part-and-parcel of it, the organization taking one misstep with its employees’ private information would risk precipitating a massive, negative blow to employee sentiment — a hit from which the employer brand might never recover. With well-sorted global payroll, an organization can help ensure that its workforce never questions whether the employer thinks of their data as private, theirs. For all the concreteness of payroll, an organization that shows empathy for employee sentiment regarding their payroll experience forges a stronger bond with its workforce.

The Lay of the Land in Global Payroll Solutions

There aren’t many needs that come to mind, in the enterprise, that are more far-reaching and specialized than the absolute necessity organizations face in making sure everyone is paid on time and accurately, globally. There are plenty of common denominators, but every organization is unique. A number of notable, innovative, relatively fresh-to-the-scene providers narrowly focus just on global payroll. In an apparent ninja move, others mate their global payroll solution with global talent acquisition. This is interesting. It makes lots of sense to deploy a specialist in global talent acquisition, which includes onboarding global hires straight into global payroll. All these activities are highly regulated, rife with minute idiosyncrasies in however many locales, regions and countries in which any given global employer operates.

Spanning global hire-to-payroll natively is Deel, announcing in Q2 2021 that it had raised $156 million in Series C funding. Yet another is Papaya Global. A vendor by the name of Remote solves for this via partnership with Greenhouse (for its applicant tracking system), a contractor management system and, of course, global payroll. Others, such as Velocity Global, cover talent acquisition, global payroll and additional domains of human capital management.

Big Elephants

Let’s address the big elephants, plural, in the room. Some global vendors of full-suite HCM technology provide for global payroll. Think Ceridian, ADP and a few others. Plenty of vendors of partial or full suites of software for the entire enterprise, as well, do the same. Think Infor, SAP and Oracle. Proficiency among this latter group runs the gamut — from archaic, to so-so, to good. ADP may indeed come to mind as the go-to when looking for global payroll. And, if you want to cover most of the planet when outsourcing global payroll, you’d be hard-pressed to beat ADP.

The capability of the solutions among these larger vendors may not be the most innovative or modern available, for it’s often — not always, but often — a legacy platform and approach. This can be a liability in the processing of global payroll, where efficiency is of the utmost importance. Some solutions out there can handle the calculation of pay centrally, every pay period, via what is called a payment factory. Choose a legacy provider, however, and you might end up with an ecosystem that processes the pay in situ, through a slew of the vendor’s individual systems at every location your organization inhabits globally. Sure, the vendor is doing it for you, but this is not exactly a state-of-the-art approach.

An Emerging New Calculus in the Competitive Landscape

On the other end of the spectrum are newer players laser-focused on innovating global payroll (or any cross-border payments, for that matter). One of note is the aforementioned Immedis, whose latest release, Immedis Pay, is remarkable in that it changes the calculus of efficiency in processing cross-border payments (a central task in global payroll). In describing a new product, we are reluctant, as analysts, to utter the word “transformational.” Immedis Pay fits the bill, however. We published a market alert about it.

Modern technology for global payroll makes other conveniences possible too. One that employees increasingly expect of payroll in general is the idea that at any point in time they may request and receive what they’ve earned so far in the pay period. Ceridian, firmly in the modern end of the spectrum when it comes to functionality in payroll, offers Dayforce Wallet for this. The capability goes by terms such as on-demand pay and earned wage access. Referring to it as the latter, CloudPay NOW was announced in mid-July of this year “as the first earned wage access solution that can be deployed globally,” according to the related press release.

A Heavily Regulated Space

Did you know? Global payroll is about more than technology. The only global payroll providers worth considering for outsourcing this incredibly complex, recurring task are those that employ experts who understand how to navigate the regulatory framework across their clients’ global footprints. When they claim to cover a number of countries, this is what that should mean. It’s also about expertise. The rules governing the processing of payroll across the globe are legion. It is the rare person who knows the entirety of them, and it is the nonexistent employer that has the resources in-house to keep track of it all or financial resources to hire for this.

Global Payroll: Ultimate Point Solution

Payroll is perhaps the most important point in the employer-employee relationship, and, for this reason, global payroll is perhaps the ultimate point solution. Why? It fits the literal meaning of ultimate. How? It may be among the final major challenges in the enterprise that a multinational organization addresses. Beyond this, global payroll providers are colloquially ultimate in that the best ones do far more than provide turnkey technology to process payroll on a global scale; they staff teams that take on the job of monitoring the regulatory landscape globally. These are massive responsibilities and challenges. Any global organization electing to take on these responsibilities and surmount these challenges internally and for the long haul would be embarking on an unending road over the hills and far away.

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