It’s hot! And yes, it’s cool too, very cool.
Anyone who’s been to an HR conference in the past 20 years can probably recall a booth sitting quietly in the expo promoting global payroll solutions, not exactly the coolest one at the party.
So, what’s changed?
A perfect storm of external influences have left the HR industry looking at global payroll solutions to help them fight the war on talent, remain compliant, deal with regulatory pressures and mitigate their global HR risks.
Back when globalization was the word of the day, multinational payroll solutions were cobbled together based on domestic processes and ERP payroll modules, or in some cases “patches.” For large multinationals that could afford major IT investments in all of their international markets, these solutions were good enough. But then came the Enron scandal, SOX and the subsequent wave of new regulations. Then to add to the perfect storm, a cloud emerged, a transformational technology that offered MNCs a whole new way of thinking about their HCM applications, and importantly, an affordable global HR solution for the growing sector of micro-multinationals.
While the clouds were multiplying, a new SSAE 16 standard was instituted, to replace an aging SAS 70 standard and keep pace with the growing push towards more globally accepted international accounting standards. Both SOX and SSAE 16 address the flow of information into financial reporting systems, requiring that organizations evaluate and document all the processes that are used to generate their financial reports, including the processes that are used by their service providers.
More recently, a provisional EU agreement has been reached on the principle of capping bonuses in the European banking industry, while U.S. regulators have convinced seven financial institutions bankers to rein in bonus pay. More rules like this means more demand for global payroll analytics, a major challenge for global organizations.
It wouldn’t be a perfect storm without a financial crisis. The traditional MNCs have weathered the storm, a new wave of micro MNCs have emerged and everyone is adjusting to the new normal. There is a war for talent and traditional recruitment strategies are no longer acceptable. Cost control is imperative and global risk mitigation has taken center stage.
HR managers are becoming true human resource strategists: hiring local nationals, contracting temporary labor, seeking creative contingent worker strategies and maintaining global HR compliance. They have learned to expand their recruitment efforts outside traditional geographic boundaries, leveraging the specialized skill sets found around the world all while controlling human capital costs and implementing employee engagement strategies for their global workforce.
Yes, global payroll is hot, and very cool.