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Is the tide turning on globalisation in payroll?

Payroll Services Alliance 19th Jun 2017

This week, we’re kicking things off with a focus on globalisation, with insight from PSA members Trianon, F2A and Seresco.

Back in February, Mark Zuckerberg’s released a BBC interview that discussed the impact of globalisation on worldwide organisations. Zuckerberg stated that ‘the tide is turning on globalisation’, but is globalisation actually slowing? Or is there still plenty of room to grow when it comes to global payroll connectivity?

According to Trianon, the results of some recent elections could be seen as a reaction against the consequences of globalisation. Trianon believe it’s difficult to say whether globalisation is slowing down and predict it will be interesting to see how the situation evolves with the upcoming elections in many countries in the European Union. Even if globalisation is decreasing (which will impact economic growth), companies will remain highly connected across countries and regions, since the demand for global payroll services is a big as ever.

Seresco agrees, arguing that globalisation has brought several benefits – along with new challenges, conflicts and inequalities. However, we live in an interconnected world thanks to technology, and larger companies require technology-enabled connectivity to achieve optimal performance. Organisations need business platforms and tools where information flows freely for its analysis. In addition, organisations need to access to different sources to understand and manage large amounts of data in the current big data era. This applies to the human resources management sector and, therefore, to payroll management.

F2A believes that although many governments, especially in Europe, are questioning globalisation and how it is going in the direction of isolation, in reality globalisation (particular due to technology) is “a way of no return”. Because of this, both individuals and companies are becoming more aware about globalisation and its accelerating growth. In addition, it is not just big companies that are looking for the benefits of globalisation, since small-medium enterprises that do not want to be out of the game also reap the benefits.

This is a debate that those of us in the payroll industry, especially at SD Worx, have been pondering in recent months. Commentators within the industry have been discussing how a gearing down on globalisation might well impact negatively on the adoption and growth of global payroll, particularly after the 2016 wave of anti-globalisation amidst Trump and Brexit. The current slowing of globalisation should, however, be viewed as a glitch in global payroll terms, and only temporary. Global payroll needs to establish a more dominant business positioning for itself – one whereby it is viewed as an essential infrastructure that can support organisations hoping to globalise.

To achieve this, emphasis needs to be placed on the payroll need to ‘glocalise’ as well as ‘globalise’. The term ‘global payroll’ is not a one-size-fits all solution as often assumed, but a centralised business department – a misconception that payroll professionals and HR teams need to tackle by making clear that the term ‘global payroll’ incorporates both global and local market capabilities. Without local market knowledge and legislative understanding, a global payroll model simply cannot exist.

In a recent article titled “The Myth of Global Payroll”, Ascender CEO Marjukka Maki Hokkonen discusses the importance of local expertise in a global payroll strategy, saying; “Whilst globalisation continues in many areas, it is still very much like a dream when it comes to payroll. There has been a misconception that whilst companies are being globalised and operating globally, so too can their payroll function. You might think global, but you have to act local”.

The evolution of technology and the strengthening of capabilities such as software integration and artificial intelligence, only increases the value delivered by regional payroll and HR players. The connectivity enabled by technology means they can deliver a true localised solution, but on a global scale.

Achieving the right balance between the local and global aspects involved in payroll, is imperative to its success. By building systems with a global outlook and local knowledge in mind, organisations can benefit from the efficiency gains of a global model, whilst maintaining the risk mitigation of local legislative expertise. A modern, bottom up payroll services approach.

To learn more about what the Payroll Services Alliance can do for your business, please get in touch.

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