ey human capital conference 2012: global payroll - myth or reality?

2012 Human Capital Conference23–26 October

Global payroll: myth or reality

Disclaimer

► Ernst & Young refers to the global organization of member firms of Ernst & Young Global Limited, each of which is a separate legal entity. Ernst & Young LLP is a client-serving member firm of Ernst & Young Global Limited located in the US.

► This presentation is ©2012 Ernst & Young LLP. All rights reserved. No part of this document may be reproduced, transmitted or otherwise distributed in any form or by any means, electronic or mechanical,distributed in any form or by any means, electronic or mechanical, including by photocopying, facsimile transmission, recording, rekeying, or using any information storage and retrieval system, without written permission from Ernst & Young LLP Any reproduction transmission orpermission from Ernst & Young LLP. Any reproduction, transmission or distribution of this form or any of the material herein is prohibited and is in violation of US and international law. Ernst & Young LLP expressly disclaims any liability in connection with use of this presentation or itsdisclaims any liability in connection with use of this presentation or its contents by any third party.

► The views expressed by panelists in this session are not necessarily those of Ernst & Young LLP


those of Ernst & Young LLP.

Presenters

► Jeff Brown ► Vinay Singh► Ernst & Young LLP► [email protected]

y g► Ernst & Young LLP (UK)► [email protected]


Agenda

► Global payroll: myth or reality?► Key survey highlights► Global payroll challenges► Key questions for global payroll improvement


Global payroll: myth or reality?

Vendor perspective

Buyer perspectiveperspective perspective


Do you believe there is a single vendor who can handle all your global payroll needs?can handle all your global payroll needs?

30%Yes

55%N 55%No

15%Unsure70% of respondents are not

confident there is a truly global vendor.

0% 10% 20% 30% 40% 50% 60%


Global payroll surveyKey highlightsy g g

Survey profile

► Local language telephone interviews with 161 g g pmultinational organizations

► Headquartered in 13 countries across five continentsq► Respondents — the most senior person with responsibility

for global payroll:► Global payroll leader► Senior payroll manager/Director

C t ll► Controller► HR director► CFO/COO► CFO/COO► Head of shared services


Which of the following is the main driver for your existing payroll operating model?your existing payroll operating model?

54%Hi t i ti ► If it isn’t broken don’t fix it!

14%

54%

Cost

Historic practice ► If it isn t broken, don t fix it!► It probably is being fixed:

► Manually

6%

7%

Control/risk

Lack of confidence in alternative models

► At high cost► A resource drain

19%

6%

Other

management

0% 20% 40% 60%


How is your payroll operation currently serviced?serviced?

60%Hybrid operation

Public sector

Private sector

28%In-house 80% 80% in-house outsourced

12%Outsourced 20%outsourced

20%in-house

0% 50% 100%

None of the US organizations interviewed had a purely in house payroll operation


None of the US organizations interviewed had a purely in-house payroll operation.

Does your current payroll outsourcing model vary by geography?vary by geography?

Global resultsChina

No

Global resultsNo

No 22%

100%

Yes No

19%US

78%US

Yes81%


Are you considering switching to a new outsource payroll vendor in the next 12 months?outsource payroll vendor in the next 12 months?

► The US is more tolerant of

38%54%

Yes change.► The US payroll offering is

57%40%

No

p y gchanging, e.g., technology evolution drives vendor h57%

6%

change.► Legislative change in the

UK (RTI) and US (health5%6%

Unsure UK (RTI) and US (health care reform) is forcing focus on payroll.

0% 20% 40% 60%US Global

focus on payroll.


Are you planning to make a change?

Are you considering switching to a new outsource payroll vendor in the next 12

Where in the planning process are you in adjusting your payroll model?

40%Not considering at hi i

months?

38%Yes

23%

40%

Considered/in initial discussions

this time

58%No 18%In planning stage but not implementing

4%Unsure

11%Actively pursuing implementation

0% 50% 100%

8%

0% 20% 40% 60%

Other


Are you considering bringing any portion of your payroll in-house in the next 12 months?your payroll in house in the next 12 months?

Unsure4%

► Does this mean organizations are happyYes

19%

organizations are happy with their outsource service provision?

No77%


Global consistency and effectiveness

What percentage of your internal payroll operations and policies are consistent across all countries?

How would you rate the effectiveness of your current payroll policies and practices on a global scale?

46%80%–100% of processes 15%Best practice

a cou t es g oba sca e

22%60%–79% of processes 54%Good

14%40%–59% of processes 23%Average

6%20%–39% of processes 7%Below average

12%

0% 20% 40% 60%

0%–19% of processes 1%

0% 20% 40% 60%

Needs immediate attention


0% 20% 40% 60% 0% 20% 40% 60%

Do you have a knowledge base or tracking system to facilitate resolution of payroll issues?system to facilitate resolution of payroll issues?

► Typically more than 90% of employee issues and

No42%

questions are repeated► A robust self-service 42%

Yes58%

system results in a faster and more cost-effective resolution58% resolution


Regardless of whether you currently outsource your global payroll, what are (or would be) your challenges to i l t ti ?implementation?

% 19%Cost

11%

17%

15%

16%

17%

19%

Vendor understanding requirementsConsistency

Cost

14%

14%

7%

11%

13%

L f t lGeographic capability

Legal and regulatory requirements

10%

6%

10%

6%

6%

7%

Culture/language/time zoneTechnology

Loss of control

1%

2%

10%

0%

5%

Contract managementChange management

g g

0% 5% 10% 15% 20%Largest challenge Second largest challenge


Regardless of whether you currently outsource your global payroll, what are (or would be) your challenges to implementation?

► “A vendor who can handle a lot of small countries at a low cost”of small countries at a low cost

► “Home and host tax issues make it a challenge to be compliant”

► “I would say getting everyone on board across the group wouldboard across the group would be our largest challenge”

► “Resistance from each local t d t i t t th tcountry and trying to get them to

change their process”► “The ability to demonstrate the

► “Standardization of the working model and putting that into a system”y

return on investment”system

► “No true global payroll provider out there”


Regardless of whether you currently outsource your global payroll, what are your current global payroll issues?

36%L i l ti li

21%

16%

11%

28%

36%

Finding the right payroll talent

Org. consistency in payroll processes

Legislative compliance

12%

16%

10%

6%

8%

%

Management reporting

Administration cost

Finding the right payroll talent

9%

9%

12%

5%

6%

Org. consistency in remuneration and benefits

Regional capability

Management reporting

2%

5%

9%

0%

0%

Audits, info requests and remediation

Managing mobile employees

2%

0% 5% 10% 15% 20% 25% 30% 35% 40%

Primary issue Second highest issue


How would you characterize your current capabilities in employee and manager payroll self-service?

► Employees are more

14%

p ytechnology driven.

► 60% or HR admin time is 35%

17%spent on calls answering basic queries.

► The opportunity for organizations to mine employee data is lost

34%employee data is lost.

Basic IntermediateAdvanced None available


If you were to select a new vendor for global payroll, what would your top three criteria be?payroll, what would your top three criteria be?

24%C t

13%

23%

24%

Technology platform

Global capability

Cost

8%

10%

13%

Accuracy of payroll delivery

Managing mobile employees

Technology platform

Would you expect “technology

5%

8%

Standardized payroll model

Relationship mgmt model

y p y y technology platform” to be in third place?

4%

4%

Customer support availability

Reducing compliance risks

p

1%

0% 5% 10% 15% 20% 25% 30%

Cultural intelligence


Which of the following services would you consider receiving from a global payroll vendor?g g p y

65%

70%

Cross-border payroll reporting for business travelers

Payroll operations for mobile employees

58%

60%

Time and attendance tracking

Comp mgmt for mobile employees

37%

47%

Learning and development

Health and welfare

35%

37%

Onboarding/recruitment

Learning and development

20%

0% 10% 20% 30% 40% 50% 60% 70% 80%

Other


Vendor added value options

59%Our organization would

67%not be willing to pay more

41%

Local employee support24/7 vendor support

33%

41%Our organization would be

willing to pay more

0% 20% 40% 60% 80%


Global payroll challenges

We have identified three core challenges

► Consistent payroll delivery when expanding into new k tmarkets

► Vendor selection — including determining the best operational modeloperational model

► Reaping the benefits of an outsourced model


Key questions for global payroll improvementimprovement

Key questions for global payroll improvementimprovement

► Is your global payroll model aligned with the overallC

► When was the model last reviewed?aligned with the overall

business strategy and the vision for support services?

► Do you have a five year planRAT

EGIC reviewed?

► Have you validated the art of the possible — which aspects of payroll can beYB

RID

► Do you have a five-year plan for your payroll operations?ST

R aspects of payroll can be outsourced and which do you need to keep in-house?

HY

► Do you have a good source of skilled payroll technicians?

► Did payroll outsourcing yield the expected savings?EDp y

► Have you championed the implementation of employee self-service for a broad rangeH

OU

SE

p g► Are your Key Performance

Indicators (KPIs) and Service Level Agreements (SLAs)SO

UR

CE

self service for a broad range of payroll events?IN

-H Level Agreements (SLAs) measuring things you feel are indicative of your payroll’s quality?

OU

TS


payroll s quality?

Questions


ey human capital conference 2012: global payroll - myth or reality?

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