Introduction to Global Payroll

Introduction to Global Payroll
Amazing thing is that when you look from above there are no boudaries, boarders or differences between countries.

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

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

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

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!

International/Local Centric
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 US Centric Uses a US based system for entire world Accommodates regional cultures minimally Continues to operate in the same manner as before being global Does not feel processes need to be changed as they work for the US Can result in Rogue systems JOHN – RI example 6

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!

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

“Employees” Local nationals (Locals) Expatriates (Expats) Inpatriates
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

Global Considerations

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

Language 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? How many of you have English as the official language of your company? Do you think there are still conversations in other languages? Need to allow detailed, side bar conversations in local languages BUT you need to control it so you know what is going on! So need to control the extent of it, ask for summaries, and, in self-defense, learn some of the languages! Written materials – symphony example of 1200 pages of tech doc in dutch!!! Need to be smart about what you ask for/require in English versus what can/should stay in local language (in this case, client decided what pieces should be translated and if we were missing something we asked) 12

Language May require local language support Written communications
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 How many of you have English as the official language of your company? Do you think there are still conversations in other languages? Need to allow detailed, side bar conversations in local languages BUT you need to control it so you know what is going on! So need to control the extent of it, ask for summaries, and, in self-defense, learn some of the languages! Written materials – symphony example of 1200 pages of tech doc in dutch!!! Need to be smart about what you ask for/require in English versus what can/should stay in local language (in this case, client decided what pieces should be translated and if we were missing something we asked) 13

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! How many of you work across time zones in the US? Say east coast to west coast, or even east coast to Hawaii? How many hours different? In different parts of a country? For ex, Australia has multiple time zones just like the US. Different countries/regions switch to/from daylight savings at different times, and not all switch by the same amount. (think of those towns in Indiana that don’t switch – what if you’re a firm in Berlin doing business with someone there?). Australia goes opposite US/Europe, for ex, because of southern hemisphere, and across Australia they don’t switch by consistent amounts – some by an hour, some by 90 min, some by 30 min! All need to be flexible. So if project is east coast US driven, don’t make all the calls at times most convenient there (for ex, don’t schedule a weekly status call with your EMEA team for 4pm Tuesdays). For ex, we try to make meetings involving US and Europe in the mornings in US, so afternoons in Europe. But sometimes – if things time critical, or folks not avail, or whatever, may have to do them late into the evening in Europe, or very early in the day in the US. Key is to balance as best you can, so no one is overburdened. You can ask people to be inconvenienced, but make sure they know you know they are being inconvenienced 14

Time Zones 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 How many of you work across time zones in the US? Say east coast to west coast, or even east coast to Hawaii? How many hours different? In different parts of a country? For ex, Australia has multiple time zones just like the US. Different countries/regions switch to/from daylight savings at different times, and not all switch by the same amount. (think of those towns in Indiana that don’t switch – what if you’re a firm in Berlin doing business with someone there?). Australia goes opposite US/Europe, for ex, because of southern hemisphere, and across Australia they don’t switch by consistent amounts – some by an hour, some by 90 min, some by 30 min! All need to be flexible. So if project is east coast US driven, don’t make all the calls at times most convenient there (for ex, don’t schedule a weekly status call with your EMEA team for 4pm Tuesdays). For ex, we try to make meetings involving US and Europe in the mornings in US, so afternoons in Europe. But sometimes – if things time critical, or folks not avail, or whatever, may have to do them late into the evening in Europe, or very early in the day in the US. Key is to balance as best you can, so no one is overburdened. You can ask people to be inconvenienced, but make sure they know you know they are being inconvenienced 15

Time Sensitivity and Perceptions
“Time is money” – an American mantra! But to other cultures, may indicate our obsession with both Meeting with Knut, rest of team at Plaza Major. First meeting with Israel client – deployed an hour, then 2, then 5! And conf call – late by 24 hrs! And goes to attention – when you get in with the French team, though, typically yours for as long as it takes (like waiting in line for something, too – when you get to the counter, their attention is all on you!) – which is of course why they’re late to the next one! Versus Spanish – tend to be late because of a more laid back attitude. Don’t tend to hurry too much, things will get done when they get done (I believe it comes back to the siesta thing, too hot to rush, and need to add in the 2 hour siesta, so…and someone else mentioned bad traffic in south America so everything is late there!) Not all areas react the same way! 16

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! Meeting with Knut, rest of team at Plaza Major. First meeting with Israel client – deployed an hour, then 2, then 5! And conf call – late by 24 hrs! And goes to attention – when you get in with the French team, though, typically yours for as long as it takes (like waiting in line for something, too – when you get to the counter, their attention is all on you!) – which is of course why they’re late to the next one! Versus Spanish – tend to be late because of a more laid back attitude. Don’t tend to hurry too much, things will get done when they get done (I believe it comes back to the siesta thing, too hot to rush, and need to add in the 2 hour siesta, so…and someone else mentioned bad traffic in south America so everything is late there!) 17

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

Culture

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

Culture – Dress and Communication
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

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

Culture – 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

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 Lunch is a great example, You’d think this wouldn’t be hard – but in the US and UK we’re used to eating while we work, and having working meetings over lunch, etc. But in France and Spain, it is important to have a sit down meal at lunch. And just as important is the morning coffee break. To an American, these may seem wastes of time, but to those folks it is an important part of staying connected with one another, and is used for recharging and even coming up with new and different ways of looking at things. BBVA team example – we would have week long working sessions and tried to compromise by bringing lunch in American style twice and allowing time to go out twice. But again, need to manage. Got to the point one time where they went ahead and ordered because they knew I was coming! Had gotten used to it, which on one hand was nice because they were trying to accommodate me, but on the other hand sent a message to me that I was asking them to bend too much Spanish siesta – still part of the culture, even though most in the cities don’t follow the actual practice anymore (guy sleeping on the job building out the service center!) Accountability/responsibility/hierarchy – Americans very action oriented, French tend to adhere more to hierarchy, staying with the status quo (Martial waiting for “official approval” before doing something for a client, even though I had given him the okay verbally. And Michel hitting the roof with me the one time I copied his boss (with whom I had a direct relationship as well). But an American will say “I’ve got it” versus assigning “owners” in France and Spain is very difficult! And sense of urgency – “the sun will still rise tomorrow” balance between work hours and off hours, and what is really to be disturbed about (other story with martial – client issue, needed a quick answer from him, called and ed. He was off that afternoon, saw it come in, decided it wasn’t enough of an emergency to disturb his private time over!) 24 24

Cultural Norms 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! Lunch is a great example, You’d think this wouldn’t be hard – but in the US and UK we’re used to eating while we work, and having working meetings over lunch, etc. But in France and Spain, it is important to have a sit down meal at lunch. And just as important is the morning coffee break. To an American, these may seem wastes of time, but to those folks it is an important part of staying connected with one another, and is used for recharging and even coming up with new and different ways of looking at things. BBVA team example – we would have week long working sessions and tried to compromise by bringing lunch in American style twice and allowing time to go out twice. But again, need to manage. Got to the point one time where they went ahead and ordered because they knew I was coming! Had gotten used to it, which on one hand was nice because they were trying to accommodate me, but on the other hand sent a message to me that I was asking them to bend too much Spanish siesta – still part of the culture, even though most in the cities don’t follow the actual practice anymore (guy sleeping on the job building out the service center!) Accountability/responsibility/hierarchy – Americans very action oriented, French tend to adhere more to hierarchy, staying with the status quo (Martial waiting for “official approval” before doing something for a client, even though I had given him the okay verbally. And Michel hitting the roof with me the one time I copied his boss (with whom I had a direct relationship as well). But an American will say “I’ve got it” versus assigning “owners” in France and Spain is very difficult! And sense of urgency – “the sun will still rise tomorrow” balance between work hours and off hours, and what is really to be disturbed about (other story with martial – client issue, needed a quick answer from him, called and ed. He was off that afternoon, saw it come in, decided it wasn’t enough of an emergency to disturb his private time over!) 25 25

Communication

Be Cautious of Communication Styles

Communication Styles 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 Americans will continue a conversation on Tues morning that they were having Mon night with no gaps For the French, must have the polite conversation first, and of course greet each other (kisses – 2 cheeks or 3? – or at least handshakes, and when/how often for an American???) Case of Americans in Paris – GP team, lock themselves in the room, don’t say hello, etc – seen as rude and unfriendly! And French love to debate and discuss – very conceptual – where Americans TEND to try to go right to the solution (hey, if it doesn’t work we’ll try something else! Movie camera example). But for French, when they are animated they are truly engaged! Paris as snail analogy, and remember that first meeting with jeff when he thought we strayed too far off the agenda! And feedback from Laurent, etc when announcing the reorg Spanish are like Italians and Greeks and Israelis – very animated in discussions! Talk over one another (recall story of Pierre and Franco on the call!) Germans tend to state everything as fact – can come across as arrogance (so can the French, for that matter – up to you to raise the questions!). And German precision is legendary, and rightly so. Can seem like lack of flexibility to others… And then you have the “yes” of yes, I absolutely will, versus the “yes” meaning well, I will look into it Cell phones – in Paris, you get signal throughout the metro! They take their mobiles everywhere and will take a call anywhere (have been on sales calls where the head of sales takes a call during the sales meeting!). Also tend to prefer calls to . 28

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 Americans will continue a conversation on Tues morning that they were having Mon night with no gaps For the French, must have the polite conversation first, and of course greet each other (kisses – 2 cheeks or 3? – or at least handshakes, and when/how often for an American???) Case of Americans in Paris – GP team, lock themselves in the room, don’t say hello, etc – seen as rude and unfriendly! And French love to debate and discuss – very conceptual – where Americans TEND to try to go right to the solution (hey, if it doesn’t work we’ll try something else! Movie camera example). But for French, when they are animated they are truly engaged! Paris as snail analogy, and remember that first meeting with jeff when he thought we strayed too far off the agenda! And feedback from Laurent, etc when announcing the reorg Spanish are like Italians and Greeks and Israelis – very animated in discussions! Talk over one another (recall story of Pierre and Franco on the call!) Germans tend to state everything as fact – can come across as arrogance (so can the French, for that matter – up to you to raise the questions!). And German precision is legendary, and rightly so. Can seem like lack of flexibility to others… And then you have the “yes” of yes, I absolutely will, versus the “yes” meaning well, I will look into it Cell phones – in Paris, you get signal throughout the metro! They take their mobiles everywhere and will take a call anywhere (have been on sales calls where the head of sales takes a call during the sales meeting!). Also tend to prefer calls to . Differences Difficulties Accommodations 29

Service Delivery Models

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?

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 Strength of HR control Degree of variability High Low Corporate level Business unit or Regional level Locally driven practices 32

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

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 Regulatory compliance specific to all employee populations for processing and reporting I.e., countries may require specific banking activities are preformed 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 are critical in multi-country service delivery models Language and cultural requirements Activities performed by the customer ultimately using the service delivery model Number of technology solutions used by the organization and service delivery model 34

Global Payroll In other words… HR Transformation Journey
Common, standardized, repeatable processes Single HCM platform Selected processes in Regional/ Global Shared Service Center Outsourcing of selected processes Outsourcing of HR IT platforms hosting & ongoing support HR Transformation Journey Payroll Transformation Journey Why? What? How? Who? These questions need to be addressed in the context of overall Business and HR strategy 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 Vision (How do we get there?)
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 Identify the tools to create your new reality: Information/education Data Interactive tools Transactions Collaboration Global community Take a hard look at where you are today: Organization design Process design Technology infrastructure Communication strategy and process and the cycle continues…

Global Payroll Provider Options
One single in-house or outsourced solution under a single contract Consolidated reporting Provider may use in country partners May have variations in the services due to countries combination Global Payroll Processor

Local providers specific to a country May be Accounting Firm Company manages performance and compliance requirements Local in Country Provider (ICP)

A company that has a network of ICP’s managed under a single contract – services may vary by country Data integration Consolidated reporting Payroll Aggregator

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

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

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 HQ S International Limited employee populations in countries (Expats) Low integration Low local responsiveness

International Model: Possible Payroll Service Delivery Models: Outsourced Local in-county provider Outsourced to accounting firm Outsourced to “aggregator” provider HQ S International Limited employee populations in countries (Expats) Low integration Low local responsiveness

Global Model: Various global subsidiaries with the HQ having a major impact with local practices and policies Global Model could also apply to a Regional or Shared Service Center approach S Global Strong HQ Control HQ High Integration Low local responsiveness

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 Global Strong HQ Control HQ High Integration Low local responsiveness

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 Multi-Domestic Strong Local Control HQ Low Integration High local responsiveness

Multi-Domestic Model: The HQ or regional leadership role maybe one of high-level governance Oversight with compliance and interface coordinating actions with HQ HRIS systems and other third party groups. S Multi-Domestic Strong Local Control HQ Low Integration High local responsiveness

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 Multi-Domestic Strong Local Control HQ Low Integration High local responsiveness

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 Transnational Local control, yet integrated HQ High Integration High local responsiveness

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 Transnational Local control, yet integrated HQ High Integration High local responsiveness

Governance

Governance Governance: the act of leading the HR and Payroll functions and managing related investments to optimize the performance of the assets, mitigate risk, align priorities with the business and fulfill financial requirements Governance provides a framework for managing all of HR’s activities an initiatives cohesively and with a common purpose 52

Governance Benefits It is critical to put the appropriate governance objectives, structure and processes in place to ensure the HR/Payroll priorities are being effectively delivered The appropriate governance model is also driven by the Organizational Model Without appropriate governance, HR/Payroll runs the risk of allowing itself to be managed by its initiatives, rather than proactively managing the initiatives themselves Governance provides a framework for managing all of HR’s activities an initiatives cohesively and with a common purpose 53

Success Factors

Critical Success Factors
Active corporate and local user involvement Development of global vision and strategy Understanding critical and geographic requirements Investigate and plan for geographic technical challenges Review slides Decide function by function where each task should be completed Face-to-Face functions should be local Remember to keep focus on adding value to all HR and HR systems functions which are provided to local facilities Learn as much about the deal before you begin any efforts at globalization Rely on local resources to keep your operations current and legal Preserve cultural differences and value diversity Identify and plan solutions for system gaps 55

Critical Success Factors
Plan for global functionality but accommodate local business processes Invest in change management and communications Create a good business case Ensure good project planning and management Review slides Decide function by function where each task should be completed Face-to-Face functions should be local Remember to keep focus on adding value to all HR and HR systems functions which are provided to local facilities Learn as much about the deal before you begin any efforts at globalization Rely on local resources to keep your operations current and legal Preserve cultural differences and value diversity Implement and maintain a robust governance structure 56

Education | Publications | Networking Opportunities
STRENGTHEN YOUR GLOBAL CONNECTIONS Education | Publications | Networking Opportunities Learn what they know — join the global community at GPMInstitute.com Check out our new website!

Global Payroll Management Forum 3rd Annual
Compliant! Innovative! Resilient! 15-19 May, 2018 Gaylord National Resort on the Potomac National Harbor, MD, USA

Introduction to Global Payroll

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