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Masterclass ‐ Confronting the Challenges of Multi‐Country Payroll
Payroll Services AllianceCarsten Staehr ‐ Cintra HR & Payroll Service
Joeri Mariën ‐ SD Worx
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Who are we?
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Carsten Staehr
• CEO of award winning Cintra HR & Payroll Service.
• Over 23 years experience in the fields of payroll and software development.
• Dedicated to nurturing emerging talent and developing innovative and productive business networks.
• Recognised in Payroll World’s Top 50 Most Influential People in 2013.
Joeri Mariën
• International Alliances Director of HR services provider SD Worx.
• In 2010, Joeri Mariën set up the “Payroll Services Alliance”, together with Aditro.
• Today the “Payroll Services Alliance” is the answer to the needs of Pan‐European companies who are looking for a genuine European payroll solution.
Payroll Services Alliance
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• Established in 2010• 28 countries – 63,000 clients – 5,7M payslips/m
• One contract, single point of contact• European + local expertise
• Managed Payroll Services in 28 countries• European reporting
• 300 years of experience in payroll services!
Payroll Services Alliance
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Aditro (Nordics): DK, EE, FI, NO, SEEspoo, Göteborg, Malmö, Oslo, Stockholm, Trondheim
Cintra (UK): UK, ROI, Channel IslandsBelfast, Dublin, Newcastle
Elanor (CEE): BG, CZ, HU, PL, SK, SL, RO, RS, RU, UABeograd, Bratislava, Budapest, Bucharest, Katovice, Ljubliana, Moscou, Orel, Prague, Vienna
SD Worx (Western Europe): BE, DE, FR, LU, NLAntwerp, Berlin, Breda, Brussels, Frankfurt, Luxembourg, Paris
Seresco (Southern Europe): ES, PTAsturias (Oviedo), Barcelona, Galicia (Vigo), Madrid
Trianon: CHLausanne (Renens), Zürich
Multicountry Outsourcing...... is increasingHR outsourcing: CAGR of 5,5% through 2017, same for payroll outsourcing (Gartner)
Why?• A lot of surveys, one that keeps coming back is cost control (SD Worx, Gartner, E&Y, ...) – due to the uncertain
economic situation & competition • Lower total cost of ownership (but is this a real driver?)• Flexible adaptation of costs (M&A, restructuring, growth, ...)• Focus on core business (it’s all about added value, professionalization)
• But certainly as important:• Risk reduction: outsourcing as an insurance (get rid of liabilities)• Legal complexity: legislation is a fast moving, difficult and expensive to manage• Consistency and governance of the payroll/HR processes in different countries (e.g. analytics)
(and what about the US: trend back to SaaS, away from services outsourcing...)
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Multicountry Outsourcing...• Many organisations have an international payroll model which has simply evolved without any co‐ordinated
design.
• Historically, organisations have typically dealt with the payroll aspects of their global expansion on a country by country basis, resulting in:
– In‐effective internal reporting– Governance issues– Lack of standardisation– Increased cost– Lack of perceived alternatives in the market
Many companies are now going to market for the second time and know what they don’t want!
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Multicountry Outsourcing:What’s in it for you?
(in theory...)
– Central contract negotiations & economy of scale– Global governance (with global sla’s, kpi’s)– Consistent processes in all countries– Global reporting– Single point of contact for delivery– ...
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(in theory...)
– Central contract negotiations & economy of scale– Global governance (with global sla’s, kpi’s)– Consistent processes in all countries– Global reporting– Single point of contact for delivery– ...
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Multicountry Outsourcing:What’s in it for you?
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Do you know what this is?
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Vendors often produce a lot of fog...
And try to sell as much as possible (because you need it of course...)
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They also like state‐of‐the‐art solutions. • Because they are very nice.• And never an overshoot...
(Or too complex.)
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In short: we see a lot of prospects that feel like ...
What should be the Central Questions?
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– What do you – as a client – really need?– What helps you forward?
Our Experience
What to bear in mind for a successful Global Payroll Strategy
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Myth 1Does a Global Payroll
Engine Exist ?No !
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Hence• No Enterprise System such as Oracle, SAP exists in the Global Payroll world• But
• Global reporting• Global input screens
What is your preferred process for Global Management Reporting• Interface to Your Enterprise system• Use the tools of Global Payroll providers
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Myth 2I will provide a full interface from my ES solution to the
Payroll vendor
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ServicemanagerSAP HR Maintenance
Payroll Services2nd
Level
Payroll System Vendor 3rd Level
1st
Level Single Point of Contact(SPOC)
Telephone emailSLA
HR Department / Management / Employee
Spain
SAP HCM System
Client Spain
Client SAP Standard
France …Germany
Client France
Client Germany
Client …
Payroll Complexity Varies
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Rank Country
1 France
2 Italy
3 Germany
4 Holland
5 Belgium
6 India
7 United States
8 Luxembourg
9 Spain
10 New Zealand
source: NorthGate Arinso, 2013
Hence• Great Difference in cost per country
• Cost per payslip• Implementation cost• What is included and not (Hidden cost)!• Different price models
• Lead time varies • Planning ahead essential• More and more difficult to have speedy set‐up
• Solution sophistication varies
A new trend of an all inclusive price per employeeNo hidden surprises – or cost!
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Issues faced by Global Payroll Departments
Rank Problem Reply
1 Legislative compliance 23%
2Organizational consistency in in payroll process 18%
2Finding the right global payroll talent & resources 8%
3Administration cost 5%
4Management reporting 4%
5Regional capability 4%
6Organisational consistency in remuneration and benefits 3%
7Manging Mobile Employees 0%
8Audits, information requests and remediation 0%
Other 35%
Source : Ernst & Young April 2013
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If you were to select a new vendor for Global Payroll what would be your top
three criteria?
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Rank Problem Reply
1Cost 19%
2Geographic/Global Capability 18%
2Technology Platform 10%
3Managing Mobile employees 8%
4Accuracy of Payroll delivery 6%
5Relationship Management Model 6%
6Standardisation of service delivery model 4%
7Ability to reduce compliance risk 3%
8Customer support avalibility 3%
9Cultural intelligence 1%
10other 22%
Source : Ernst & Young April 2013
Conflict ?
• Needs versus buying criteria
– Important to ensure you know what you want and what is driving your decision
– Is it a cost exercise versus better control and compliance?– Does the technology platform matter?
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Examples of where we see it go wrong
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The HQ of a European MNC decides to switch provider in all its subs. The subs however don’t feel like changing. They see no added value, extra work coming up and their local relationships disappearing.
Examples of where we see it go wrongRFI / Tender
Do you understand what you want and where you need to be – What are the key drivers of change?– What are the objectives of change?– Do you have a clear view of your payroll costs and potential budget?– What is the appetite for change internally?– Have you identified any barriers?– Does your organisation have a culture and history of outsourcing services?– Do you have a clear view of what is available in the global payroll market and what service
offering is right for you?
Tendancy to over complicate RFI and concentrate on non essential requirementUse the global players/current providers to help before issuing a RFI.
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Examples of where we see it go wrong
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We all use the same words, but they mean something else... “Payroll”, “HR”, “managed services”, “BPO”, “outsourcing”, ... – no common framework
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Outsourcing Degree varies per region & country
source: Nelson Hall, Targetting Payroll Outsourcing, 2013
source: SD Worx, 2012
Some Advice
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• Talk to your subs! (detect their needs and local situation, culture and legislation)• Look into what you really need and what you’re willing to pay for (before sending out RFI’s) – use
providers’ expertise in this process (but don’t let you talk into complexity) • One size fits all?• SOX?• Integration of HRIS, Time & Attendance, ...?• Mobile applications?• Paperless?• ...?
• Make sure you understand the different levels of outsourcing: commitments and liabilities (SaaS, bureau services, online, managed services, BPO, comprehensive services, ...)
Looking to the Future...
What is next?
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What is next?We don’t know !
but • Technology will have a greater impact• More sophisticated analysis of Payroll data• Hybrid solutions
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Thank you!
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