Staying compliant as a global workforce
March 2016 | EXPERT BRIEFING | LABOUR & EMPLOYMENT
Managing compliance on a global scale could prove to be the greatest challenge for HR and payroll professionals in 2016. In order to meet this challenge, businesses should aim to improve data management practices in partnership with a global payroll provider while striving to achieve a deep understanding of the ever-changing compliance landscape.
Managing data effectively
The first step to improving data management practices is understanding which types of data are being tracked. Payroll data can be broken down into four major categories: (i) employee data – such as basic demographics, base salary or rate, address and bank details; (ii) elective elements – for example, car allowances or performance bonuses; (iii) workforce management data – including time and attendance data and absence information; and (iv) documents – such as signed work contracts and verified sick notes.
An organisation must understand each payroll data category well – down to the country level, and the current source of each data type within their organisation. Additionally, firms need to map the processes in which the data is captured. Although this sounds like a straightforward task, many multinational firms struggle with both data sourcing and process identification across the globe. In a recent study, global strategic advisory firm The Hackett Group found data integrity to be the biggest global payroll challenge for most firms. Only once sources and processes are understood can firms make more informed technology and process optimisation decisions.
Next, the firm must review the payroll ‘map’ they have assembled, and ask several questions. Firstly, do existing systems and processes support accurate, timely submission of data per country? Are non-payroll functions aware of their role in accurate payroll (e.g., operations, HR, finance)? And, how many data elements are tracked manually or in a single-country system?
This realistic view of existing payroll data sources and processes should be reviewed with corporate headquarters. Many firms’ HQs assume existing investments in systems, processes and service providers are satisfactory as is. However, a holistic review can expose redundancy, compliance risk and critical growth limitations. Gaining corporate support for global payroll initiatives becomes much easier once this reality is articulated.
Partnering with a global payroll partner
A single global system creates true visibility and also simplifies process standardisation. The availability of cloud-based global payroll software enables system consolidation. Companies implementing central cloud technology should also understand if their new system is flexible enough to cater to differing processes and data elements at country level. Furthermore, cloud HCM has simplified the management of future upgrades and maintenance – everyone is on the same code, and all project team members are working from the same playbook. This can also reduce the total cost of ownership through the large economies of scale and specialisation cloud vendors are able to provide. Finally, it enables IT and organisation leaders to focus on their business, not application hosting. Many of the early concerns that surrounded cloud technology – e.g., privacy, security and reporting – have long since been mitigated.
The role of self-service
Processes should be optimised while implementing any new system to truly unlock the value of the investment. Many firms struggle to improve processes while turning on new software – preferring the path of least resistance and copying existing processes into new systems. A great example is employee self-service, a feature that is often underutilised by multinational firms. Allowing employees to view and update their information reduces HR and payroll burdens and increases data accuracy, while at the same time empowering employees with additional visibility and control. With the widespread adoption of mobile technology, new workers will expect a consumer quality self-service experience.
HCM technology is engaging and empowering users in new and exciting ways. Processes that have traditionally been paper based, asynchronous, manual and disconnected are literally being put into the palms of employees. Using self-service to request time off, perform shift trades, check earnings or view schedules may seem minor at first, but in many cases this replaces frustrating physical processes full of misinformation and inconvenience. With easy access to messages and notifications, employees have more control over their work and personal information, and feel empowered by the visibility and access they have.
HCM applications generate an unbelievably rich set of data spanning the entire employee lifecycle – from to-the-minute transactional data to long-form employee entered data like performance reviews (which can contain metrics and discussion). This provides a foundation for a rich set of analytics, dashboards and reports to support decision making helping organisations to understand the what-ifs of their business with unprecedented clarity.
Compliance – the ever-changing landscape
It’s important to understand that the compliance rulebook is always changing. Businesses should expect the unexpected and plan for rules that are more restrictive, rather than less. Today, increases in both social programmes and austerity measures are driving additional need for revenues cost reduction efforts. In practice, this means the creation and enforcement of new rules, regulations and reporting requirements that ultimately fund government programmes.
An example is Brazil’s eSocial program, which is consolidating numerous federal agencies to which payroll professionals have to report. Today, there are between six and eight federal agencies that payroll professionals must to report to – which will become one. The requirements for this new reporting regime are very onerous on a company. They must report up to 2000 data elements to the government on a monthly basis. Closer to home, recent changes to California’s labour laws have made it more challenging for employers to stay compliant. Companies need to be able to constantly monitor local changes and provide flexible systems that can react and adapt quickly to changes country to country, which can be difficult to manage without the assistance of an experienced global provider.
The bottom line
Strong payroll practices and management provide better data and more visibility into a firm’s workforce, and high visibility enables a top performing, compliant global payroll function. When a top payroll function is partnered with the right HCM provider – one committed to continuous evolution, with the ability to provide global data management and HR self-service – global organisations can thrive despite the challenges of global payroll.
Aaron Hurst is the vice president of global solutions at Ceridian.
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