Know What You Need and How to Measure It

Know What You Need and How to Measure It: Key Metrics In Your Global Payroll Business Case

AGENDA

• Strategy• Guiding Principals• Business Drivers• Cost components• Evaluating Risk• Quantifying Controls and Compliance• Setting the expectations of Quality• Communication, Communication,

Communication

COMPANY GLOBAL STRATEGY

A Part of everyone’s Global Strategy = Processes

• Usual metric – reduce overall G&A expenses by improving processes

• Normal Hierarchy –Accounts receivable Accounts Payable

Globally implement ERP system but….New Hire/Termination processPerformance appraisal processIncrease HR Productivity

• Outsource Payroll• Employee Self Service

• LEVERAGE INFORMATION TO MAKE BETTER MANAGEMENT DECISIONS

WHY FOCUS ON GLOBAL PAYROLL INITIATIVE?

• Company has already seen significant ROI for other Shared Service initiatives:

Accounts receivableAccounts payablesFinancial transactions, reporting and metrics

• COMPLIANCE –• CONTROLS –• RISK REDUCTION

Core Goals – WHAT REALLY MATTERS…..

• Reduced cost and improved efficiency• Reduced Risk -Including Legislative

compliance• Better control – Management information• Improved quality of service TO

MANAGERS AND EMPLOYEES• Consistency of processes

What is common – A “HODGE PODGE” OF SOLUTIONS FOR PAYROLL.

YOU ARE NOT ALONE!!!

The Guiding Principals

• Business Driven not Payroll driven• “Let’s face it – no one wants to mess with

payroll”

• Focus on Quantifiable returns• Business case evolve/updates as real

scenarios are tested• Same Business case but Different

Argument focuses for different audiences• Factor in the risk of inertia vs. risk of

change

“If it ain’t broke

don’t fix it”

Change is scary

Business case = Logical Exercise to build a compelling argument for a change/benefit to justify

the initial and on-going commitment of time, resources and funding

Strategic – Enhanced capabilities improved service quality to drive overall cost reduction

Operational – Process improvements, leverage on existing SSC’s capabilities

Technical – Leverage on Technology and infrastructure optimization

Financial – Cost, benefit analysis and overall impact on business (NPV, IRR)

Design Principals – Standardization Risk & Controls

Business Processes related to Payroll

• Time and Attendance• Multiple Country management

Most countries with between 1-3000 employees cannot be done cost efficiently in house by the company

• Who wants the liability?

• How do I keep up with the legislation?

• Standard Operational details/Reports – GL, Bank File, Pay slips

• New Hire/Termination Process

• Update of Employee information

• Billing of clients (Engineering, legal, …etc. Companies)

How do you determine when and how you should tackle this?

• Look at the risks of the current system

Fund transfer processBack-up’s and timingData protection/securityCompliance and up to date legislationControls – internal and external (Fraud prevention)

• Is the current process efficient?Internal process of gathering time and attendance dataID what is currently broken or needs to improveTime team spends on quality control functions from internal/external suppliersDo I have common processes and standardization

How do you determine when and how you should tackle this?

• Is there continuous improvement in quality of my payroll service?

• LeverageWhat information is missing that will help me manage my business better? Across regions? Globally?

What information could the company use?

Do I have full Visibility of the processes, suppliers, timelines, …etc.?Does this fit/enhance company strategy?

Inform yourself – What are my peers doing?

• It is difficult to build a business case

• Companies are approaching the global challenge in

a pragmatic manner (regional versus global)

• Companies are finding that transformational

change is challenging

• Vendors are building out capabilities

• Many companies “jumped the gun”

• No consistent language or definitions for the

payroll industry

So How do I begin?

How to start

• Understand today before assessing tomorrow

Direct operational costs –• Staff – fully loaded costs• Training• Subscriptions for legislative advise• Software costs – maintenance, licenses,

upgrades, new software• 3rd party vendor costs (fully loaded) • Payment costs• Hardware• Telecommunication costs• Time & Attendance software costs• ID – out of cycle costs, new hire costs,

additional report costs• Fines (past and present risks)

Quantify Compliance – Risks

• What are the risks?Compliance risksCompany image risksUnion/Collective employee risksFraud risks

Identify company initiatives – and cost/issues

• ERP maximization and roll-out throughout organization

Cost to integrate into separate payroll vendorsAgenda for leveraging existing investment

• Global T&A approach• SSC leverage based on current

capabilities • Employee electronic communication

standards

Factors in the cost expectations

• Nature of multi-country payrollExtra dimension of control/ management visibilityOffset by efficiencies from standardizationNature of the platform you are usingNature of the model you chooseSmaller country populations versus larger country populations

Cost of Change

• Cost analysis of the researchPeer reviewAdvisory services

• Cost of the RFI/RFP initiativeTeam costsTimingTravelContracting/legal costs

• Service/system implementation actual cost

Hedge

Future on-going state

Per pay cycle costs for new solutionTangible –

Reduction in FTE’s and hours to provide payrollShorter payment cycles Reduction in materialsReduction in cost to service employeesElimination of non value added processes – and manual work (or at least identification)

Intangible –Better employee communication More self service capabilitiesBetter manager information

Risk Analysis – Short/Medium Term

• Fundamentals –

For each country and together –

• Can you ensure delivery of payroll on- time and accurately?

• What is the accepted employee service level and will it be maintained?

• What does the cost/business case analysis show? (What is the Delta and ROI limits?)

• What are the risks to operational performance and compliance?

Any resource constraints

System/service provider weaknesses (run worst case)

What are some possible process problems?

How will I ensure management visibility and control?

What are possible Compliance issues?

What are the risks of change?

• Resistance to change = human nature• Manage cultural nuances• Loss of key team members during the

process• Implementation/project management

issues• IT issues

Key Steps after developing and vetting the Business Case

• Identify the key peopleMust have an internal champion who can communicate the benefits and get everyone on board as to the Benefits to the company

• Board level or executive level sponsorship is key

• Develop a project view and report card

• Place as part of Balanced Score Card

Key steps - continued

• Set the vision

• Communicate, Communicate, Communicate

• Build the Knowledge and understand theSkills needed

• Know the benefits and repeat often

• Phasing is OK – Pilot has shown great success

Communication

• Cannot do enough!• Set up KPI report card and send to all of

those involved• 2-3 levels – senior, mid and country

specific – require supplier to provide this• Re-enforce each time –

Why you are doing this!Goal – cost saving, efficiency

• Get local decision influencer’s buy-in• Tell all bad news first

Key steps

• Clearly ID your approachGather information – the more the better

• GET THE SNOWBALL ROLLING

Fully managed international payroll as a single service provider

Our differentiation:

Centralized integrated payroll model and platform

Innovative proprietary technology, web based interface

SSC in Budapest , centralized operation center

Global Account Management with Single contract, single SLA

Integrated delivery model

In-house payroll processing capabilities in 44 countries and via partners 60+ more

Service in 18 languages

Intercomp Global Services provides

Multi-country payroll services as a single provider

FOR MORE INFORMATION FEEL FREE TO CONTACT