5 elements to consider when defining your multi-country payroll strategy
Article 3 minute read

5 elements to consider when defining your multi-country payroll strategy

19 October 2015

While the payroll is not usually considered a "strategic" business unit, the construction of a global strategy for the payroll of countries of all sizes becomes increasingly important, as companies seek to impose central control over their international payroll operations. Our Head of Global Business Services discusses some of the ways in which this strategy can be defined for companies with a small employee population.

Historically, most multinationals were satisfied with making the payroll in each country - among other things because the different legislative and organizational requirements made it difficult to do otherwise. Today, there is a growing acceptance of the value of improving central payroll control through a multi-country payroll program, whether by compliance, cost, efficiency, risk management or other reasons.

In a research conducted by Webster Buchanan and commissioned by TMF Group, five elements emerged as essential considerations in the definition of a multi-country payroll strategy that involves smaller countries and companies with small payrolls.

  1. Controls and compliance
    Due to limited resources many companies adopt an approach taking into account the risks to manage compliance in their smaller countries, assessing both the likelihood and the potential impact of compliance issues.
  2. Organizational design
    To overcome the limitations of local resources, some organizations seek to absorb supplier management activities in existing shared service centers or regional centers.
  3. Cost equation
    The cost per execution in smaller countries may be higher than larger countries of similar complexity, given the lack of volume and associated economies of scale.
  4. Multifunctional roles
    In many smaller countries, the person responsible for payroll management may also be responsible for other functions of the company, such as human resources management or accounting. In these cases, outsourcing or payroll restructuring will impact only part of the roles, and companies may have to take a broader, multifunctional approach. For companies that are creating small towns in new countries, it may be convenient to have a single provider that offers a range of services such as accounting, human resources administration, payroll, legal and secretarial services.
  5. Systems configuration
    Smaller countries do not usually enjoy the same level of system sophistication as their larger counterparts. In particular, creating interfaces of central Human Resources systems to the payroll may not be economically viable in some smaller countries, and it may be necessary to adopt an alternate means to provide payroll data.

Within this global business framework, a multi-country payroll strategy will encompass all aspects of an end-to-end payroll service, from organizational design decisions to global governance, and takes into account a variety of factors, including:

  • the nature of the multinational's business and the sector in which it operates
  • the size and type of the employee population
  • payroll operational requirements, including possible practical limitations on theoretical models
  • the idiosyncrasy of each country
  • the nature of the Human Resources function, including the degree to which it is centralized.

How can TMF Group support the payroll of small populations?

We have over 1,000 payroll experts in more than 80 countries, as well as more than 5,500 payroll clients worldwide. We handle more than € 5 billion in salary payments per year, with the flexibility to invoice in local currency when necessary. The risk of retentions and problems along the way, while members of the network give work to other companies are minimized; you are working with only one company, and that company has central processes to mitigate the problems quickly and in compliance.

Not only that, but we are the experts in payroll for small populations - that is, from 1 to 3,000 employees per country. We can help you run the payroll in several countries or in one country - even if you only have a handful of employees. Our experts are in the countries in which you operate, ensuring that not only regulatory needs are up-to-date, but that any presentation that has to be done at hand in the country can be attended to.

It is important to note that, by selecting TMF Group as your provider, you will be working with a fully owned company, and not someone who outsources some of the work - like many other payroll providers. This in turn helps to minimize the risk.

Read more about our payroll services.

View here the countries where we are present.

Written by

Deborah Williams

Former Head of Global Business Services

Insights and updates delivered to your inbox.

Sign up now