Global reward
Within the reward industry there are many claims of global solutions! But is there such as thing as a Global solution? Often a business with heavy involvement in a single nation expands overseas believing that a well tried and tested process will easily transport. Although business process may be enforced, culture and local law are difficulty areas to change. With regards to payroll solutions, is there really a truly global solution?
Making national based systems international!
This article explores the ‘ization’ challenges that multi-country businesses face and how that aligns with challenges for reward professionals. Within global reward software suppliers they are several with strong North American origins. A culture that retains clocking and ‘pay checks’ and a distrust of local small banks and direct credit. Pay Cheque in the UK would be outdated. However, a US solution fit easily transposed into close neighbour Canada, are therefore global solutions for the world! After all the integration of English and French language translation is already solved.
Banked and unbanked
With some nations having high population of unbanked, the concept of Cash Cards and even Pay on Demand Wallets may culturally fit some nations, where in others the adoption of the concepts may seem unusual and be treated with caution.
Fiscal differences
So, what about: Tax, Social Insurance, Holiday, Sickness, Maternity & Paternity, minimum pay law, Data Protection, bonus, share equity schemed, employment rights? Can business policies around these be truly global.
And what about the requirements under minimum pay laws, what constitutes work time and what national conditions are to be applied that differ from nation to nation.
After all – we’re all the same
Things like the concept of ‘colleague number for life’ creates challenges with the HMRC insistence of each employment instance requiring a unique payroll ID to prevent duplication, misbalance, and collection activity. An insistence of enforcing Legal Entity structures for fiscal reporting may not match the UK legal requirement to report using different PAYE references (with multiple splits and In-Pat/Ex-Pat separations). And then employee transfer from one part to another. At least we all have a common fiscal year starting on the 1st January, right? Certainly we can call HMRC and ask them to change the tax year start!
International Standards
The implementation of standardisation has enabled differing IT systems, business process, payments etc, to be transacted internationally. Very much related to process and the introduction of ISO (or International Organisation for Standardisation) in the 1950s. Extremely popular, although the predominance of ISO for payroll solutions is virtually non-existent. DeFacto or De Jure standards may be applied to meet certain contractual, legal or compliance relevant situations. Payroll is far from standard as you compare nation with nation in Global organisations.
Standard can very much influence elements such as Currency exchange and potentially technology, language still presents a significant barrier along with technology application usage. And what of cultural difference and priorities of life? Although international standards have been adopted in relation to payment, the UK with one of the few central clearing systems does not utilise the international payment standard – yet, but utilises a common interchange format for the purposes of UK interbank payments.
Globalisation
Globalisation is an attempt to overcome all of the obstacles, providing a world view as opposed to any individual nation. The challenge is that many that claim to be global are not and contain localised culture bias to their creator’s host nation. What are often claimed to be Global solutions are actual national solutions with some added elements of Internationalization.
Does it work? To an extent, it might. Google, Facebook, Twitter etc. can all potentially stay the same around the world with language adaption etc. But converting a US payroll system in German does not result in a German payroll system. Significant Localization is required, so multiple variants of a perceived single solution to deal with the local impact elements of employment law, tax, Social or National Insurance, Parental pay rights, labour and union requirements.
Glocalisation – dochakuka
In the UK we have our own challenges to face. Having been a Union for many years we have seen the progression of devolved government with the onset of national variances such as Scottish Tax and Welsh tax. And then the differences in employment law applicable between Great Britain and variances in Northern Ireland.
‘glocalisation means the simultaneity – the co-presence – of both universalizing and particularizing tendencies’
Harvard Business Review. Sociologist Roland Robertson
This then leads to a term introduced in the late 1980’s as part of the Harvard Business Review. Sociologist Roland Robertson stated that ‘glocalisation means the simultaneity – the co-presence – of both universalizing and particularizing tendencies’. From the Japanese word dochakuka which means global localization. Adaption of solutions, services, products, may be even payroll services, to ensure that they fulfil the requirements of the local obligations and needs etc., yet allow a global coverage. A major challenge is achieving the ability for real time or near time reporting management information so that an accurate view of the business is maintained.
Global Payroll
So can there be a global payroll solution? Not that is compliant without much statutory localisation being added to make it Glocal! Many global operated require individual local solutions with an integration service to knit data and reporting together.
This article is based on an original by the author – May 2017.
PAYadvice.UK 9/7/2023