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Payroll on parole

Multinationals must adopt transformative payroll techniques in order to compete and expand in the global marketplace.

The majority of multinationals (85 percent) want improvement in their current payroll practices, yet they are skeptical about whether payroll providers can deliver a comprehensive global solution. This is according to a new Ernst & Young survey, Global Payroll: Myth or Reality, of 161 global senior payroll leaders. Seven out of ten (70 percent) of the survey respondents are not confident a global vendor currently exists that can provide a truly global payroll solution. They identified a wide range of issues as potential hurdles, from total cost of the overall solution (16 percent) to the vendor understanding and meeting specific requirements (14 percent) and legal and regulatory requirements (12 percent).

As a result, nearly half (41 percent) are not considering adjusting their payroll administration model, even though a third (35 percent) plan to expand into new global markets. Only one in five of the respondents (22 percent) currently have a global payroll model, but this applies mainly to organizations that operate in mature markets and therefore are more likely to be able to adopt a truly consistent model. Jeff Brown, Principal, Human Capital, Ernst & Young, says: “Accepting the status quo in payroll solutions may have worked in the past, but it is no longer adequate for companies that need to compete and expand in the global marketplace. Organizations need global payroll data to make important business decisions. Managers can build the business case based on risk and compliance to improve payroll operations, but access to the payroll data is proving to be very value added. It’s time for organizations to begin viewing payroll as a critical business process that requires a global solution with local flexibility.”

The survey also reveals that: Just 15 percent of respondents believe that the effectiveness of their current payroll policies and practices are excellent and meeting best practice . The majority of respondents (54 percent) regard their current payroll setup as good, with room for improvement. The top three criteria for selecting a new global payroll vendor are cost (19 percent), geographical/global capability (18 percent) and technology platform (10 percent)

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