HROA EMEA PYWG webcast 18 Mar 2011

Proprietary and Confidential - Copyright © 2011 HROA

International Payroll

Services Delivery

Friday, 18 March 2011

EMEA Payroll Workgroup


Welcome & Introductions

Today‟s Presenters:

Jason Davenport

Rudi De Roeck

2


Agenda

Defining the Strategic Payroll Position

In-house or Outsource?

Local, Regional or Global?

Designing for Success

The Transformation Roadmap

Questions and Wrap-up

3


Drivers for Payroll Delivery Transformation

Clients must reduce the liability and cost associated with in-house

payroll systems and transactions

• Multiple, decentralized payroll systems and controls

• Compliance with myriad employment and data privacy laws, tax table &

systems maintenance

• Consolidated reporting & analytics

Companies are demanding improved service and employee

satisfaction

• Mature contact center environment

• Service levels and performance guarantees

Common business case components

• Headcount reductions and redirecting of client staffs to core business

activities vs. administration

• Duplicative systems & third party costs

Additional business value in the form of “leakage” is often cited as a

significant savings to the enterprise, but may need field study work to

estimate value

Multi-country, regional, or global scope amplifies all of these

dimensions

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by whom?» Internally Distributed

» Internally Centralized

» Internal Shared Services

» Outsourcer

where?» On Shore

» Near Shore

» Off Shore

» Multi Shore

how?

» Governance

» Organization

» Technology

» Practice

» Policy

» Process

How to make Strategic Payroll Delivery Choices

Based on a Statement of Work that covers the

end-to-end payroll process

Answer the following key questions about what work

gets done:

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The Service Delivery ContinuumO

pera

tio

nal

Resp

on

sib

ilit

y

Co-sourcingPartner with Supplier(s)

to share responsibility

for operational,

technological and

human capital functions

and resources.

OutsourcingContract with

Supplier(s) to provide

all operational,

technological and

human capital

functions and

resources.

InsourcingInternal development

and maintenance of all

operational,

technological, and

human capital functions

and resources.

Decentralized

Centralized

Service Center

Shared Services

Payroll Application Provider

Payroll Outsourcing Supplier

BPO Supplier

Niche Payroll Supplier

Model People Process Technology

Acquire some/all of

current staff

Transition &

transform payroll e²e

Current or Supplier

platform

Supplier staffSpecializes in

e²e PayrollSupplier platform

Specialized staffShared admin.

procedures

Shared in-house

platform

Specialized staffCross functional

admin. procedures

Cross functional

in-house platform

Current staff Modified processesPlatform is Supplier

hosted / maintained

Supplier staffSpecializes in 1 or

2 payroll areasSupplier platform

Integrated staffCommon admin.

procedures

Integrated technology

applications

Site specific

generalist staff

Local admin.

procedures

Non-integrated

technology applications

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Process Outsourced In-House

Data Entry

Time & Attendance

Manage Queries

System Maintenance

Run Payroll

Post to GL

Generate payslips

Disbursements

Reporting

» Market data shows that organisations outsource

many parts of their payroll activities today:

Complex areas such as Tax Regulations,

Working Time variations, Gross-to-Net

calculation, IT Maintenance, Generate Payslips

and Regulatory Reporting are often outsourced.

» Data Entry is only outsourced in a Fully

Managed /Comprehensive Payroll Service, but

is often retained if organisations look to

leverage their Service Centres. Time and

Attendance is typically kept in house (if it’s not

for system management) due to variability of

local systems and business alignment.

» Payment of Employees and 3rd parties may vary

and is often governed by local statute and

practice.

» Whereas general account ledger reconciliation

is an activity companies may chose to keep in

house for purposes of standardisation and

control.

Keep In-house or Outsource?

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Drivers for Global or Regional Payroll

Drive a „Consistent and Standard‟ payroll processes across regions

with deviation only where local laws stipulate.

Maintain a high degree of „Data Quality‟ in HR systems and local

payroll solutions

Produce reliable integrated „Global Reporting‟ that adds value to

executive decision making, and acts as an enabler to Finance

processes and operational management

Deliver „Transparent and Compliant‟ Global and Local country

solutions that satisfy regulatory requirements and manage the risk of

non-compliance out of business

Rationalise and „Centralise‟ labour intensive payroll activities such as

data entry and explore opportunities for cost advantages to group into

service centres.

„Reduce Complexity‟ of feeding Global Master Data to multiple payrolls

by providing a single Global payroll interface

“Global where we can, Local where we must”

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Evolution of Multi-Country Payroll

Historically, companies have acquired a variety of local country

Bureau Service Providers

Payroll traditionally has been a decentralized business unit function

Global ERP Payroll platforms have matured to include country-specific

modules but may be costly to implement and maintain

• Complex country specific implementations

• Local regulatory and tax updates annually

• Upgrades every 18 to 24 months

• High cost of ownership for small populations – this is changing.

• May require investment in infrastructure

The HRO and Payroll Service Providers are building or expanding

Global Payroll solutions and support capabilities

• Population size and existing footprint continue to drive Service Provider

offerings. “Big head, long tail” concept.

• Need for regional and in-country administrative payroll support

The growth of multinational companies is driving the emergence of a Global Payroll outsourcing market.

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Model Pros Risks Mitigation

Global

• Consistent service

• Fast and easy access to MI

• Leverages shared service model

• Aggregate global reporting

• Fast and easy to add new countries

• Simplification of governance

• Cost efficient for in-scope

• Accreditations SOX, SAS70 Type II

• Too rigid too expensive

• Costly integration with other systems

• Often paying for rarely used functionality

• Rationalise pay process

• Harmonisation and

simplification of pay data

• Provider having access to local

country expertise

• Contract to cater for in-scope

required functionality only

Regional

• Relative consistency of service

• Access information easily

• Leverages regional shared service

• Can use existing supplier relations

• Easily add new countries

• Accreditations SOX, SAS70 Type II

• Reporting requires reconciliation

• Potential additional layers/costs

• Provider not sufficiently strong in all

regions/languages

• Governance still decentralised

• (In addition to above)

• Limit to fewest # of providers

• Strong governance tools

• Global reporting

• Due diligence on provider

capability – select best by region

Local

• Flexibility of solution

• Ease of implementation

• Localized SME

• Inconsistency of services

• Increased demand for reconciliation

• No control at country level

• Risk of regulatory non-Compliance

• Expensive to run country solutions

• Expensive governance

• Expensive to add new countries

• Complexity for Corporate governance

• Risk of non-Compliance with SOX, etc

• (in addition to above)

• Strong governance tools

• Disciplined SLA culture

• Clarity of accountability and

consequence management

Pros and Cons of Different Sourcing Models

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Payroll Service Delivery Design Principles

• Payroll activities are managed through a formal governance model

To determine which plans, programs and policies will be adhered to consistently

across the entire organization

Prioritize projects and improvements and determine how they will be resourced

Control performance of the HR and Payroll functions

• Payroll service delivery must align with and support organization

business structure while providing both common and unique services

to business units/locations

• Payroll must demonstrate strategic, technical and administrative

expertise.

This requires a commitment to designing efficient work processes, monitoring key

performance indicators and ongoing improvement activity

Work should be logically grouped based on related activities:

The majority of work activity should directly support the mission/key deliverables of

the Payroll functions

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Payroll Service Delivery Design Principles (cont’d)

• Technology must be appropriate to support Payroll programs and

services. Payroll must have the ability to rationalize all technology

investments and to fully exploit the system‟s capabilities.

Streamline and/or automate highly transactional, lower value activities to achieve

economies of scale.

Technology infrastructure should focus on customer points of entry and facilitate

access, accountability, responsiveness, speed, and accuracy

• Payroll must choose the most cost effective and high quality service

delivery solution that meets the needs of the organization

Separate the design from the delivery of programs, policies, and procedures

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A Blueprint For Payroll Transformation

What to achieve? How to deliver?

Vision and design for renewing payroll services

linked with the company’s core mission

» Business services strategy

» Baseline & Comparative Assessment

» Service Delivery Model

Enthusiasm and alignment for the future state

solution across the executive team that will lead

change

» Decision Process and Change

Methodology

» Stakeholder Alignment

» Opportunity Case Development

» Risk Assessment

» Recommendation / Decision

Roadmap for achieving transformation and a team

prepared to implement it

» Quick Hits / Early Wins

» Solution and Provider Discovery

» Sourcing Strategy

» Retained Organization Strategy

» Change Strategy

» Implementation / Road Map

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THANK YOU

Questions

&

Wrap-up

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Documents

HROA EMEA PYWG webcast 18 Mar 2011