Managing Complexities of a Multi Country Payroll

Managing Complexities of a Multi Country Payroll
By : Gurinder Pal Singh, General Manager-HCM & Payroll Practice.

Large multinationals with presence in multiple countries often face the challenge of reducing their payroll processing costs.Since payroll is governed by the country statutory and industry regulations, it is important to ensure compliance to avoid any fallout arising out of inaccurate computation. Many companies have found to their horror that they have been underpaying the wages
and overtime for years. Such issues not only jeopardize the company’s reputation but also put a huge strain on the payroll department since the entire credibility of the payroll is lost.
Most companies have taken the route of outsourcing the payroll to external vendors. However,most outsourcing vendors do not have a unified solution to address legislative requirements of all countries. Payroll Aggregators are bridging this gap by managing the multiple vendors in each region/country and being the single contact point for their clients. This calls for high vendor management andintegration costs.
Since multinationals run multiple businesses, it is impossible to implement a policy that fits all.
Mergers and acquisitions require exception handling. Some businesses demand exceptions to match the pace of the industry. Exceptions are also often created for the senior management and the rising stars of the company. Since most payroll systems do not allow such fine-tuning of the policies to suit business demands, this results in a lot of manual work for the payroll team, thereby increasing the payroll cycle times as well as the risk of over or under payments. Sometimes the payroll systems are customized to deliver a solution on case-to-case basis. Not only this calls for continuous spend to fund such customization  it also means that the payroll software becomes impossible to upgrade when the provider releases the next version. Many large companies have been stuck with older versions of the payroll software for this reason.
Companies like Ramco Systems (www.ramco.com/hcm), have invested into building a unified payroll platform that enables companies to run their entire payroll on a single platform. Coupled with its integrated Human Resource Management functions, this comes as a sweet alternative to eliminate the pains of distributed vendor management, data management and consolidation. Designed with powerful capabilities on exception handling, the solution allows configuration of policies based on parameters that can be fine-tuned easily to meet the ever-changing business demands. Exception riders can be setup by company, department, position, employee type and other organizational attributes thereby automating any complex payroll calculation. Ramco is now developing a path breaking optimization for its payroll engine, called Ramco Minnal. Using in-memory processing and advanced optimization techniques, this will reduce the processing time for thousands of employees from hours to a fewminutes saving precious computing costs and improving the payroll cycle time.
Currently available for 48 countries across the Globe, Ramco’s multi-country payroll solution is fast catching up with large players like SAP and Oracle to provide an alternative to the business community, who has been spending millions of dollars for system integration and customization.

Exception!

Here's a good definition of an Exception!

"An Exception is an action that is not part of ordinary operations or standards. These actions are important in the discovery of talent"

During recession kind of turbulent times, HRMS can help CEO, you know why?

t is true that recession had hampered our growth rate but we are not in a bad economic situation when compared to some of the developed countries. Positive signs are there in some of the industrial segments and IT. Unfortunately certain segments in our economy are very much affected, many people lost job and many investors faced bankruptcy. If we look back to our economic history, these are quite temporary and we can regain our growth rate very soon.

In US,whenever something happen to business front, investor will immediately go for bankruptcy suite or say goodbye to all employees. But here in India, our management style is quite different. Most of the organizations are not running on credit and investors used to save money during good times to manage unexpected ‘no sale/fall in businesses’. Survival rate of companies in India has been deep routed to excellent management expertise. Recently somebody in US commented that in the coming years, it would be very difficult to get skilled people in US for IT jobs because students are not opting IT (this can be in the outsourcing context).This can be a strategic mistake or a bottleneck in US in coming years.

Let’s come back to India.Except some of the MNC firms operating in India, layoffs are not common here.But we lost considerable number of jobs in garments and construction sector in selected geographical locations. This can be partly due to economic downtime or huge export loss to United States. In some segments, we can see substantial amount of correction. For example, a builder may find difficult to find a buyer for his deluxe apartment worth Rs.1.5 crores till the market regains its momentum.

HR Managers are facing unusual challenges in organizations which are not recession proof. There is pressure from investors to get more output to beat recession,where as employees are looking at increased benefits or pay hikes. Board will be requesting to come up with countless analytical reports with zero down time.Many are working on profile GAPA and realigning corporate goals and communicate across organization. HR folks managing scattered organizations and that too using paper office are facing many difficulties in delivering quick information as well as realistic inference to corporate management. Many used to work late nights at office or failing to manage personal life. This made CEO or HR Heads of the organizations to buy and install HRMS on a war foot basis. Even though advertisement budget across companies are reduced, market research and business intelligence expenses are not at all freezed and companies in that segment are getting more projects (this reveals that there is tremendous need towards inferences based on accurate information). Accuracy and relevance of any decision related to people and processes and certainly credibility of HR department itself is very much depends on quality of information available.

There can be a decline in sales of enterprise software license which cost more than Rs.25 lakhs but I think demand for Integrated HRMS suites [Employee Information, Leave Management, Attendance Tracking, Payroll, Exit Management etc] selling at Rs. 5-25 lakhs is still consistent. Small and Medium enterprises are moving towards subscription model and SAAS is getting its grip over there.

Today,Investors are not considering HR Department as luxury but as strategic business partner. HRMS is considered as an efficient tool to streamline processes, an inevitable decision support system and a cost effective tool to enable new age HR Road Show (online) and to boost employee motivation.

During recession kind of turbulent times, more proactive resource management, decision based on live data, employee self service, more transparency in terms of organizational, team and individual performance are so critical. HR Department can market Corporate as well as HR initiatives to employees through HRMS.

360 Degrees Performance Appraisal!!!

360 Degrees Performance Appraisal!!!

An Outlook.

Background

• Contemporary 360-degree methods have roots as early as the 1940s, however, there is some disagreement regarding the exact genesis of the technique.
  
• Despite these disagreements, one point that most scholars can agree on is 360-degree performance appraisal has historical roots within a military context.
  
• During the 1950s and 1960s this trend continued in the United States within the Military service academies.
  
• At the United States Naval Academy at Annapolis, the midshipmen used a multi-source process called “peer grease” to evaluate the leadership skills of their classmates.
  
• In the corporate world during the 1960s and 1970s, organizations like Bank of America, United Airlines, Bell Labs, Disney, Federal Express, Nestle, and RCA experimented with multi-source feedback in a variety of measurement situations.

The Concept

For example, subordinate assessments of a supervisor’s performance can provide valuable developmental guidance, peer feedback can be the heart of excellence in teamwork, and customer service feedback focuses on the quality of the team’s or agency’s results.

The Process

The Appraisers

Superiors

It’s Contribution:

• The 1st line supervisor is often in the best position to effectively carry out the full cycle of Performance Management.
• The supervisor may also have the broadest perspective on the work requirements and be able to take into account shifts in those requirements.

Cautions to be addressed:

• Superiors should be able to observe and measure all facets of the work to make a fair evaluation.
• Supervisors should be trained. They should be capable of coaching and developing employees as well as planning and evaluating their performance.
  

Self

It’s Contribution:

• Self-ratings are particularly useful if the entire cycle of performance management involves the employee in a self-assessment.
• The developmental focus of self-assessment is a key factor.
• Approximately half of the Federal employees in a large survey felt that self-ratings would contribute “to a great or very great extent” to fair and well-rounded PA.
• Self-appraisals are particularly valuable in situations where the supervisor cannot readily observe the work behaviors and task outcomes.

Cautions to be addressed:

• Research shows low correlations between self-ratings and all other sources of ratings, particularly supervisor ratings. The self-ratings tend to be consistently higher. This discrepancy can lead to defensiveness and alienation if supervisors do not use good feedback skills.
• Sometimes self-ratings can be lower than others’. In such situations, employees tend to be self-demeaning and may feel intimidated and “put on the spot.”
• Self-ratings should focus on the appraisal of performance elements, not on the summary level determination. A range of rating sources, including the self assessments, help to “round out” the information for the summary rating.
  

Peers

It’s Contribution:

• Employees report resentment when they believe that their extra efforts are required to “make the boss look good” as opposed to meeting the unit’s goals.
• Peer ratings have been an excellent predictors of future performance and “manner of performance”.
• The use of multiple raters in the peer dimension of 360-degree assessment programs tends to average out the possible biases of any one member of the group of raters.
• The increased use of self-directed teams makes the contribution of peer evaluations the central input to the formal appraisal because by definition the supervisor is not directly involved in the day-to-day activities of the team.
• The addition of peer feedback can help move the supervisor into a coaching role rather than a purely judging role.

Cautions to be addressed:

• Peer evaluations are appropriate for developmental purposes, but to emphasize them for pay, promotion, or job retention purposes may not be prudent always.
• Generally, the identities of the raters should be kept confidential to assure honest feedback. But, in close-knit teams that have matured to a point where open communication is part of the culture, the developmental potential of the feedback is enhanced when the evaluator is identified and can perform a coaching or continuing feedback role.
• It is essential that the peer evaluators be very familiar with the team member’s tasks and responsibilities.
• The use of peer evaluations can be very time consuming. When used in PA, the data would have to be collected several times a year in order to include the results in progress reviews.
• Depending on the culture of the organization, peer ratings have the potential for creating tension and breakdown rather than fostering cooperation and support.
  

Subordinates

It’s Contribution:

• A formalized subordinate feedback program will give supervisors a more comprehensive picture of employee issues and needs.
• Employees feel they have a greater voice in organizational decision-making.
• The feedback from subordinates is particularly effective in evaluating the supervisor’s interpersonal skills. However, it may not be as appropriate or valid for evaluating task-oriented skills.
• Combining subordinate ratings, like peer ratings, can provide the advantage of creating a composite appraisal from the averaged ratings of several subordinates.

Cautions to be addressed:

• The need for anonymity is essential when using subordinate ratings as this will ensure honest feedback.
• Supervisors may feel threatened and perceive that their authority has been undermined when they must take into consideration that their subordinates will be formally evaluating them.
• Subordinate feedback is most beneficial when used for developmental purposes. But precautions should be taken to ensure that subordinates are appraising elements of which they have knowledge.
• Only subordinates with a sufficient length of assignment under the manager should be included in the pool of assessors. Subordinates currently involved in a disciplinary action or a formal performance improvement period should be excluded from the rating group. Organizations currently undergoing downsizing and/or reorganization should avoid this source of PA.

Customers

It’s Contribution:

• Customer feedback should serve as an “anchor” for almost all other performance factors.
• Including a range of customers in PA program expands the focus of performance feedback in a manner considered absolutely critical to reinventing the organization.

Cautions to be addressed:

• Generally the value of customer service feedback is appropriate for evaluating team output (there are exceptions).
• Customers, by definition, are better at evaluating outputs as opposed to processes and working relationships.
• It is a time-consuming process.

Important factors in 360 degree feedbacks

• The mission and the objective of the feedback must be clear.
• Employees must be involved early.
• Resources must be dedicated to the process, including top management's time.
• Confidentiality must be assured.
• The organization, especially top management, must be committed to the program.

Advantages:

To the individual:

• Helps individuals to understand how others perceive them.
• Uncover blind spots.
• Quantifiable data on soft skills.

To the team:

• Increases communication
• Higher levels of trust
• Better team environment
• Supports teamwork
• Increased team effectiveness

To the organization:

• Reinforced corporate culture by linking survey items to organizational leadership competencies and company values.
• Better career development for employees
• Promote from within
• Improves customer service by involving them
• Conduct relevant training

Problems

• It is the most costly and time consuming type of appraisal.
• These programs tend to be somewhat shocking to managers at first. Amoco's Bill Clover described this as the "SARAH reaction: Shock, Anger, Rejection, Acceptance, Help".
• The problems may arise with subordinate assessments where employees desire to “get the boss” or may alternatively “scratch the back” of a manager for expected future favors.
• The organization implementing this type of performance appraisal must clearly define the mission and the scope of the appraisal. Otherwise it might prove counter productive.
• One of the reason for which 360 degree appraisal system might fail is because the organizations attempt to assimilate the 360-degree method within a traditional survey research scheme. In traditional survey research, investigators attempt to maximize data collection with as many items/questions as possible and with large sample sizes. In the case of 360-degree appraisal, creating measurement instruments with many items will substantially increase non-response errors. In addition, large sample sizes are not typically possible considering that perhaps 4 or 5 sources will rate an employee’s performance. As such, statistical procedures that rely on large sample sizes in order to ensure statistical validity might not be appropriate.
• Organizations must consider other issues like safeguarding the process from unintentional respondent rating errors.
• The culture shock that occurs with any system that creates “change.” And especially with a modern system like 360 degree performance appraisal; must be taken care of.

Conclusion

• Because many of the more conventional performance appraisal methods have often proved unpopular with those being appraised and evaluators alike, 360 is gaining popularity with many managers and employees.
• It offers a new way of addressing the performance issue.
• When used with consideration and discipline, feedback recipients will feel that they're being treated fairly.
• In addition, supervisors will feel the relief of no longer carrying the full burden of assessing subordinate performance.
• The combined effect of these outcomes should result in increased motivation, which in turn improves performance.

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Before you Buy - Understand the HRIS Input Requirements

Have a Full Understanding of your HRIS Input Requirements Before You Purchase
A new Human Resource Information System (HRIS) can save you tremendous amounts of time and make you and your staff far more effective at your job, but it is important to understand work will be required to maintain the database and maximize results. It is extremely important before you have your company make an investment into an HRIS Systems that you have a complete understanding of exactly how much input will be required from you and your staff. Follow these steps to minimize the amount of data you have to manually input into your human resources application.
HRIS Setup Input
Before selecting HRIS Systems you need to have a complete understanding of what data will be imported into your system and where is that data coming from. You may have the data in Excel, a payroll system, or another HR product. Regardless how much data you have in another product, there will still be required input. Rarely will you have the capability of importing benefits data or history, so it’s important to understand that this data will have to be manually input the majority of the time. Any data that you can’t import, or that is not available in another system, will have to be manually input as well. I would recommend asking for an exact list of data fields that will be populated from other sources by the implementation team; make sure it is included in the contract and the scope of the engagement.
Use Human resource Software Interfaces Wherever Possible
Interfaces allow for data to be transferred from one system to another, but they are not real time and require some type of action to transfer the data. The advantage of an interface is that it can save tremendous amounts of time associated with manual entry. That saved time can mean the difference between a helpful product that your employees use and one that they abandon because it’s too cumbersome. If you are using one system for HR and a different product for payroll, make sure you have an interface for transferring data included in the scope of the project. It’s important to note that while this step will reduce your input requirements and time investment, it won’t eliminate them; there are numerous fields in an HR product that your payroll system may not offer, and they will have to be manually updated. Also remember that historical and benefits data are rarely included in Interfaces.
Maintaining the Database
To receive maximum benefits from your HR Payroll software, HRIS product, or other HRMS applications you should make sure that the data in that system is up to date and accurate.Interfaces and a good implementation can assist with this, but additional work is always required. For example, all of your code tables for job titles, department titles, and benefits codes will be created at setup, but there will eventually be additions and changes to this information. Whether you’re using an interface or an integrated system, input will be required from your end to maintain the database. Make sure you have a plan in place as to when data will be input and who will maintain it

HR Software Solutions Interfaces versus Integration

Expect to hear the terms interface and integration frequently during your search for a HR Software Solutions. Both refer to the interaction of two systems, but there are differences and it’s important that you understand them. An interface usually requires work on your part and data changes do not happen in real time. Integration, however, is automatic and requires no work on your end. Either provides the capability to eliminate time consuming, error-prone double entries, but because an integration generally means less work you should select systems that integrate whenever possible.

HR Software Solution Interfaces

Almost all business software applications on the market today should be able to create and accept some type of import or export file. This allows you to transfer data to and from numerous independent solutions.

Let’s say, for example, your company uses one product for payroll and another for all other Human Resource (HR) functions. Obviously you would not want to enter changes to employee data separately into the two systems; it’s a lot of extra work and literally doubles the chances of an error. An interface would provide the opportunity to take data from your Payroll product and download it to your HR system following each payroll run. Now here’s the catch: A file must be created or run from the payroll product, then downloaded to the HR Software solution either through a custom interface or some time of import utility. This might not take more than five minutes, but it’s still an extra step you would have to apply to keep your HR software solution up to date. Another important issue here is that your HR data is only as current as your last download. So if you are not frequently interfacing the data, you might find that the data in your HR software solution is often out of date.

Interfaces require extra work and will not be real time, but they are an important means of tying two systems together, eliminating repetitive double entry, and reducing manual entry errors. You will be probably be working with interfaces far more often than true integrated software applications. While an interface may not be the perfect solution, it does sometimes offer the easiest method of eliminating time consuming double entry.

HR Software Solution Integration

Integration is always the best-case scenario, but it’s rarely offered. An integrated HR software solution requires no work and changes happen in real time; the two systems share the same database, so you only have to add or update data once. If the two systems from our earlier example were integrated, a change made to payroll would show up automatically in your HR product (and vise versa). If you are going to want an integrated HRIS you will probably have to get all of your HR software products from the same company. Take a look at our products list, as we offer a number of systems that provide integrated HR Payroll Software solutions.

Stop Manually Entering the Same HR-Related Data in Various Systems

As I said before, almost any HR software solutions on the market is going to allow you to import and export data. So the capability is probably already there for you to eliminate time consuming, error-prone double entries. Solving the problem is usually just a matter of effort, expense, and a little time.