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Will Hutton

Will Hutton

Principal, Hertford College, Oxford University and chair of the Big Innovation Centre

Tuesday 08 May 2012
Why don’t some HR directors ‘get’ global payroll outsourcing?

Why don’t some HR directors ‘get’ global payroll outsourcing?

The value available to an organisation in outsourcing its global payroll is well documented. So why is it that we still see some HR directors not grasping and driving the need for outsourcing when they are continuously faced with obvious challenges?

We still find mature organisations, which have typically grown through a mixture of organic growth, mergers and acquisition, do not know the basics about their workforce, often their most important asset. This includes, but is certainly not limited to, the number of heads in each country, the monthly gross payroll costs and the payroll performance. Which begs the questions, did their employees get paid on time?

Organisations continue to tell us that they are challenged by the risk of non-compliance in the countries in which they operate, often due to the complexity of staying abreast of continually changing in-country legislation. And nor should organisations spend time away from their core business when there are experts and off-the-shelf solutions available.

The time needed to manage the complex business of paying their global workforce on time and accurately again takes organisations away from their core business. It demands not only time but considerable investment in people, process and technology. And without synergy across countries, the hope of central global payroll information can be nothing but a long-term aspiration.

One example of the efficiency improvements available came from a manufacturing business which saw that they previously "experienced huge problems with our previous suppliers…we were facing major legal liabilities and payroll errors were impacting employee engagement. Sixty per cent of management time was spent sorting out issues."

So why, with all the challenges that they face in providing a global payroll service to their organisations, don't some HR directors grasp and drive the lower risk route of outsourcing their payrolls to a provider that has all the experience, know-how, people, infrastructure and an out of the box solution?

The explosion of SaaS, along with Cloud-based solutions, also means that although the service is outsourced, an organisation still maintains overall control of the payroll process and has real-time global payroll information at its fingertips. As one of organisation reported, "With Ceridian, there is one standard service description so our service experience is consistent globally and monthly service reports give us the information we need to manage the relationship."

In the current global financial environment a business case which addresses the substantial cost of non-compliance, the inefficiency of managing a non-core function, as well as the cost of payroll professionals and payroll technology, certainly supports an organisation that is increasingly looking to reduce operating costs and improve efficiency. Reports from one organisation showed that "as a result, we made changes to some of our in-country processes, saving us 30% of additional payroll cost across nine countries."

So, back to the original question, why don't some HR directors 'get' global payroll outsourcing?

Nick Bland, international product and alliances director at Ceridian International Payroll Services