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Key metrics in your global Payroll business case
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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