ey human capital conference 2012: global payroll - myth or reality?
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2012 Human Capital Conference23–26 October
Global payroll: myth or reality
Disclaimer
► Ernst & Young refers to the global organization of member firms of Ernst & Young Global Limited, each of which is a separate legal entity. Ernst & Young LLP is a client-serving member firm of Ernst & Young Global Limited located in the US.
► This presentation is ©2012 Ernst & Young LLP. All rights reserved. No part of this document may be reproduced, transmitted or otherwise distributed in any form or by any means, electronic or mechanical,distributed in any form or by any means, electronic or mechanical, including by photocopying, facsimile transmission, recording, rekeying, or using any information storage and retrieval system, without written permission from Ernst & Young LLP Any reproduction transmission orpermission from Ernst & Young LLP. Any reproduction, transmission or distribution of this form or any of the material herein is prohibited and is in violation of US and international law. Ernst & Young LLP expressly disclaims any liability in connection with use of this presentation or itsdisclaims any liability in connection with use of this presentation or its contents by any third party.
► The views expressed by panelists in this session are not necessarily those of Ernst & Young LLP
Global payroll: myth or realityPage 2
those of Ernst & Young LLP.
Presenters
► Jeff Brown ► Vinay Singh► Ernst & Young LLP► jeff.brown@ey.com
y g► Ernst & Young LLP (UK)► vsingh@uk.ey.com
Global payroll: myth or realityPage 3
Agenda
► Global payroll: myth or reality?► Key survey highlights► Global payroll challenges► Key questions for global payroll improvement
Global payroll: myth or realityPage 4
Global payroll: myth or reality?
Vendor perspective
Buyer perspectiveperspective perspective
Global payroll: myth or realityPage 5
Do you believe there is a single vendor who can handle all your global payroll needs?can handle all your global payroll needs?
30%Yes
55%N 55%No
15%Unsure70% of respondents are not
confident there is a truly global vendor.
0% 10% 20% 30% 40% 50% 60%
Global payroll: myth or realityPage 6
Global payroll surveyKey highlightsy g g
Survey profile
► Local language telephone interviews with 161 g g pmultinational organizations
► Headquartered in 13 countries across five continentsq► Respondents — the most senior person with responsibility
for global payroll:► Global payroll leader► Senior payroll manager/Director
C t ll► Controller► HR director► CFO/COO► CFO/COO► Head of shared services
Global payroll: myth or realityPage 8
Which of the following is the main driver for your existing payroll operating model?your existing payroll operating model?
54%Hi t i ti ► If it isn’t broken don’t fix it!
14%
54%
Cost
Historic practice ► If it isn t broken, don t fix it!► It probably is being fixed:
► Manually
6%
7%
Control/risk
Lack of confidence in alternative models
► At high cost► A resource drain
19%
6%
Other
management
0% 20% 40% 60%
Global payroll: myth or realityPage 9
How is your payroll operation currently serviced?serviced?
60%Hybrid operation
Public sector
Private sector
28%In-house 80% 80% in-house outsourced
12%Outsourced 20%outsourced
20%in-house
0% 50% 100%
None of the US organizations interviewed had a purely in house payroll operation
Global payroll: myth or realityPage 10
None of the US organizations interviewed had a purely in-house payroll operation.
Does your current payroll outsourcing model vary by geography?vary by geography?
Global resultsChina
No
Global resultsNo
No 22%
100%
Yes No
19%US
78%US
Yes81%
Global payroll: myth or realityPage 11
Are you considering switching to a new outsource payroll vendor in the next 12 months?outsource payroll vendor in the next 12 months?
► The US is more tolerant of
38%54%
Yes change.► The US payroll offering is
57%40%
No
p y gchanging, e.g., technology evolution drives vendor h57%
6%
change.► Legislative change in the
UK (RTI) and US (health5%6%
Unsure UK (RTI) and US (health care reform) is forcing focus on payroll.
0% 20% 40% 60%US Global
focus on payroll.
Global payroll: myth or realityPage 12
Are you planning to make a change?
Are you considering switching to a new outsource payroll vendor in the next 12
Where in the planning process are you in adjusting your payroll model?
40%Not considering at hi i
months?
38%Yes
23%
40%
Considered/in initial discussions
this time
58%No 18%In planning stage but not implementing
4%Unsure
11%Actively pursuing implementation
0% 50% 100%
8%
0% 20% 40% 60%
Other
Global payroll: myth or realityPage 13
Are you considering bringing any portion of your payroll in-house in the next 12 months?your payroll in house in the next 12 months?
Unsure4%
► Does this mean organizations are happyYes
19%
organizations are happy with their outsource service provision?
No77%
Global payroll: myth or realityPage 14
Global consistency and effectiveness
What percentage of your internal payroll operations and policies are consistent across all countries?
How would you rate the effectiveness of your current payroll policies and practices on a global scale?
46%80%–100% of processes 15%Best practice
a cou t es g oba sca e
22%60%–79% of processes 54%Good
14%40%–59% of processes 23%Average
6%20%–39% of processes 7%Below average
12%
0% 20% 40% 60%
0%–19% of processes 1%
0% 20% 40% 60%
Needs immediate attention
Global payroll: myth or realityPage 15
0% 20% 40% 60% 0% 20% 40% 60%
Do you have a knowledge base or tracking system to facilitate resolution of payroll issues?system to facilitate resolution of payroll issues?
► Typically more than 90% of employee issues and
No42%
questions are repeated► A robust self-service 42%
Yes58%
system results in a faster and more cost-effective resolution58% resolution
Global payroll: myth or realityPage 16
Regardless of whether you currently outsource your global payroll, what are (or would be) your challenges to i l t ti ?implementation?
% 19%Cost
11%
17%
15%
16%
17%
19%
Vendor understanding requirementsConsistency
Cost
14%
14%
7%
11%
13%
L f t lGeographic capability
Legal and regulatory requirements
10%
6%
10%
6%
6%
7%
Culture/language/time zoneTechnology
Loss of control
1%
2%
10%
0%
5%
Contract managementChange management
g g
0% 5% 10% 15% 20%Largest challenge Second largest challenge
Global payroll: myth or realityPage 17
Regardless of whether you currently outsource your global payroll, what are (or would be) your challenges to implementation?
► “A vendor who can handle a lot of small countries at a low cost”of small countries at a low cost
► “Home and host tax issues make it a challenge to be compliant”
► “I would say getting everyone on board across the group wouldboard across the group would be our largest challenge”
► “Resistance from each local t d t i t t th tcountry and trying to get them to
change their process”► “The ability to demonstrate the
► “Standardization of the working model and putting that into a system”y
return on investment”system
► “No true global payroll provider out there”
Global payroll: myth or realityPage 18
Regardless of whether you currently outsource your global payroll, what are your current global payroll issues?
36%L i l ti li
21%
16%
11%
28%
36%
Finding the right payroll talent
Org. consistency in payroll processes
Legislative compliance
12%
16%
10%
6%
8%
%
Management reporting
Administration cost
Finding the right payroll talent
9%
9%
12%
5%
6%
Org. consistency in remuneration and benefits
Regional capability
Management reporting
2%
5%
9%
0%
0%
Audits, info requests and remediation
Managing mobile employees
2%
0% 5% 10% 15% 20% 25% 30% 35% 40%
Primary issue Second highest issue
Global payroll: myth or realityPage 19
How would you characterize your current capabilities in employee and manager payroll self-service?
► Employees are more
14%
p ytechnology driven.
► 60% or HR admin time is 35%
17%spent on calls answering basic queries.
► The opportunity for organizations to mine employee data is lost
34%employee data is lost.
Basic IntermediateAdvanced None available
Global payroll: myth or realityPage 20
If you were to select a new vendor for global payroll, what would your top three criteria be?payroll, what would your top three criteria be?
24%C t
13%
23%
24%
Technology platform
Global capability
Cost
8%
10%
13%
Accuracy of payroll delivery
Managing mobile employees
Technology platform
Would you expect “technology
5%
8%
Standardized payroll model
Relationship mgmt model
y p y y technology platform” to be in third place?
4%
4%
Customer support availability
Reducing compliance risks
p
1%
0% 5% 10% 15% 20% 25% 30%
Cultural intelligence
Global payroll: myth or realityPage 21
Which of the following services would you consider receiving from a global payroll vendor?g g p y
65%
70%
Cross-border payroll reporting for business travelers
Payroll operations for mobile employees
58%
60%
Time and attendance tracking
Comp mgmt for mobile employees
37%
47%
Learning and development
Health and welfare
35%
37%
Onboarding/recruitment
Learning and development
20%
0% 10% 20% 30% 40% 50% 60% 70% 80%
Other
Global payroll: myth or realityPage 22
Vendor added value options
59%Our organization would
67%not be willing to pay more
41%
Local employee support24/7 vendor support
33%
41%Our organization would be
willing to pay more
0% 20% 40% 60% 80%
Global payroll: myth or realityPage 23
Global payroll challenges
We have identified three core challenges
► Consistent payroll delivery when expanding into new k tmarkets
► Vendor selection — including determining the best operational modeloperational model
► Reaping the benefits of an outsourced model
Global payroll: myth or realityPage 25
Key questions for global payroll improvementimprovement
Key questions for global payroll improvementimprovement
► Is your global payroll model aligned with the overallC
► When was the model last reviewed?aligned with the overall
business strategy and the vision for support services?
► Do you have a five year planRAT
EGIC reviewed?
► Have you validated the art of the possible — which aspects of payroll can beYB
RID
► Do you have a five-year plan for your payroll operations?ST
R aspects of payroll can be outsourced and which do you need to keep in-house?
HY
► Do you have a good source of skilled payroll technicians?
► Did payroll outsourcing yield the expected savings?EDp y
► Have you championed the implementation of employee self-service for a broad rangeH
OU
SE
p g► Are your Key Performance
Indicators (KPIs) and Service Level Agreements (SLAs)SO
UR
CE
self service for a broad range of payroll events?IN
-H Level Agreements (SLAs) measuring things you feel are indicative of your payroll’s quality?
OU
TS
Global payroll: myth or realityPage 27
payroll s quality?
Questions
Global payroll: myth or realityPage 28
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