Are Shrinking Wage Gaps Creating an even NEWER Normal for HR?

Shrinking Wages

Cost pressures combined with skill gaps and an educated global workforce have all been contributing to a surge in global recruitment outside corporate HQ locations. This strategy has become less of a nice to have and more of a strategic imperative; a new normal.

But now there’s a newer normal. Definitive research from respectable analyst organizations are proving that wage gaps across mature, emerging and newly emerging markets are shrinking. This is not surprising but it’s interesting to consider how quickly these gaps are shrinking. They are closing up quickly enough that they will have a direct and significant impact on global business within the next two decades.

Countries that have traditionally offered lower wages e.g., China, India, etc., are experiencing a shrinking wage gap compared to the U.S., U.K. and other mature markets. They will slowly and steadily transform from labor markets to consumer buying markets.

This creates a newer normal for organizations overall, but let’s consider how it will impact HR and recruitment.

Migration of Manufacturing

Shrinking wage gaps may mean migrating manufacturing facilities from one country to another, a huge undertaking. Internal managers will have to be relocated to set it up, local workers will have to be hired and trained, finance may have to set up local entities and HR will need to manage the recruitment, as well the ongoing HR and payroll. On top of that, managing payroll for a manufacturing staff is always a tricky endeavor with various labor types, collective bargaining agreements, etc., especially in a country where HR is not accustomed to the local regulations.

New Buying Markets

As countries such as India and China become larger consumers and more countries enter into the buying market, new opportunities will open up for organizations to sell their products and services in a growing list of countries. That’s wonderful but who’s going to do the selling? Sales and marketing staff will have to be engaged, which means more recruitment for the HR folks; recruitment in countries they’ve never dealt with before, where they don’t have an entity or an HR department. What makes this even more challenging are the markets in scope. Take Africa, for example, an emerging region that may offer wage advantages for the organization, but it’s also a region with complex and often unclear HR regulations.

Impacts on HR Regulations

A third and important impact all of this will have on HR involves international HR compliance. Global HR professionals already know how complex it is now, how difficult it is to source country-specific regulations, how they have little confidence in the accuracy of the regulations and how challenging it is to stay up to date on new regulations. That all aside, consider this. As the emerging markets move up the buying ladder and younger emerging markets take a few more steps up the ladder, global economic forces will drive even more HR regulations. Countries will be protecting and nurturing their own economies and these efforts will inevitably drive changes to their HR laws, taxes, social costs, etc.

It may sound daunting but it’s actually quite exciting. Revolutionary technologies and experienced global outsourcing service providers will be there to help HR and their organizations remain competitive in a global economy and thrive in a “newer” normal.

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Rising Guardians: Rising to the Challenges of Multinational Payroll

Rising Guardians

My company’s Founder & CEO, Bjorn Reynolds, and a group of my colleagues, which are affectionately known as SafeGuard World Guardians, are all in beautiful San Francisco at the Moscone Center attending Workday Rising 2013, Workday’s 7th annual educational gathering of customers partners and Workday employees.

2013 has been a phenomenal year in relation to our partnership with Workday. Last May, we celebrated our 3 Year Partnership and our 23rd client has recently joined our journey to become the world’s principle payroll provider.

On May 13, 2010, SafeGuard World International (SGWI) became the first global payroll provider to establish a formal partnership with Workday. The partnership quickly resulted in what was then recognized as a “packaged integration” between Workday’s Cloud Connect for Third-party Payroll and SGWI’s Software-as-a-Service (Saas) global payroll technology system. In early 2011, we became the first multinational payroll provider to process live payrolls for shared Workday clients.

Workday released six updates since this partnership was established, having announced Workday 19 this past April. Many of these upgrades had a direct impact on Cloud Connect for Third-party Payroll, e.g., bi-directional integration (import and export of data). In line with these upgrades, SGWI made the necessary adjustments to its own global payroll technology system.

Today, we are especially proud as we enjoy a “Certified Integration” status from Workday, and proudly serve 23 shared clients across 55 countries.

The Certified Integration provides four key benefits for global payroll customers who are using or implementing Workday’s HCM.

  1. Customers only have to log into one system to manage all of their HR and payroll data, which means the data only has to be entered into one system, and multinational payroll data can be obtained the same way they view and access their Workday HCM data.
  2. The Certified Integration provides a comprehensive and consistent view of payroll analytics across their global footprint, gaining a true understanding of global labor costs.
  3. It provides ease and sustainability of the integration. The main benefit of a pre-built integration is that the difficult and complex work e.g., field mapping, etc. has already been completed and tested, which mitigates risks relating to the relating to the time and effort involved in any global payroll integration.
  4. Once payrolls are implemented, it works forever. It’s hosted, maintained and regression tested by SGWI, and offers SaaS benefits such as full scalability and centralized upgrades in real time, without disrupting the customer’s business.

So, as you can see by the smiling faces in the picture above, my fellow Guardians are rising to the challenges of multinational payroll.  It’s a proud day for SafeGuard World International and I am personally very proud to be on this journey with our clients, our partners and all of our Guardians around the world.

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Payroll Data Integration: Part 2

How to Integrate your Global Payroll Data

HR and Payroll Data Integration is not about the most advanced technology, the fastest communication methods or even the ability to automate. No, HR and Payroll Data Integration is about identifying and implementing the most pragmatic method of retrieving and transferring data in any  given situation.

A payroll company may have the most technically advanced Data Transformation tools, Web Services, or APIs (Application Programming Interfaces); but what do the clients have?

It may be that the client has an HRIS system that also has the most advanced interface technologies; but do the clients know how to set it up, use it or even know that it exists?

Priorities and Comfort Blankets

Some of the clients I work with currently are at the forefront of advances, using cutting edge technologies and are quite savvy, from a technical perspective. Some have sophisticated systems, employ the latest technology and invest in their IT systems. However, that does not necessarily mean that the HR data comes top of the list for enhanced communications when the business case does not make financial sense, and in some cases, the HR department want to maintain a sense of control and verification of the data.

This means that they may utilize the established tool of the trade and the most “lived in” application of all Payroll professionals; Microsoft Excel!

Time, Cost and Complexity

There are many things that need to be considered when embarking on the implementation of data integration; various systems of record, country requirements, security, payroll schedules, audit/compliance and much more.

Is it cost effective to create automated interfaces between an HR and Payroll system when operating in multiple countries that have multiple pay frequencies? Yes, there are various levels of automation – from timed extracts and transfer to fully integrated communication of data – but remember legislations change and systems evolve, and integrations needs to be maintained, updated and managed to keep up with changes to an organization’s data eco-system. And that doesn’t even include exception handling, notifications and audit reporting.

There is a fine balancing act between the benefits of more complex and technical integrations over data reports/extracts.

Utopia, the “Art of the Possible” and Today’s Reality

In an ideal world, all data would be seamlessly passed between systems without manual intervention automatically with no drop in connections, no countries would change their requirements, no errors would arise and all data would be entered correctly the first time and every time in one system through automated interfaces where every conceivable error scenario had been explored and catered for, up front.  Ah, utopia.

HR and payroll professionals can protect against many of the issues mentioned “tongue in cheek” above. Integration systems can  re-establish connections, build in workflows to flag changes to requirements and provide notifications  of any errors and produce audit reports. There are lots of technical options.

And then there is today’s reality. The costs involved and the complexity and time to deliver the above may not sit well with the project plan or budget. And that brings this back to pragmatism. What are the REAL requirements, what offers the best value for money and the best results? After all, these are business issues and commercial decision making will prevail.

A One-Stop Shop?

Is there truly a one stop shop? Can all the data required for payroll be held in one system of record? The answer is yes! But the reality is no!

In my experience, 80-90% of data required for payroll is usually held in a company’s HR system. However, the other information – bonus, benefits, time tracking, stocks, etc. may be held in other systems or even those legacy spread sheets. Integrating all this information in one go can add to the complexity.

So how do you get all your payroll related data to your payroll provider in an efficient, cost effective manner?

Configurable Integration

SafeGuard World International (SGWI) offers a range of data integration methods to suit the client abilities, wishes and even budget. However in our experience, due to the challenge that customers have in data extraction, budget constraints, functionality constraints or just even internal appetite for change, we have taken a different approach to make the HR integration approach easier for customers.

We’ve developed a data transformation engine to solve some of the key challenges customers have. We’re able to take data in a variety of formats and transform them into formats which are more suited to quick, efficient and controlled data loading processes. Acceptable formats include:

  • Delimited files (CVS, TXT, DAT)
  • Excel spread sheets (XLS, XLSX)
  • Extensible Mark-up Language files (XML)

Not only can our system accept different formats, but it can also compile multiple input files into one upload for the relevant pay period. Therefore, it can handle employee data from an HR system along with data from other sources such as bonus runs, stocks etc. The result for some of our clients is that they continue to use existing tried and tested data input files, but SGWI manages the more “painful” part of the process; data loading, validation and error handling.

The client simply has to transport these files to the SGWI secure server. This enables to client to implement any automation on their side to extract and send the data to SGWI for processing via the integration system.

This fully configurable integration system means that a client can send data to SGWI from their HR system and other systems of record in a method that suits their business processes, data schema and technical abilities. Data can be transformed, mapped, compiled and conditional logic applied via the integration system.

International Integration – Local Logic

With the utilisation of our configurable integration system, clients can submit their global HR data from various sources, in various formats, at various times/pay periods but still maintain the legislation and business rules, as well as country specific data elements and configurations. The result is all data seamlessly interfaced to our technology platform ready for onward processing.

Payroll Data Integration: Part 1

worldmapcircle3Why Integrate your Global Payroll Data

As Founder & CEO of SafeGuard World International (SGWI), Bjorn Reynolds, discusses in this videoSGWI is more than just a Global Payroll Outsourcer, it is a Fully-managed Global Payroll solutions provider. In that they can help deliver great benefits to a client’s payroll processes; they can provide consistency of global data and  continually strive to improve both client and SafeGuard processes. And one key area of this is good use of integrations to mitigate data concerns and enhance process efficiencies.

HR and Payroll Data Integration is about the retrieval and transfer of data from client HR system(s) and other sources of record to the payroll provider without the need to rekey (or double key) that data, and ensuring that all data points are consistent throughout the relevant systems.

Utilise your Investment

There is little point in investing in your HR systems, working with a global payroll provider and then spending your time rekeying, duplicating or collating your data. All HR systems that I have come across have at least one method of extracting data, whether that be prebuilt reports, access to query the data or some other kind of reporting or extraction tool.

By integrating your data with the global payroll provider you can:

  • Reduce Risk
  • Minimise data related errors and increase auditability of your processes
  • Save time and effort
  • Enable greater point in time reporting

Even if you do not have a consistent solution across the globe, you can still benefit from integrating.  It might be that you only develop integrations within your high population entities or those with high volume of changes, but each entity integration will be a stepping stone that provides the benefits mentioned above. Working on an assumption that as a minimum, 10% of employee Master Data may change in a given pay period, you don’t need to have populations in the tens of thousands to leverage efficiency gains.

Your Global Landscape

It is not uncommon for companies to utilize different HR systems within their different entities. This may be due to cost, country requirements, historical processes, legacy systems contracts or acquisitions.

Not all the data required for processing payroll may be stored in one system. It could be that you have compensation and benefits application, time and attendance, or stocks and other financial systems that will all have an impact on your payroll make-up. Again, these could vary between countries and entities.

So it is important to understand your global landscape; knowing what systems you have, what data is stored where, and how this data can be extracted. And remember that this will, more likely than not, involve more than one method or solution across your systems.

Global Payroll Vendors

Some global payroll vendors work in a ‘hot potato’ method, in which the data they receive from their company is simply passed on to the in-country payroll provider to process with no validation.  Some spend time rekeying their data into their systems and some may even force you to rekey your data into specific forms.

SGWI works with its clients to ensure that the best integration method is used to achieve the benefits mentioned above in the most pragmatic and cost effective manner. With experience in integrating data from all the major HR vendors, common reporting tools and a variety of data file formats, SGWI can enable clients to take advantage of their current systems and simplify their processes, deliver savings on valuable resource time and mitigate risks.

Stay tuned to this blog for Part 2, where I will discuss more about how this can be achieved.