If you ever need to register for a new doctor in California, leave yourself plenty of time. Thanks to the state’s obsessive focus on preventative care, the process involves lengthy questioning, intrusive examinations, and a battery of tests that only go to highlight the alarming number of ways in which it’s possible to meet one’s Maker. It’s great for making sure that the internal plumbing’s all fine and dandy – but a little irritating if you were simply nipping in for a travel vaccine and some sleeping pills.
Spending two very enjoyable years in Australia, by contrast, my one experience of signing up to a new doctor involved a quick check of my blood pressure, a couple of physical tests and two or three questions about whether I smoked or drank alcohol. I wasn’t even asked how much I drank – for a country that makes a sport out of necking beer, I guess they simply assumed the answer was ‘far more than is good for me’. In all, I walked out with the prescription I wanted in a fraction of the time it takes in the US.
These experiences beg a question that’s as essential in multi-country payroll as it is in personal healthcare – how do you choose between two fundamentally different approaches to the same task? I’m the sort of person who only goes to the doctor when I need a problem fixed, a myopic perspective that makes the Australian model much more attractive to me. But if I were to step back and assess my life goals – staying healthy and if possible, living long enough to watch either England or the United States win a soccer World Cup – the US approach would be far better for me. Stepping back even further, I might conclude that seeing the doctor once a year isn’t even the point – it’s how I live my life for the other 364 days that really matters.
The same principles apply when companies consider their multi-country payroll objectives. When a new international payroll manager walks into a job, lifts up the covers and sees just how sick their patient is, the short-term option is to book an appointment with the nearest outsourcer and ask for a fix. But blanket outsourcing isn’t always the best way to meet your other business priorities. Take cost. If your largest employee population is on an in-house enterprise software system, you’ve written off the set-up costs and you’re now enjoying a low-cost pay cycle, it may be more cost-effective to exclude that country from any outsourcing deal. Likewise, the cost of outsourcing some of your smallest employee populations may prove to be higher than staying with what you have today – assuming that what you have today is fit for purpose.
This is why it’s so important to start every multi-country payroll project by getting as much consensus as possible around your business objectives. Working with multinationals over the years through Webster Buchanan’s research and consulting businesses, we’ve seen many common goals cited for international payroll projects – ensuring external and internal compliance; standardizing processes; improving visibility and the quality of management information; reducing vendor management overhead; cutting operational risks; containing or cutting costs… But the way these are prioritized varies from stakeholder to stakeholder and from company to company, sometimes in very nuanced ways. Getting agreement on these objectives will provide the framework for everything else you do going forward, from determining your international payroll strategy, through vendor selection and into your change project.
Like much in multi-country payroll, this sounds simple – but when your Head of HR’s objective is to hand everything over asap to a single global provider, your CFO wants to cut costs, payroll want to retain its in-house technical expertise and IT has an innate distrust of outsourcing, you’ve got your work cut out.
As always, it helps to approach this kind of exercise with a dose of pragmatism, given that neither doctors nor outsourcers can work miracles. In the US, life expectancy among one demographic has actually dropped by four years since 1990, suggesting that preventative care and medical advances aren't overcoming problems relating to obesity, smoking and uneven health insurance coverage. Similarly, while bringing in a global payroll outsourcer can generate big returns, it won’t solve any issues you might have with the poor quality of your initial data inputs or the complexity of your compensation policies.
That said, there is some good news – life expectancy at birth in Australia has increased over the last decade. I leave the beer drinkers among you to draw your own conclusions.