going global with hr & payroll - corporate leaders · efficiency practices for global payroll !...

© Copyright 2012. All Rights Reserved.

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Karen Beaman CEO/Global Advisor/Head of Research

Jeitosa Group International

London, Zürich, Amsterdam 3-10 May 2012

Going Global with HR & Payroll ReThink HR Series


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Agenda

! Global Industry Trends

! Globalisation of HR / Payroll

! Efficiency-Innovation Model (EIM)

! Stages of Global Maturity

! Leading Practices of Global Organisations

! Successes and Challenges

! Opportunities and Recommendations


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Global Industry Trends

! Continued increase in globalisation: •  Business expansion within an slowed economy forces organisations

to look globally for new opportunities. •  Pressure to do “more with less” encouraging organisations to

consolidate and integrate systems and to outsource infrastructure globally in search of cost efficiencies.

! Forces of globalisation are slowing: •  Recent Hackett Group study reports that organisations are “running

out” of jobs to send overseas. •  Reuters reports an emerging “de-globalisation” trend, as the cost

differentials with offshoring and labour arbitrage are no longer as advantageous as they once were.


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Globalisation of HR / Payroll


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Strategy

Jeitosa’s Global Enterprise Model (GEM)


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Over 50% of

organisations

regularly involve

local HR in global

business planning

efforts.

IT and HRIT are both moving to more globalised approach in their strategic planning efforts.

Strategy: Global Business Planning

n = 130

Source: Jeitosa, 2011-2012


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Global Organisational Models

! Four organisational models are typical among global companies, each with different strengths and weaknesses


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The Global organisational model continues to increase year-over-year, bringing more standardised processes and greater

cost efficiencies.

Organisation: Global Models

n = 130



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Globalisation of sourcing strategies is clearly on the rise – over 100% increase in global SSCs and COEs over last four years.

Organisation: Strategic Sourcing

n = 130



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Year-after-year Global Mindset and Cultural Intelligence

are the top two competencies important for

working successfully

globally.

People: Global Competencies

n = 130



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On-the-job training –

through job rotations

and special projects –

is on the rise over

formal classroom

training as the

preferred method for

developing global

talent.

People: Global Training & Assignments

n = 130



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Most globalised processes continue to be Risk Management, Compliance, Compensation, Succession Planning, Metrics, and Top

Talent programs.

Process: Globalised Business Processes

n = 130



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Global Core HR has shown the most consistent growth over four years (41%). Benefits/Payroll/Time took a spike in 2010 and has leveled off in 2011.

Three-Year Growth (2008-2010)

Process: Core HR / Payroll

n = 130



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Talent management business processes show a significantly greater degree of globalisation than core HR and payroll processes, with Compensation

Management (56%) and Succession Planning (47%) being the most globalised.


Process: Talent Management

n = 130



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Risk Management and International Compliance are the most globalised corporate functions, followed by Data Privacy, Metrics, and Top Talent

programs, all becoming increasingly more global year-after-year.

Process: Other Corporate Functions

n = 130



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50% of companies have one single system for their global workforce – 5% increase over last year.

Technology: Single, Global Database

n = 130



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Organisations are making headway in moving to one single global system of record, but progress is slow, prohibiting the ability to provide global

workforce analytics to support strategic decision-making.

Technology: Single, Global Database

n = 130


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Global Data Warehousing and Global Reporting/Metrics show the greatest increase in globalisation, increasing 54% and 40%, respectively over four years.

We also see a spike in Global Benefits/Payroll in 2010 and a leveling back off this year.


Technology: Global Adoption – Core HR

n = 130


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Corroborating many

other studies, we are

seeing a steady decline

in legacy, on-premise

solutions and a

significant increase in

SaaS solutions.

*Oracle, PeopleSoft, SAP **SuccessFactors, Ultimate, Workday

* **

Technology: SaaS Adoption

n = 130


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Global Payroll Benchmarking Study


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Global Organisational Models

! Three of the four organisational models are seen in the ADP/Jeitosa Global Payroll Benchmarking study.

n = 38


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Participating Organisations

Abercrombie & Fitch ADP AIG Amazon American Express Apple Computer Avery Dennison Avis Budget Baker-Hughes, Inc Bank of America Boehringer-Ingelheim Bombardier Transportation Cargill Celestica Cisco Systems Corning Credit Suisse Halliburton Hitachi

Honeywell IHG IKEA JP Morgan Chase Lenovo Mastercard Microsoft Monsanto Navistar NCR Philips Rhodia SPX Corp Standard Chartered Swiss Re Syngenta Teradata Unisys VWR International n=38

Source: ADP-Jeitosa, 2012


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Efficiency-Innovation Model (EIM)

! The Efficiency Innovation Model (EIM) is a technique for assessing an organisation’s capabilities along two vital dimensions:

•  efficiency – the degree of centralisation / decentralisation of the organisation; maximum efficiency is achieved through the right balance between localisation and globalisation

•  innovation – the ability to implement leading practices to increase effectiveness across the global organisation both in local operations and global headquarters

! EIM can be used to assess an organisation’s structure and thereby determine the most effective HR / Payroll structure, services, processes, systems and infrastructure.

Source: Jeitosa


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Efficiency-Innovation Model Factors

Efficiency Measures – Centralization/Decentralization Factors 1.  Delivery Model (from local to regional to global) 2.  Governance Model (from local to regional to HR to Finance) 3.  Global Vendors (from multiple to several to clusters to one) 4.  Standardization (from minimal to regional to emerging to full) 5.  Integration (from manual to FTPs to hybrid to single system)

Innovation Measures – Leading Practice Adoption Factors 1.  Key Accountabilities (from country to regional to global to process) 2.  Metrics (from none to lagging to root cause to leading/predictive) 3.  Tools and Methods (from none to control to process to external) 4.  Automation (from manual to basic to workflow-enabled to portal access) 5.  Mindset (from clerical to country to regional to process to strategic)

Source: Jeitosa


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Stages of Global Payroll Maturity

! Organisations are maturing in their global efficiency, but less so in areas of global innovation

Global Payroll Efficiency

Global Payroll Innovation

n = 38

Source: ADP-Jeitosa, 2012


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Internationals

Multinationals

Transnationals

Globals

Efficiency- Innovation Model (EIM) for Global Payroll

Level of Efficiency

Leve

l of I

nnov

atio

n

n = 38 © Jeitosa Group International


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! Ability to leverage innovation is facilitated by effectively balancing centralisation and localisation – extremes of either inhibit the dispersion of innovations – the “Effectiveness Circle.”

! Companies too far out on the centralization/decentralization scale are ineffective at disseminating best practices:   If the organisation is too centralized, then innovations get stuck at the centre   If the organisation is too localized, then innovations get lost on the periphery

! Striking the right balance on the efficiency scale (global versus local) helps an organisation reach optimal effectiveness – the “Magic Middle.”

EIM Implications


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Efficiency Practices for Global Payroll

! Multinationals ▼ Multi-local approach to payroll, generally managed by Finance ▼ Multiple payroll vendors (sometimes 100’s) across the globe ▼ Some key integrations, but overall lack of integration strategy

! Globals ▲ Global Shared Services & governance likely managed by Finance ▲ Fewer systems for managing payroll and greater integration ▲ More standards-focused and global process-orientation

! Transnationals ▲ Larger number of countries with greater stability (less change) ▲ Working longer in a global services environment (5-10 years) ▲ Fewer systems for managing payroll and greater integration


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Innovation Practices for Global Payroll

! Multinationals ▼ No single system, data warehouse, or integrations in place ▼ No global workflow capabilities or metrics in place ▼ Very operational and clerical focused

! Globals ► Likely to have 100% of workforce on single system ► Have only basic metrics in place from primary vendors ► Focused on developing deep country-specific expertise

! Transnationals ▲ Extensive workflows, approvals, and portals in place ▲ Advanced metrics framework, including root cause analysis ▲ Greater process orientation and strategic mindset


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Closing and Recommendations


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The greatest challenges organizations face is also their greatest success when working globally: more than half of the challenges and successes stem from working with the vast cultural differences across the globe.

Top Successes in Working Globally

n = 130



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After Time Zone Differences, Resources

Cultural Differences, and Compliance are the top challenges for global

organizations.

Top Challenges in Working Globally

n = 130



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In going global,

organizations are

seeing results in

improved talent

development and

enhanced business

performance.

Business Successes in Working Globally

n = 130



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Opportunities in Going Global

! There is a clear globalisation trend from the Multinational (decentralized) to the Global (centralized) model, and on to the Transnational model, leveraging both efficiency and innovation.

! There is a significant gap between global technology capability and global business process development – pointing to a considerable opportunity for improved business performance.

! Lack of integration between HR and Payroll systems brings significant duplicate data entry, data quality and timeliness issues, and difficulties in global reporting and metrics.

! While cultural appreciation is clearly a byproduct of global work, HR/Payroll professionals have a ways to go in moving from a country-based to global process-oriented mindset.


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Learnings from Global Executives (1 of 3)

Process Standardization: ! “We didn’t standardize enough up front. Push to have 80% in the global

blueprint and 20% local functionality.”

! “Global process standardization is key. If you look at the processes, you can standardize far more than you initially think.”

! “Payroll is not the driver for standardization and harmonization. It has to be HR Operations.”

! “Make sure to do the due diligence up front to understand the local nuances and what's really necessary to do locally and what can be done globally. It's important to ask to the right questions.”

! “Follow a solid process. The difference between having an A team versus a B or C team is huge. But with a solid process, a B player can be successful.


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Project Management: ! “It’s important to have a cross-functional team, including change management.

Having people from different departments helps to drive the change.”

! “Anticipate that this is a big project. Assign sufficient, globally minded resources.”

! “Make sure you have centralized global project management…. And it can’t be the vendor project management.”

! “Have one global implementation team for all countries. As the team moves from country-to-country, they can take the best practice knowledge with them.”

! “The biggest issue is the communications barrier. Terminology means something different everywhere. The best approach is face-to-face meetings, particularly initially in the blueprinting process. Then you can see when the eyes glaze over and there's a disconnect.”


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Other Learnings: ! “Band the use of Excel.”

! “Hold the vendors accountable… and hold yourself to the same standards.”

! “The hybrid model is the best model, where the bulk of the processing is outsourced and then key people are retained in-house who keep the accountability.”

! “No one company resembles another. There is no one-size-fits-all. This a long, huge process. You don't know what you don't know.”

! It's important to look at the retained organisation and figure out what you need…. Define new responsibilities for the redeployed staff.”

! “Find a good contracting company with experience doing these types of projects to lead the effort.”


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Strategy: Involve local and regional HR teams in the global strategic planning process to gain knowledge, garner buy-in, identify strategies, set goals and metrics, and ensure alignment across disparate units.

Organization: Move toward the “Global” organizational model, focusing on standards, efficiencies, and global Shared Services (SSCs and COEs) for economies of scale and improved financial performance.

People: Build global mindset and cross-cultural competence and implement international job rotation programs and set up cross-functional, cross-geographical special projects to develop global talent.

Process: Standardize and globalize business processes to eliminate complexity and reduce costs; focus not only on global talent management, but also Core HR to streamline on-boarding and global mobility.

Technology: Migrate to one single global database and integrate systems to improve analytics, reporting, decision-making; evaluate vendors for global capabilities to ensure they meet your requirements.

As Global as Possible, As Local as Necessary


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谢谢

Thank You

gracias, merci, efcharisto, hvala, kiitos,

durdaladawhy, asante sana, bedankt, danke,

rekhmet, go raibh maith agat, salamot,

doh je, spasibo, Ευχαριστω, arigato, tack,

shukriya, tesekkür ederim, bayarlalaa, terimah,

mahalo, takk, kasih, mamnoon, dhannvaad,

, dziêkujê, tapadh leat, grazie,

dakujem, khawp khun, ngiyabonga ध"यवाद


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Thank You

www.jeitosa.com

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