HR and Payroll
Harmonization:
Fundamental
Strength to
Business Agility
HR.PAYROLL.BENEFITS.
EXPERT OPINION Q&A

2| HR and Payroll Harmonization: Fundamental strength to business agility
International expansion is an exciting time for
multinational businesses, but managing the HR
challenges that arise with it can become central
to the organization’s success or failure. Many
organizations find themselves in a situation
where a lack of standardized and integrated
HR and payroll has become a business critical
problem affecting their daily operations. What
are the common challenges and why is HR
and Payroll harmonization so important for
international organizations?
BY MICHAEL VAN
DEN BRAND
MANAGING DIRECTOR,
ADP STREAMLINE
HRandPayrollHarmonization:
FundamentalStrength
toBusinessAgility

HR and Payroll Harmonization: Fundamental strength to business agility | 3
MULTINATIONAL ORGANIZATIONS WORK IN A COMPLEX
ENVIRONMENT WHERE DEPARTMENTS OFTEN BECOME
DISCONNECTED. WHY IS IT IMPORTANT FOR HR AND
PAYROLL TO WORK TOGETHER?
T
he roles of HR and payroll professionals
have evolved over the past decade, and
both have established their position as
business critical elements. Ultimately HR and
payroll share the same goal – to support the
people within the organization. It could be said
that HR is a company’s backbone, with payroll
being the key way to recognize its most important
asset. In order to support their employees, HR
must look to drive these two functions towards a
more integrated model.
A harmonized HR and payroll operation is
a cornerstone of managing Human Capital,
enabling the organization to become more
productiveandmeetitsstrategicbusinessgoals.
By standardizing, automating and outsourcing
transactional and administrative tasks, HR and
payroll can become more strategic and focused
on value-adding activities such as employee
engagement.

4| HR and Payroll Harmonization: Fundamental strength to business agility
HOW CAN ORGANIZATIONS BETTER UNDERSTAND
THE COST IMPLICATIONS OF THEIR WORKFORCE?
W
hen making strategic decisions,
organizations need to consider the
Total Cost of Ownership (TCO) and how
it relates to their workforce. It is important to
combine the actual spending on employees plus
the management of those employees, as focusing
solely on the cost of salaries and benefits can be
misleading and result in poor business decisions.
Companies that have a successful Human Capital
strategy in place can reduce their TCO by as much
as 26%i
, while enjoying the benefits of higher
retention rates, employee engagement and more
efficient HR systems and processes.
Return on Investment (ROI) is a serious
consideration for HR and payroll, and Human
Capital Management (HCM) strategies need to
ensure it is maximized by making both functions
more agile. Streamlining payroll is often the
most efficient way to achieve cost efficiencies
across the HR sphere. When this function isn’t
structured correctly, payroll costs combined
with personnel and benefits administration
could account for up to 35% of total HR costsii
.
On top of this comes the required technology
infrastructure, which can become particularly
expensive when a company operates in multiple
locations across the world. However, in order
to reap the benefits of standardization and
automation, HR and payroll must work in
harmony. Working with a single supplier and
implementing a Human Capital Management
system will help organizations move forward
on this journey and further reduce vendor
technology costs.

WHAT ARE SOME OF THE COMMON CHALLENGES THAT
BUSINESSES FACE WHEN THEY EXPAND INTERNATIONALLY?
I
nternational expansion is always a big step
for any business, and can often bring about
the challenges of global human capital
management. HR’s focus is often on finding and
onboarding staff, which can draw its attention
away from long-term planning or detailed
thinking. Even more so, organizations are often
overwhelmed by the new local employment
laws, taxation, and payroll practices, and failure
to comply with these policies could possess a
significant business risk.
For example, the complexity of international
payroll can slow down the pace of expanding
into new lucrative markets, thus limiting
growth opportunities. Instead of trying to
understand and manage the volume of changes
when adjusting to different markets, HR’s
attention should be on more value-adding
activities such as the management of human
capital. By working with a global HCM partner
with local expertise, companies can transfer
the responsibilities and risks to a third party
provider. This will not only ensure compliance
across all markets, but will make the expansion
process smoother, faster and more efficient
Even though more than two-thirds of HR leaders
desire unification and coordination in payroll
and HR systems worldwideiii
, organizations
often fail to extend past their local systems and
implement a global HR and payroll system as
part of the global expansion. Consequently,
these local systems are often disconnected,
redundant or no longer meet the growing
organization’s requirements. The challenges
and barriers to succeed internationally often
come down to standardization, and a lack of an
integrated Human Capital Management system
can fast become a problem.

6| HR and Payroll Harmonization: Fundamental strength to business agility

HR and Payroll Harmonization: Fundamental strength to business agility | 7
References
i
NelsonHall (2014) Targeting Payroll Outsourcing
ii
ADP (2013) ‘Payroll at the heart of HR Outsourcing’
iii
ADP (2015) Harnessing Big Data: The Human Capital Management Journey
to Achieving Business Growth
HOW CAN STANDARDIZED PROCESSES HELP BUSINESSES
ADAPT TO CHANGES IN THE BUSINESS WORLD?
H
armonizing HR and payroll presents
a significant opportunity to make
processes more efficient, cost-effective
and streamlined. When all country operations
are covered by the same system, processes and
data, it’s easier for teams to be more aligned and
share best practice. This also enables greater
transparency and ensures that everyone speaks
the same language, resulting in improved
reporting and greater accountability.
When choosing a Human Capital Management
provider, organizations should always be one step
ahead. As the organization grows and market
conditions change, the chosen solution must
be able to respond to the demands of Human
Capital resource management. Even though the
main purpose of Human Capital Management
systems should be to support the business,
inflexible processes can limit the organization’s
performance and agility. It is therefore important
that the service offering and operating models
can work with all sizes and types of organizations,
across different geographies.
Despite the numerous benefits, implementing a
global HCM solution may seem like an enormous
task and a step that many international companies
are hesitant to take. In these situations it’s often
easier to move all regions to the single platform,
meaning that team will feel the impact only once.
Working with an experienced HCM partner can
ensure that the shift goes smoothly, enabling
HR to focus on the internal change management
process and making sure that workforce is
fully engaged.
HOW CAN HR BETTER USE THEIR DATA?
T
he value of having all data accessible to
HR, leadership, managers and employees
should not be underestimated. Disparate
systems are rarely able to meet wider HR and
business requirements, and organizations may
find themselves in an alarming situation where
there is lots of local information but no global
visibility. The resources required to manage
complex information add to the total cost, while
also impacting the organization’s ability to
make accurate and timely business decisions.
Working with several vendors and fragmented
systems not only adds to the administrative
burden and increases costs, but also impacts
the organization’s ability to make accurate and
timely business decisions.
By implementing an integrated HCM solution,
organizations are not only able to overcome
these challenges but become more strategic
in Human Capital and talent management. HR
professionals are under constant pressure to
demonstrate their value to the organization,
and a standardized system enables them to
have consistent key performance indicators
across the international organization. However,
the benefits extend well beyond the HR function,
as a single system gives organizations a global
view of their workforce and the tools to make
fully informed decisions.

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