Given the current speed of change, there is an increasing need for higher efficiency and effectiveness. Therefore HR organizations have been globalizing and standardizing their processes and systems. A common HR platform is considered a must for any multinational organization. Should this also be the case for your payroll?
In general, payrolling is not seen as the most exciting part of HR. Yet, it is a complex set of regulations and systems. Therefore, the payroll process requires considerable amounts of time and attention from employees. For that reason, companies are increasingly looking at a centralised approach with regard to the payroll process. These initiatives make payroll managers nervous. They will indicate that their specific operation is too complex for standardisation. However, in many cases it is wise to centralize part of the payrolling. The other part remains specific to the context of the country.
Tax and social regulations are the elements within the payroll process that are country specific. Hence, a completely ‘globalised payroll proces’ does not exist. Nevertheless, a labour-intensive part of the payroll process, the zero to gross trajectory, can be remarkably simplified. Namely by using standard (global) payroll processes and a global payroll system. Harmonising terms of employment at global level also benefits the organisation. This can, for instance, simplify many rules and increase the comparability of terms between countries. It is therefore the challenge to look for a good hybrid form of standardisation and customization at regional level.
The regional specific part of the payroll process, the gross-net trajectory, is in a growing amount of cases becoming the responsibility of the payroll suppliers. This involves the ongoing process of correct implementation of new (tax) legislation. This relieves the organisation of some pressure. As a result, this allows the entire payroll process to have a more limited impact on the internal HR organisation. Therefore, there is indeed a benefit to be gained with a partially global approach of the payroll process.