HR managers, global payroll professionals, professional employer organisations (PEO), employers of record (EOR) and their teams are well aware of the challenges a rapidly growing, multi-region workforce presents. Finding the right international candidate in a foreign market. Updating PTO policies across different languages and platforms. Navigating employee data privacy legislation around the world. These are just a few examples of the challenges impacting global payroll and human resource management.
As you invest in global payroll initiatives, make sure you consider these trends that will significantly impact the way you design and implement policy, process and best practice.
Evolving role of Global Payroll & HR
For tenured payroll & HR professionals, their role today might look vastly different from just a few years ago, especially if their organization has expanded internationally.
Today, payroll & HR is moving away from being a supporting role and is evolving into a more strategic partner. Successful organizations are maximizing the value of this strategic position by shifting their responsibilities from typical day-to-day HR tasks, like updating employment records and reviewing resumes, to initiatives that help achieve organizational objectives.
To manage this shift in responsibilities effectively, payroll and HR are either outsourcing core functions like payroll, hiring and benefits or passing responsibilities to other departments. With more time and resources available to them, these teams can take on dedicated projects as needs arise.
Major business transformation projects, like conducting an end-to-end review of your organization’s recruitment process or maximizing the value of a Human Capital Management (HCM) system investment, can be owned and managed by HR in collaboration with other departments. Cross-functional activities like these can quickly elevate HR’s position within the organization, defining them as an able and willing partner that is agile enough to meet growing demands.
Changing employee expectations
Remaining flexible in order to adapt to a changing global workforce has never been a greater challenge for HR. 2019 marked the first time in history that five different generations worked together at the same time, and 2020 will be the fourth year that Millennials constitute the largest generation in the labour force.
Yet employers are still failing to implement policy and working practices that meets their demands. Even though 75% of U.S. millennials want their work environment to be flexible and fluid, Deloitte’s Global Millennial Survey found that only 39% believe their work environment is flexible.
- Flexibility and work-life balance
- Making a meaningful impact
- Experiences rather than achievements
Promoting a flexible work environment is now commonplace in many organizations. But as new generations enter the workforce, the next phase to consider is flexible career options. Offering employees meaningful work experiences, including the ability to move between departments, provides an opportunity for organizations to hire and retain the best talent.
Improved employee experience
Organizations that rank in the upper echelons of “Best Companies to Work For” lists from sites like Glassdoor and Inc. are continually raising the bar on employee experience. The toughest reality for employers is that a majority of them do a poor job of implementing new recommendations. For 2020, CHROs and their teams would be wise to revert back to principles that emphasize the “human” in “human resources.”
The Future Organization, founded by Jacob Morgan one of the world’s leading authorities on the future of work, provides organizations with a quantifying scoring model to rank their employee experiences. Those who score highly on the index demonstrate a strong aptitude to meeting the changing expectations of the workforce, such as providing:
- Vibrant workspaces
- Flexible, autonomous work options
- Fair treatment and a sense of purpose
- Resources and opportunities to advance and learn something new
- Coaches and mentors instead of managers
It’s also well worth the effort to keep a pulse on employees and former employees. Setting up Google alerts for your organization’s name can help you stay up to date as new comments and mentions are made online. Even review sites such as Glassdoor can provide HR with actionable advice that can inform decisions and help you create an industry-leading employee experience.
Payroll data and analytics
Payroll will increasingly become the go-to department for data-driven information that can inform the rest of the organization. The CFO may want insight into the amount of overtime paid in employees in LATAM, for example. No matter the reason, rapidly delivering accurate data is on the list of everyday demands for HR./
As organizations mature in their data proficiency, they will be able to leverage predictive analytics. Rather than reporting on turnover rates, HR can predict why turnover is happening and design programs to address employee attrition before it happens.
Google built a People Analytics department to ensure that all decisions related to people are based on data and analytics. This group has identified “meeting cancellation rates” as an indicator of potential turnover and has helped inform an on-boarding process that increased employee productivity by up to 15%.
Portable benefits systems
An emerging global payroll & HR trend related to the gig economy is the advent of portable benefit systems. In this model, contract workers will be able to port 401(k) pensions and health benefits seamlessly between gig jobs.
If individuals have the ability to transfer their benefits around alongside their employment, particularly in countries without universal health care, we could see an influx of contingent jobs. Organizations offering traditional employment options may find themselves second choice, if this opportunity becomes a reality.
Increased regulations on contract work
Don’t expect the gig economy to disappear from your newsfeed any time soon. As temporary employment grows, scrutiny will continue to intensify and governments will continue to act.
California recently passed Assembly Bill 5 (AB5). This legislation is one of the most revolutionary steps to date in directing how independent contractors are treated in the U.S. The bill sets out to ensure employees are no longer incorrectly classified as independent contractors—a misstep that negates any basic worker protections, such as paid sick days and health insurance. Expect improvements in worker rights to intensify in other states, as well as around the world, particularly in European countries.
To negate the risk of employee misclassification—especially when hiring in countries where organizations have no entity—HR can leverage Global Employment Outsourcing, Professional Employer Organisations, Employer of Record & Global Payroll Services.
A knowledgeable payroll and employment partner can help you navigate these trends, strategize for the future and reach your ambitious 2020 goals.