Introduction to Global Payroll

1. Introduction to Global Payroll

2. Speaker Mary Holland, CPP Global Director of Strategy, Development and Training Global Payroll Management Institute (GPMI)

3. Hello! • China • Spain • French • German • Australian • Russian • Netherlands • Switzerland Nee Hau Buenos Dias Good Day Привет Guten Tag Prevet Goedemorgen .. Gruezi Bonjour

4. Our Agenda • What does “Global” mean for your organization? • Types of Employees • Cultural Considerations • Communication • Variety of Organization Models

5. Global Payroll(The Perception) • This is what your CEO thinks: • Global Payroll = • A single pay engine delivering net pay seamlessly across the globe • System / Provider handles all local currencies, languages, taxes • One multilingual call center able to transact and provide support across geographies • It’s not rocket science!

6. Business Focus • Mixture of Both • Which processes can’t change due to local/regional laws? • Can the system accommodate a mixture of both processes? • US Centric • Current operations are U.S. based but now you’re going global • This is the way corporate has always done it • We don’t need to change how we do things • International/Local Centric • “This is the way it’s always been” • Our way is better

7. Global Payroll(The Perception) • This is what your Local Teams / Stakeholders think: • We’re different! • Our processes are too complicated • You don’t have the expertise to manage local labor laws and tax regulations • Our employees demand VIP treatment • If it’s not broken, don’t fix it!

8. Global Definition • Expatriates • Local Nationals • International Commuters • International • Multi-national • Etc…….

9. “Employees” • Local nationals (Locals) • Hired for jobs in their own country • Expatriates (Expats) • US Citizen or permanent resident working outside of the US on temporary assignment generally greater than a year and less than 5 years • Inpatriates • Foreign national employees transferred to work in the home country of an international organization on a temporary or permanent basis • Third-country nationals (TCNs) • Employees not from the home country or the host country • TCNs have traditionally been technical or professional employees hired for short-term employment. Source: SHRM • Global Commuter

10. Global Considerations

11. Corporate Culture Language Time Zones Cultural Norms Communication Styles Time Sensitivity and Perceptions Global Organizations: Key Areas of Consideration

12. First thing everyone thinks when they hear “global team” or “global project” The easy answer? English! As language of business, of our company Not everyone has same level of comfort in English What about detailed, technical conversations? And very heated exchanges? Language

13. Language • May require local language support • However, need to control the extent to which these occur • Written communications • Materials coming from a specific country • And materials being used for a specific country

14. Time Zones • Working across time zones is a challenge in the best of circumstances • Keeping track of what time it is where • And then daylight savings time, various holidays, etc. • Trying to find common times for calls • 9am in NYC = 3pm in Paris, 2pm in London • But 6am in LA! And late in the day in India, middle of the night in Japan or Australia!

15. Accommodate all as best you can, but everyone will need to be flexible: Share the burden of inconvenience And make sure you understand the difficulties Time Zones

16. “Time is money” – an American mantra! But to other cultures, may indicate our obsession with both Time Sensitivity and Perceptions Not all areas react the same way!

17. Time Sensitivity and Perceptions • Time can be fluid or static • Mediterranean cultures often accept arrivals well outside of scheduled times • But other European cultures expect punctuality • Asians generally timely • Indians not so much! • Understand the differences but set your boundaries • Critical to make your expectations known!

18. Discovery - People • Where is the payroll function being done today? • Local, Regional, Centralized • Do you have a global payroll owner? • Are the business owners working together? • Countries, number of entities and populations • Company growth plans • Are you in the merger and acquisition mode? • Language Support • Country requirements for business operations • Employee Communications

19. Culture

20. Culture • “Culture is, in the words of E.B. Tylor, "that complex whole which includes knowledge, belief, art, morals, law, custom and any other capabilities and habits acquired by man as a member of society.“ • Remember you need to look at country and your company culture • Very important for global payroll operations • Avoid stereotyping • Consider providing the team with cultural training

21. Culture – Dress and Communication • Dress: • First impression sets the tone • Dress code – Establish a professional appearance • Focus on the local dress code • Culture & Communication: • Communication styles defined by country or region • Some cultures “yes” means “I hear you” • Length of pleasantries varies • Level of tolerance of a foreign language

22. Culture – Trust and Gender • Building trust • May be required before gathering information • Communication effectiveness • Time and Patience • Gender • Predefined roles for men and women • American women are viewed differently than other women • Understanding the differences between men and women • Understanding the complexities of the working relationships • Avoid stereotyping

23. Culture – Business Cards • Business cards • Recognized Method of Introduction with Business Associates • Best practice is for one side in each native language • Formal presentation • Remember to plan ahead and bring enough cards 23

24. Cultural Norms – Working Hours • Work habits and styles can vary greatly • Lunch is a great example • Working lunch is not acceptable in many cultures • Expected hours of work pose another challenge • Start/end times • Vacations • Holidays 24

25. Ways of dealing with management, assignment of accountability and responsibility, vary widely “the sun will still rise tomorrow” Need to pay keen attention to ensure that differences are “real” Viva la difference! Cultural Norms 25

26. Communication

27. Be Cautious of Communication Styles

28. It is very true that we all have different styles and protocols about communication Americans tend to be pretty direct, “get to the point” For the French, its all about “politesse” and being polite Spanish are generally rather heated in discussions Israelis are, too! Germans are matter of fact about things Indians are animated, polite and deferential Asians preferences are relationship focused Communication Styles

29. Communication Styles • Topics open for discussion in business and personally differ • Difficulties of people communicating in non-native languages increases potential for misunderstandings too • Accommodate different styles Differences Difficulties Accommodations

30. Service Delivery Models

31. Current State • Where is the payroll function being done today? • Local Regional, Centralized • Do you have a global payroll owner? • Are the business owners working together? • Countries, number of entities and populations • Company growth plans • Are you in the merger and acquisition mode?

32. Aligning Processes to the Organizational Model Global organizations must strike a balance between global philosophy and regional implementation • Degrees of standardization: • Corporate level – What needs to be driven centrally and be the same for everyone • Business unit – What can be determined by each business unit • Locally driven practices – Accommodating special local geography/location needs High Corporate level Business unit or Regional level Strength of HR control Locally driven practices Low Low High Degree of variability

33. Impact of Globalization on Payroll • Inconsistent processes and business functions across legal entities, business units, and countries • Complex employment and taxation requirements • Data privacy requirements • Resistance to change • How to handle countries with a small number of employees? • Do you have one global HR System of record or many? • Reconciling data differences between global HR systems and local payroll solutions • Moving applications will incur an implementation fee and risk associated with changing systems, visible to the employee

34. Global Design Considerations • Regulatory compliance • i.e., countries may require specific banking activities are performed within that country when servicing employees of that country. It is common that when serving German employees the relating banking activities are required to be performed within the country. • Data privacy and information management • Language and cultural requirements • Level of self-service utilization • Technology environment 34

35. In other words… Where is payroll on the overall HR Transformational journey? Decisions on payroll need to be taken in the wider context Payroll transformation journey will be impacted or driven by overall HR, HR IT decision and timelines Global Payroll HR Transformation Journey Outsourcing of HR IT platforms hosting & ongoing support Payroll Transformation Journey Why? What? How? Who? Outsourcing of selected processes These questions need to be addressed in the context of overall Business and HR strategy Selected processes in Regional/ Global Shared Service Center Single HCM platform Common, standardized, repeatable processes

36. Global Vision(How do we get there?) • Identify the tools to create your new reality: • Information/education • Data • Interactive tools • Transactions • Collaboration • Global community • Open your mind to be where you want to be: • Business strategy alignment • New role for HR/Payroll • Redesign of processes • Reinforcement of infrastructure • Refocusing of communication strategy • Take a hard look at where you are today: • Organization design • Process design • Technology infrastructure • Communication strategy and process and the cycle continues…

37. Global Payroll Provider Options

38. Global Payroll Provider Options

39. Global Payroll Provider Options

40. Service Delivery Models • Centralized • Regional (EMEA, APAC, Americas) • In Country • Combination of the above It is important to define roles, responsibilities and ownership!

41. Global Business Models S S S S S S HQ HQ HQ High Global Strong HQ Control Transnational Local control, yet integrated S S S S S S S = Subsidiaries HQ = Headquarters or “Corporate Center” S S Integration HQ International Limited employee populations in countries (Expats) Low Multi-Domestic Strong Local Control Low High Local Responsiveness

42. MNC Business Model Alignment with Payroll Service Delivery Model International Model: • Initial international expansion phase • Possibly only limited sales or operations employees • Expats most likely • HQ still has much control S S HQ • Lowintegration • Lowlocal responsiveness International Limited employee populations in countries (Expats)

43. MNC Business Model Alignment with Payroll Service Delivery Model International Model: • Possible Payroll Service Delivery Models: • Outsourced • Local in-county provider • Outsourced to accounting firm • Outsourced to “aggregator” provider S S HQ • Lowintegration • Lowlocal responsiveness International Limited employee populations in countries (Expats)

44. MNC Business Model Alignment with Payroll Service Delivery Model Global Model: • Various global subsidiaries with the HQ having a major impact with local practices and policies • Global Model could also apply to aRegional or Shared Service Centerapproach S S Global Strong HQ Control S S HQ • High Integration • Lowlocal responsiveness

45. MNC Business Model Alignment with Payroll Service Delivery Model Global Model: • Possible Payroll Service Delivery Models: • In-house or Outsourced: Centralized, Regional, Local and Shared Services • Outsourced • ERP • Payroll Service Providers • Local Vendors • Aggregators S S Global Strong HQ Control S S HQ • High Integration • Lowlocal responsiveness

46. MNC Business Model Alignment with Payroll Service Delivery Model Multi-Domestic Model: • The subsidiaries operates with a high degree of autonomy from the HQ center • Control of payroll administration services is held at the local level S S S S HQ • Low Integration • Highlocal responsiveness Multi-Domestic Strong Local Control

47. MNC Business Model Alignment with Payroll Service Delivery Model Multi-Domestic Model: • The HQ or regional leadership role maybe one of high-level governance • Oversight with compliance and interfacecoordinating actions with HQ HRIS systems and other third party groups. S S S S HQ • Low Integration • Highlocal responsiveness Multi-Domestic Strong Local Control

48. MNC Business Model Alignment with Payroll Service Delivery Model Multi-Domestic Model: • Payroll Service Delivery Models: • In-house or Outsourced: Centralized, Regional, Local and Share Services. • Outsourced, ERP, Payroll Service Providers, Local Vendors and Aggregators S S S S HQ • Low Integration • Highlocal responsiveness Multi-Domestic Strong Local Control

49. MNC Business Model Alignment with Payroll Service Delivery Model Transnational Model: • With the Transnational model, HQ and subsidiaries work in a collaborative approach with both systems, processes and oversight. • Shared Service Centers work well and regional scope is defined by the global workforce footprint. S S Transnational Local control, yet integrated S S HQ • High Integration • Highlocal responsiveness

50. MNC Business Model Alignment with Payroll Service Delivery Model Transnational Model: • Possible Payroll Service Delivery Models: • In-house or Outsourced: Centralized, Regional, Local and Shared Services. • Outsourced • ERP • Payroll Service Providers • Local Vendors • Aggregators S S Transnational Local control, yet integrated S S HQ • High Integration • Highlocal responsiveness