TO EXAMINE THE QUESTION, HRO EUROPE MAGAZINE PULLED TOGETHER A PANEL OF SOME OF THE TOP PAYROLL EXPERTS TO SOLICIT THEIR RESPONSES.

by HROE Staff

Jacques Bossonney (JB)
Sales Director Multinational Accounts, ADP Europe

Peter Carlile (PC)
Business Development Director, LogicaCMG

Eric Delafortrie (ED)
Managed Payroll Services Director, Europe, ARINSO International

Eve Godoy (EG)
HRO Offering Manager, EMEA, EDS

Synco Jonkeren (SJ)
Director HCM, BPO, SAP

Bill Thomas (BT)
President, Ceridian Multinational Services

HRO Europe: What are the three greatest challenges to multinational payroll?    

JB: The challenges are two-fold. On one end, clients are looking for suppliers with global coverage. A lot of them in Europe are shifting their workforce from Western to Eastern Europe or Southeast Asia and they want a supplier to follow them there or already be there. At the other end of the spectrum, payroll remains very complex and country specific with different payroll rules, country regulations/restrictions, and collective agreements and collective legislation. 

EG: Skill set is also an issue. When we are looking at multinational payroll, we are looking for people to understand rules per country. They may understand one country, but finding someone who understands the rules for many countries is difficult. 

BT: First, compliance is a big issue in several regards: Each countys legislative compliance is an issue, but so is the issue of multinationals struggling with corporate compliancedoing corporate policy in each country they trade in. Another issue is the plethora of solution types and vendors that multinationals have, which brings both cost and best-practice challenges over multiple countries. Third is access to data both pre and post-payroll process 

PC: Another issue is local resistance within multinational corporations, which comes up quite a lot during HR and finance decisions to reduce costs globally. Many will think We already have our payroll working, why bother with changing or doing it globally? This is especially an issue in specific countries, such as France, which has very complex rules and processes. Also, people have difficulty understanding the difference between business process outsourcing versus just payroll outsourcing. Some understand, others are just looking for basic operations. 

ED: Service consistency is a challenge: How do you ensure your service in all different countries follows the same process? Another challenge related to that most important issue is: Who has the capacity to deliver pan-European payroll to European countries, especially eastern European countries? How credible are we in providing those services? What will we centralize? What will we localize? Can a provider give country expertise from a central area? 

SJ: Since we are more technology based, our company has different options. We are investing heavily in our solutions to support customers and providers. Compliance is important at the country, company, and industry level and collective labor agreements are honored not just at the country level. Another thing that is important is truly global (i.e. localized) technology to make sure companies can deliver payroll in multiple countries at a low cost. 

HRO Europe: What are some of the greatest country-specific challenges to payroll? 

JB: Countries like France and Italy, where payroll processing is very complex, are the biggest challenges. France is certainly one because of the complexity of legislation around things like time and attendance.  Another challenge is the decreasing amount of skill around payroll. We, as a payroll provider, are actually one of the largest payroll training organizations, simply because there are less and less of those skills that favor the business. 

BT: France, Germany, Portugal, Italyyou can almost pick any of the countries in Europe. Payroll is so country-centric and regional-centric its hard to pick a country where it would be easy. Another issue is that understanding of a countrys legislation is almost only available in any quantity from nationals who have lived in that country. Because of that, skill set is dependent on individuals at a national level.  Cultural and national awareness is another issue. For example, a time scale that may be acceptable in one country but wouldnt be acceptable by a parent organization or in another country. 

PC: Data protection is still a large problem in a number of countries because of employee attitudes. The unions, especially in countries like Germany, still have tremendous power over the process. Reluctance to have this data shared or moved can be a big barrier to global payroll processing. 

EG: We cant forget the prevalence of Eastern European employees when looking at providing multinational payroll. The skill set and understanding of what is needed in Eastern Europe is still lacking by many people. 

ED: How can you keep up with legislation and country compliance and cultural differences between all those countries? You might provide a single-service approach to pan-European, but you just cant approach payroll the same way when there is a difference between a Spanish and a Swedish subsidiary. And as Bill mentioned, being able to address the cultural difference is tremendously important. 

SJ: Keeping up with changes and keeping your current level of support with regards to compliance in each of the countries is certainly a challenge. SAP keeps on investing in this global footprint, which includes the ability to gather aggregated analytical data to support strategic decision making with data from over 45 countries worldwide. 

ED: One of the largest challenges is: Is there one single backbone you can use to provide payroll in Europe? If you want to go to a shared service center, you need to address that. Thats a challenge for everyone. 

HRO Europe: Have any of you worked with a customer or organization that has come up with a unique solution to some of the challenges noted above? 

JB: I can think of one specific company that is a great example of a way to address many of these issues. They are a large, diversified corporation. They have picked the role to focus on their shared service center.  There, they focus on three key activities supplier management, process improvement, and managing payroll metrics. The legal compliance and the country-specific issues, they let their provider handle. Another company that has unique solutions and addresses many of the above issues is SAP, who we think is a strong backbone for payroll.  We have been working with them in Asia-Pacific in 12 countries and we are proud of that relationship. 

BT: We have more than a 100 customers doing this now, taking the top three issues discussed and focusing on them: technology, which is very important; people who are capable of accurately using the technology; and the process by which they are going to deploy and run payroll. As an outsourcing vendor, we can solve all that for you and we can isolate the client from facing all of those challenges. 

PC: We have been working with SAP for several years on several initiatives and are about to go live with a client where well be serving multiple countries through one service.  SAP has enabled us to do that; they have given the most to offer pan-European payroll services. 

ED: A number of our clients have managed to do pan-European payroll on one platform, such as KONE and Schindler, and we couldnt have executed without SAP. We have been deploying single pan-European offers out of our center in Madrid and have the software capability of delivering payroll to 10 to 20 different countries.

SJ: We have seen some successful implementations of pan-European or global payroll and many of them took the same approach:  They started with standardization of business processes supported by the software, then moved to a shared-service model to centralize operations, then moved to outsourcing certain aspects. Procter & Gamble, for example, have taken this approach and have demonstrable business benefits from their HRO project. 

HRO Europe: What are the three metrics used most often to measure payroll performance? 

SJ: The number of employees/pay slips; the number of record updates; and accuracy and timeliness of paychecks/pay delivery. 

ED: Accuracy of payment, timeliness of payment (Is it on time?), and accuracy of remittance payment. In Europe, you have differences in social and tax laws, so to be able to assure those are correct is quite essential