Trends Report

When Does Multicountry Payroll Make Sense?

April 26th, 2007
With contributors:
Andrew Parker , Matthew McCormack

Summary

When looking for strategic change opportunities in HR, scores of firms make improving payroll management the top priority, with multicountry payroll firmly on the agenda. The benefits of an integrated payroll — providing standardization, harmonization, and simplification — provide an antidote to problems such as failed compliance, payroll leakage, and inconsistent cross-border management information. Adopting multicountry payroll undoubtedly makes sense in theory but many firms lack the scale to execute, find the economies of scale wanting, and fear resistance from local offices. Sourcing execs working with their HR directors begin by questioning just how dynamic payroll needs to be in the context of business change and HR strategy. The first aim for sourcing execs is to gain agreement for the auditing of payroll costs, and for their own part, to understand future HR service metrics. This will equip the procurement group to assist in deciding whether multicountry payroll makes sense and, if it does, when to outsource and when to use shared services to get there.

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