Human Capital Management Blog

Strategies for HCM Professionals

Payroll Across Borders, or How to Deliver Payroll Like a Dabbawala

Robert-Mattson-Headshot-2By Robert Mattson, VP of Content Marketing, Ceridian

How many companies are international today?  What does it mean to be international?  I’d say one employee in a foreign country and an organization qualifies.  The problem is, even if a company only has one employee, they still have many of the challenges of a company with a whole division over a border. 

While there are many hurdles from scheduling meetings across time zones to communication differences, the ones I’d like to focus on are around payroll.  The three that come to mind are probably the most basic, being able to pay employees, doing it correctly in the locale and knowing that it was done accurately.  Here are just a few things to keep in mind.

Most people realize that processes, customs and procedures differ from country to country and region to region.  However, often we forget that basics such as delivery services can be vastly different.  My favorite example are the dabbawalas in Mumbai that pick up and deliver lunches to business people that were cooked in their own homes.  That type of delivery system is practically inconceivable to a person living in North America.  And if that is how lunches are delivered, how is payroll done in Mumbai or Cameroon, or to a small business in Siberia.

So the first thing to keep in mind is how to perform standard payroll tasks when the central office doesn’t know what the core infrastructure will be?  The answer is the same as when a group of tourists go to visit another country, get a guide.  In this case the guide is a local payroll provider that is integrated with whatever master system or provider you have.  Global control, local distribution is what most companies are looking for, and it makes sense most of the time.

The next task is being confident your payroll is being done correctly.  Yes, we are talking about compliance with local rules and regulations.  This is a two-part issue.  Whatever system that is being used has to be able to be configured, recognize and apply the appropriate local rules accurately and consistently, and that’s the first part of the battle.  The second is having some expert in the local area that is tracking compliance changes and updating the system appropriately.  If not, legal ramifications can add up quickly in areas where an organization might not have legal staff, or even understand the legal system.

And finally, how does a payroll professional in Toronto, or Boston know that all their wide-ranging, international employees have been payed correctly?  This is the most amazing fact about the dabbawala system.  This is a system of 5,000 people delivering 200,000 lunches daily, and for those of you wondering how often a lunch is not, or incorrectly delivered to the hungry office worker, the answer is once every two months.  That’s better than any Six Sigma organization I‘ve ever heard of.

The challenge is that it’s doubtful whatever payroll system an organization is using internationally will be as accurate as the dabbawala.  In fact, if payroll is being administered at a local level, the ability of consolidating results and confirmations in centralized reporting is even more important.

Payroll across borders isn’t easy, but then carrying 30 tiffin (the name for the lunch carried by dabbawalas) on a bike isn’t either.  However, if an organization can properly deliver in the local environment, keep up with compliance and have regular visibility into local effectiveness it’s as rewarding as a delivered, home-cooked lunch.

Robert Mattson is the VP of Content Marketing for Ceridian responsible for Product Marketing, Digital Marketing and Social Marketing. Mr. Mattson has been in the technology space for over 25 years with companies such as ADP, Workscape, Performix Technologies, Telerik, Eprise and Applix.  His focus has been on how HR technology can be effectively leveraged to overcome both technical and business challenges.  He has spoken at events and conferences in the US and abroad, and his thoughts and research have been published both online and in print ranging from the Java Developer’s Journal to Talent Management Magazine.

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