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EY Human Capital Conference 2012: Global payroll - myth or reality?

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This presentation highlights the findings from Ernst & Young’s Global Payroll Survey, the three core challenges identified by survey participants and the key questions for global payroll improvement.

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EY Human Capital Conference 2012: Global payroll - myth or reality?

  1. 1. 2012 Human Capital Conference23–26 October Global payroll: myth or reality
  2. 2. 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, 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 or LLP reproduction 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 its contents by any third party.► The views expressed by panelists in this session are not necessarily those of Ernst & Young LLP LLP.Page 2 Global payroll: myth or reality
  3. 3. Presenters► Jeff Brown ► Vinay Singh y g ► Ernst & Young LLP ► Ernst & Young LLP (UK) ► jeff.brown@ey.com ► vsingh@uk.ey.comPage 3 Global payroll: myth or reality
  4. 4. Agenda► Global payroll: myth or reality?► Key survey highlights► Global payroll challenges► Key questions for global payroll improvementPage 4 Global payroll: myth or reality
  5. 5. Global payroll: myth or reality? Vendor Buyer perspective perspectivePage 5 Global payroll: myth or reality
  6. 6. Do you believe there is a single vendor whocan handle all your global payroll needs? Yes 30% No N 55% 70% of respondents are not Unsure 15% confident there is a truly global vendor. 0% 10% 20% 30% 40% 50% 60%Page 6 Global payroll: myth or reality
  7. 7. Global payroll surveyKey highlights y g g
  8. 8. Survey profile► Local language telephone interviews with 161 g g p multinational organizations► Headquartered in 13 countries across five continents q► Respondents — the most senior person with responsibility for global payroll: ► Global payroll leader ► Senior payroll manager/Director ► Controller C t ll ► HR director ► CFO/COO ► Head of shared servicesPage 8 Global payroll: myth or reality
  9. 9. Which of the following is the main driver for your existing payroll operating model? Historic Hi t i practice ti 54% ► If it isn t broken, don’t fix it! isn’t broken don t ► It probably is being fixed: Cost 14% ► ManuallyLack of confidence in ► At high cost 7% alternative models ► A resource drain Control/risk 6% management Other 19% 0% 20% 40% 60% Page 9 Global payroll: myth or reality
  10. 10. How is your payroll operation currently serviced? Hybrid Public Private 60% operation sector sector In-house 28% 80% 80% in-house outsourced Outsourced 12% 20% 20% outsourced in-house 0% 50% 100%None of the US organizations interviewed had a purely in house payroll operation in-house operation. Page 10 Global payroll: myth or reality
  11. 11. Does your current payroll outsourcing modelvary by geography? China Global results No No 100% 22% No Yes 19% US 78% Yes 81%Page 11 Global payroll: myth or reality
  12. 12. Are you considering switching to a newoutsource payroll vendor in the next 12 months? ► The US is more tolerant of Yes 54% change. 38% ► The US payroll offering is p y g changing, e.g., technology No 40% evolution drives vendor 57% change. h ► Legislative change in the Unsure 6% UK (RTI) and US (health 5% care reform) is forcing focus on payroll. 0% 20% 40% 60% US GlobalPage 12 Global payroll: myth or reality
  13. 13. Are you planning to make a change?Are you considering switching to a new Where in the planning process areoutsource payroll vendor in the next 12 you in adjusting your payroll model?months? Not considering at this time hi i 40% Yes 38% Considered/in initial discussions 23% In planning stage but No 58% not implementing 18% Actively pursuing implementation 11% Unsure 4% Other 8% 0% 50% 100% 0% 20% 40% 60%Page 13 Global payroll: myth or reality
  14. 14. Are you considering bringing any portion ofyour payroll in-house in the next 12 months? in house Unsure 4% ► Does this mean organizations are happy Yes 19% with their outsource service provision? No 77%Page 14 Global payroll: myth or reality
  15. 15. Global consistency and effectivenessWhat percentage of your internal payroll How would you rate the effectiveness of youroperations and policies are consistent across current payroll policies and practices on aa countries?all cou t es g oba sca e global scale? 80%–100% of 46% Best practice 15% processes 60%–79% of 22% Good 54% processes 40%–59% of 14% Average 23% processes 20%–39% of 6% Below average 7% processes 0%–19% of Needs immediate 12% 1% processes attention 0% 20% 40% 60% 0% 20% 40% 60%Page 15 Global payroll: myth or reality
  16. 16. Do you have a knowledge base or trackingsystem to facilitate resolution of payroll issues? ► Typically more than 90% of employee issues and questions are repeated No 42% ► A robust self-service system results in a faster Yes and more cost-effective 58% resolutionPage 16 Global payroll: myth or reality
  17. 17. Regardless of whether you currently outsource your globalpayroll, what are (or would be) your challenges toimplementation?i l t ti ? Cost 19% 15% % Consistency 17% 17% Vendor understanding requirements 16% 11% Legal and regulatory requirements 13% 14% Geographic capability 11% 14% Loss of control L f t l 7% 10% Technology 6% 6% Culture/language/time zone g g 6% 10% Change management 5% 2% Contract management 0% 1% 0% 5% 10% 15% 20% Largest challenge Second largest challengePage 17 Global payroll: myth or reality
  18. 18. 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” cost► “Home and host tax issues make it a challenge to be compliant”► “I would say getting everyone on board across the group would be our largest challenge”► “Resistance from each local country and trying to get them to t dt i t t th t ► “Standardization of the working change their process” model and putting that into a► “The ability to demonstrate the y system system” return on investment” ► “No true global payroll provider out there”Page 18 Global payroll: myth or reality
  19. 19. Regardless of whether you currently outsource your global payroll, what are your current global payroll issues? Legislative L i l ti compliance li 36% 16% Org. consistency in payroll processes 28% 21% Finding the right payroll talent % 11% 10% 8% Administration cost 16% 6% Management reporting 12% 6% Regional capability 9% 5%Org. consistency in remuneration and benefits 9% 0% Managing mobile employees 5% 0% Audits, info requests and remediation 2% 0% 5% 10% 15% 20% 25% 30% 35% 40% Primary issue Second highest issue Page 19 Global payroll: myth or reality
  20. 20. How would you characterize your current capabilities inemployee and manager payroll self-service? ► Employees are more p y technology driven. 14% ► 60% or HR admin time is 35% spent on calls answering 17% basic queries. ► The opportunity for organizations to mine employee data is lost lost. 34% Basic Intermediate Advanced None availablePage 20 Global payroll: myth or reality
  21. 21. If you were to select a new vendor for globalpayroll, what would your top three criteria be? Cost C t 24% Global capability 23% Technology platform 13% Managing mobile employees 10% Would you expect Accuracy of payroll delivery y p y y 8% “technology technology Relationship mgmt model 8% platform” to be in Standardized payroll model 5% third place? p Reducing compliance risks 4% Customer support availability 4% Cultural intelligence 1% 0% 5% 10% 15% 20% 25% 30%Page 21 Global payroll: myth or reality
  22. 22. Which of the following services would you considerreceiving from a global payroll vendor? g g p y Payroll operations for mobile employees 70% Cross-border payroll reporting 65% for business travelers Comp mgmt for mobile employees 60% Time and attendance tracking 58% Health and welfare 47% Learning and development 37% Onboarding/recruitment 35% Other 20% 0% 10% 20% 30% 40% 50% 60% 70% 80%Page 22 Global payroll: myth or reality
  23. 23. Vendor added value options 59% Our organization would not be willing to pay more 67% Local employee support 24/7 vendor support 41% Our organization would be willing to pay more 33% 0% 20% 40% 60% 80%Page 23 Global payroll: myth or reality
  24. 24. Global payroll challenges
  25. 25. We have identified three core challenges► Consistent payroll delivery when expanding into new markets k t► Vendor selection — including determining the best operational model► Reaping the benefits of an outsourced modelPage 25 Global payroll: myth or reality
  26. 26. Key questions for global payrollimprovement
  27. 27. Key questions for global payrollimprovement ► Is your global payroll model ► When was the model last aligned with the overall reviewed? RATEGIC C business strategy and the YBRID ► Have you validated the art of vision for support services? the possible — which Do you have a five year plan five-year aspects of payroll can be HY ► STR for your payroll operations? outsourced and which do you need to keep in-house? ► Do you have a good source ► Did payroll outsourcing yield of skilled payroll technicians? p y the expected savings? p g ED SOURCE HOUSE ► Have you championed the ► Are your Key Performance implementation of employee Indicators (KPIs) and Service self service self-service for a broad range Level Agreements (SLAs) IN-H OUTS of payroll events? measuring things you feel are indicative of your payroll s payroll’s quality?Page 27 Global payroll: myth or reality
  28. 28. QuestionsPage 28 Global payroll: myth or reality

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