A five-tier approach to a multi-country payroll project

PARIS
Although the bulk of the upcoming HR-technology projects deal with the various components of what goes by the name of talent management, by far the largest number of current HR systems still deal with good old payroll. Such a focus makes sense since you may decide to eschew compensating adequately your workforce, or recruiting them effectively, or training them in line with your company's objectives but there is no way you can avoid paying them.

With the pace of globalization showing no sign of abating most companies find themselves operating across several countries which brings to the fore the need to manage their workforce as part of a single HR system. Most multinationals have been doing just this for a good decade now: two thirds of them have a global HR system of record for all their employees from which they send the relevant data to other HR systems such as learning, time management, benefits and, primus inter pares, payroll.

Traditionally payroll has been managed via a local vendor, either outsourced or in-house, but in the last few years the proportion of large, global companies deciding to use a single, global payroll system (even if not necessarily on a single instance) has grown quite substantially. New vendors, purporting to deliver the Holy Grail of a true global payroll system, have appeared on the landscape muddying the waters of what can be done, what can only be dreamed of and what is pure fantasy.

I have spent a good portion of the past 15 years either implementing payrolls, helping end-user organizations select a new payroll system or, as part of the vendor community (especially now-defunct PeopleSoft and pre-Fusion Oracle) developing a global payroll. In my book, "High-Tech Planet", I describe the fun associated with making a business case for a global payroll.

Assuming you have decided to run your own payroll inhouse (versus outsourcing it in full or in some countries-but I will discuss this as well further below) and regardless of whether you want to do so with an on-premise system or a hosted (SaaS) one, there are basically five ways to go about it based on:

- Funding: Who will pay for it? Sure, ultimately you the customer will end up paying for it, but there are ways to go about it. The vendor can fund this out of its general licensing revenue or you the customer can pick the tab directly.

- Build: Usually he who pays for it builds it, but this is not necessarily always the case as a player (say, a subsidiary) can contract out to the development organization to do it.

- Support/maintenance: This is a key issue and again it is not always an easy decision, the builder is not always the maintainer.

-Ownership: Some of the prior issues will determine, and be determined by, who actually owns the localized payroll.

Having defined some of the key criteria and remembering what it means to have a localized payroll (if you have not done so, please read my post on the five pillars of a "glocal" HR system: http://bit.ly/eRqx5J) here are the five ways you can run your global payroll system. (And, yes, I know, my mind seems to work in fives, probably the remnant of a childhood spent using my fingers to count.)

Tier 1: The truly global payroll 

SAP is the undisputed leader covering more countries
than several vendors put together. Vendors like ADP
whose offering is made up of disparate payrolls are not
included. The figure for Oracle, PeopleSoft refers
logically to each separate product line. Although
Workday currently has the same number of country
 payrolls (two) than other vendors not mentioned here,
I am including them as I believe they will increase
 that number in the coming years

This is the ideal situation. Your payroll vendor offers a localized offering for all of the countries you operate in, meaning they have built all the different aspects required to run a payroll in, say, the US, China, Argentina and South Africa (check that they comply with my five golden rules described in the above post). They built it from their Corporate Development organization, they support and maintain it (every time a rule changes you get a patch), they pay for it themselves out of the hefty license/support/usage fee you are paying. All you have to do is "just" implement the required software and you are in business. Perfect? Trouble-free? Not really. First of all, you have to remember that every vendor will have their own definition of the law and, surprise, surprise, that definition tends to be more limited than yours. So make sure you do your due diligence on that part when comparing the offering of different vendors, you may be comparing apples and oranges (I would recommend checking if they have product managers or development engineers in the various countries you want to cover.) Second, there are few, very few vendors that cover several geographies in this Tier-1 solution in a systematic way*, meaning that you will most probably have to resort to other solutions to complete the global model you need.

Tier 2: The half-baked payroll

HR software vendors are anything if not resourceful. If the Corporate Development organization for reasons I explained at length in my book, does not want to fund a localized payroll for some countries that are key to you, chances are that your vendor's country manager of, say, Nigeria  or Thailand or Tunisia (assuming you are in contact with them), will tell you that they would fund it themselves and contract out to Development to build the required features. You can thus end up with a product developed by your vendor following their development guidelines, on their codeline, with their own people responsible for developing other parts of the standard product. For all intents and purposes, it sounds and feels like the Tier 1 solution, except that it ain't. First of all, once they've built and delivered it, Development won't touch it with a ten-foot pole. The subsidiary, sometimes under constant prodding from you, will have to finance it and if the local market does not warrant it (you were a one-off case) you may wait a long time for that statutory report on overtime pay required by the government of Brazil. And, of course, there is no guarantee that any new off-the-shelf release of the core HR system and payroll (Tier 1) delivered by the vendor will be compatible with this Tier-2 product.

Tier 3:  The partner-built payroll

This is a variant of Tier 2 whereby, since Corporate Development doesn't want to have anything to do with the local payroll (either directly or indirectly, "hey, we don't even have time to build what we committed to"), a local partner is enlisted to replace Development. The great advantage here is that the partner, usually a local payroll vendor, knows the country requirements quite well since they have been developing their own system for  a long time: they therefore have the knowledge, people and resources to develop the localized layer of rules, processes and reports that you need for countries X, Y or Z.

All they need to do is get trained on the core payroll engine, understand the global vendor's development guidelines and they can get you the country extension you wanted in a faster turnaround your global vendor could never dream of. Who will pay for this? you may ask. Well, it all depends on the relationship between the global vendor's  subsidiary and the local vendor: sometimes there is a true partnership whereby they split the licensing revenue or the local payroll vendor gets royalties. (You will not believe how much frequent-flyer mileage I accrued traveling across several time zones and meeting countless payroll vendors to fix these issues) As a customer you need to understand the intricacies of such deals to ensure proper and speedy maintenance. Also, what happens if the local vendor bows out of the agreement? Will the global vendor's subsidiary pick it up as a Tier 2 solution? Will the global vendor accept to productize it and bring this local payroll into the standard product (make it a Tier 1 solution)? What about the compatibility issue with new releases of the global system? Since the global and local products will be on separate release schedules (and sometimes technology stacks) serious issues might arise.

Tier 4: The project payroll

If neither of the previous works, usually because as a customer you represent too small a market share for the vendor to get involved even at the local level through a partnership with a local vendor or by having the product financed by the subsidiary, you can still build the local extension as part of your implementation. Your own people can do it, especially if they have experience working with the vendor, know the tools well, especially the core payroll engine. Or your system integrator (SI) could do it for you, especially if, as is likely, they have experience implementing that payroll or even building out localized versions: and like all SI's they would love to do it for you, in exchange for fat, cascading consulting fees. A third option would be to use the consulting arm of your vendor to build it for you, on a T&M basis. The advantage of the latter is that it may minimize risks associated with such a project, if only because you can assume that as part of the vendor's organization they would know the product better than your own folks or an SI. Whatever the option of this solution, you the customer as the owner and funder of this solution will still be responsible for  its support and maintenance. Tough decision to make, but well worth it if the country under consideration is a key one with many employees and user experience, analytics and integration issues demand a similar payroll be used for that country as for the other ones.

Tier 5: The third-party payroll

When all else fails, then you are left with only one solution: create an interface between (a) either your HR system of record or your global payroll (there are pros and cons to do either, I will discuss that in another post) and (b) either a local legacy payroll or, more likely, an established local payroll vendor's solutions for the countries where you do business. It could be either an ADP-like outsourced payroll or the myriad third-party payroll systems which, in spite of the global vendors' growing market share, still rule the roost all over the world and which your local team will have to install and use. If you're lucky, maybe that such an interface has already been built by your vendor. For instance, most of the ERP vendors (SAP, Oracle and PeopleSoft or "SOP") have built such an interface (goes by various names, Payroll Interface or ADP Connector) where, in a nutshell, they already map HR data (employee details, compensation, organization, contract, absence data etc.) to selected payroll systems. Just make sure you understand what is really covered and who will maintain such an interface. In some cases where the interface is too light (what I call a marketing interface rather than a true product one) you might as well build your interface yourself.  Especially when the number of local payroll vendors is huge and there is little chance of your global vendor to have built standard interfaces to all of them.

It is noteworthy to keep in mind that when "SOP" vendors start localizing their offering they do it on a module-by-module basis, meaning that they first release a localized  HR Administration system (contract types, national identifier, address format etc.) and only then (there can be a lag of several years between the two) the payroll rules (earnings, deductions, gross-to-net calculation etc.) In order to optimize a Tier-5 solution, you may want to check which of the vendors has the most localized HR Admin modules as this will help lessen the need to build such features prior to their use by a payroll interface.

One tantalizing thought is the extent to which a pure SaaS vendor (such as Workday) can meet the needs of large multinational companies since in a SaaS model the payroll sits on a vendor's data center and is accessed remotely by users. It is therefore hard to envisage how Tiers 2-4 solutions can be done with such a system. Could it be that a global payroll system will be hampered by SaaS? So far the jury is still out as there is no   vendor that has yet come up with a SaaS-based multi-country payroll. This probably explains why Workday has been quite slow at expanding its country footprint and few members, if any, of its growing customer base are using its payroll outside North America. But if a true SaaS vendor manages to enhance its configuration options to the level needed to quickly build local payrolls and/or add new payrolls quickly to its standard offering, then it will truly revolutionize the oldest of HR functions.

*A list of how various global vendors fare in terms of HR and payroll localization is available from www.AhmedLimam.com\ Vendor Localization Footprint (excerpt -Google Docs sign-on may be required.) Please note that the Tier-4 description therein is somewhat different from the five-pronged approach presented here since the Vendor Localization Footprint report does not by definition cover the Tier-5 solution presented in this post.

A wedding in the Land of White Moors

The groom (and blogger's brother) with his bride who is
dressed, hand-hennaed and bejeweled according to
centuries-old traditions 

NOUAKCHOTT
Apart from the gift of life, I shall always be grateful to my parents for having brought me up in a multicultural family. And you can't get any more wildly multicultural than my family: my mother was born in Paris into a Romanian family and at age 2  was taken to the old country when WWII broke out. My grandmother left her daughter behind with her parents to go back to France (and  my Hungarian grandfather.) Little could my grandmother suspect that the war would separate her from her daughter for 6 years and then the Communist-imposed Iron Curtain for another 12 years. Only at age 21 did my by-now Romanian-speaking mother go back to France where she met my father, an Arab from the large but little known country of Mauritania (if you don't know where it is located on the map, you'll find it in the northwestern corner of Africa, just south of Morocco - interestingly enough my father himself had a half sister, whose father was French, and she too was lost to her mother from her childhood until her mid-20's. You can call my family many things but boring isn't one of them!) I then grew up between France and Mauritania with summer breaks spent in Romania, in particular the northern region of Transylvania. Such varied cultures and languages helped me become more open to other societies and people, different ways of doing things as well as learn other languages more easily.

When my Mauritania-based brother asked me if I wanted to attend his wedding in  the country known to locals in their Arabic dialect as Trab el Bidan or Land of White Moors, I enthusiastically accepted. So it was that last Thursday, after a 15-year absence, a 6-hour Air France flight from Paris disgorged me  into the diminutive airport of Nouakchott, the largest city in the Sahara desert and Mauritania's capital. It was the day of the wedding and I had barely changed into the traditional men's garb (see picture below) when I repaired to the bride's family 's home in the northern sector of the sprawling city that is relentlessly expanding from the Atlantic Ocean into the desert in all three directions (the view from the sky with the bluish hues of the ocean and the dusty white of the desert makes quite a contrast.)

We were greeted by the bride's parents and shown into a large rectangular room decorated in the typical low mattresses and colorful woven-wool carpets where male relatives of the bride's and groom's were assembled. It was quite entertaining to play the recognition game, an uncle here, a cousin there, and a nephew, a handsome young man in his mid 20's and recently married himself. When I last saw him he was barely two years old and it was in dramatic circumstances: his mother, my older half-sister, had just committed suicide in one of the family's highest profile dramas. The women sat in a separate  room but this segregation didn't last long as one of  my aunts was too excited to stand the protocol and waved at me to join her outside where other aunts and female cousins, close and distant ones, joined me, hugging and kissing me with with full theatrics. After this breach with protocol I went back to the men, some of the elders shaking their hands while muttering in their beards something about how Moorish traditions are lost to people living in the West.

I later heard that there was another etiquette violation, this time courtesy of my father who brought his own cleric. According to tradition since the Day 1 ceremony (known in Arabic as 'aqd or contract signing) takes place at the bride's place, it is her family's cleric who should officiate. Maybe my father felt that our tribe, the Laghlal, who for centuries had vied with my future sister-in-law's tribe of Idewaali for the control of our joint town, Chinguetti, Islam's seventh Holy City, should assert itself in a show of tribal power politics.  Anyway, things went smoothly, the cleric called on the representatives of both groom and bride to get closer to him, the conditions were read out ("the husband shall not raise his hand on his wife nor take another one, otherwise the marriage will become null and void immediately"), the audience were asked if they had any reason to object to the matrimony (I felt like raising my hand saying that as my younger brother, wasn't it bad form that he would get married before I did, but then thought otherwise) and the most noble son of the even noblest family of a  greatest tribe got married to a lady who was no less grand in her titles than he was. Of course, as befits tradition, neither bride nor groom were present. A short prayer that involved our whispering verses from the Koran hands raised skywards followed and we then proceeded  to partake of the meat, dates and drinks served on a cloth set right on the carpet, while steaming hot cups of tea were circulated around. As soon as the food was dispatched, everybody got up, slipped into their shoes and left the place leaving it to the female relatives  who were going to celebrate throughout the evening.

According to Moorish tradition, the bride has to remain
unseen  for three days. The smiling girl is the blogger's
(and groom's) sister, a management consultant based
in Brittany, western France

The next evening saw the wedding reception (known in Arabic as marwah) being organized in the palatial home of a cousin, in another neighborhood (which didn't exist last time I was here), closer to the ocean but at a safe distant since Moors (as Arab Mauritanians are known) have from time immemorial turned their backs on the salty body of water, even if fishing now represents one of the country's main exports. Day 2 was slightly different from the previous religious-cum-legal day with guests definitely on the younger side and men and women mixing and, to my utter surprise, dancing freely. But it is true that Mauritanians are unique among Arabs in that women are equal to men, they run their own businesses, work and travel freely, get married and divorce at a dizzying rate (a young cousin of mine who was there had already gone through a fourth marriage and counting), something unheard of in neighboring Algeria and Morocco where divorcees and widows are damaged goods with no hope of any further social life. And I'm not speaking of retrograde Saudi Arabia where they can't even show their faces or drive their own cars.

(You will notice from the top picture and the one right above, that, unlike what is customary in the West and other Arab countries, Mauritanian brides wear black while grooms are dressed in white. This is an old Beduin tradition that has survived the ages.)

A thoughtful blogger watches
the proceedings

Once all the guests had assembled, my brother accompanied by male friends and relatives set out in a car convoy to pick up the bride at her family home. Amid a pandemonium of car horns being blown insistingly they arrived at the party where everybody was craning their necks to get a  glimpse of the bride. They didn't see much as, according to tradition, the bride is to remain covered from head to toe, face unseen, for three days until the elaborate hair braiding is undone and jewelry that is part of it removed. The newlyweds had to sit under a dais for the whole evening without drinking or eating anything nor go the bathroom, while the rest of us drank and ate and danced. The music was provided by a Moroccan Sahara band who played a catchy mix of traditional and modern tunes. I could hardly believe my eyes seeing my aunts dancing the night away, with even more energy than younger girls. Highly entertaining was the parade of marriageable girls whose mother shamelessly pushed them  my way, most of them close or distant cousins or from the same tribe: as in 1950's America, in this traditional society a girl's highest ambition is still to land a good husband, such weddings are golden opportunities for mothers to catch somebody in their spider-like web. Must say that some of the girls were stunningly beautiful.

Dancing the night away, Mauritanian-style

We thus spent the rest of the evening under a starlit sky, dancing, laughing, gossiping, flirting, eating, drinking, bursting into sudden exclamations of recognition ("oh, my God, it's you!") until jetlag got the better of me and it was time to go to sleep. I discreetly slipped out, avoiding the hundreds of hands to shake, hugs to give and foreheads to kiss if I had taken formal leave of everybody. As I pulled away in my rental car, I couldn't help but be amazed at how centuries old traditions are still being kept alive by the cell phone-toting, Chanel #5-smelling, Mercedes-driving and Rolex-carrying descendants of nomadic Arabs who a millennium ago came from distant Arabia, some of them via Spain and Sicily. In an an era of all-out globalization, this is no small feat.

(To watch the above video of the party, made from a cell phone - sorry for the quality- you may have to play with different readers such as VLC or DivX to get the sound since, for some reason, Windows Player mutes the audio track)


(For those curious to read more about Mauritania, there are unfortunately no titles I know of in English. 

In French I highly recommend Le tambour des sables (Drum of Sands), the splendid memoirs of a French colonial administrator, Gabriel Feral. General Gouraud, another colonial administrator, wrote a unique document from my family's region, Adrar: Mauritanie, Adrar: Souvenirs d'un Africain published in 1945. Famed transcontinental pilot Antoine de Saint-Exupéry's Terre des Hommes (Land of Men) is probably the most famous novel written on Mauritania (not all the action takes place there, though.) Another famous Mauritania lover, Théodore Monod who crossed the Sahara many times over a half century, the last time in his old age, wrote Méharées. Odette du Puigaudeau's  account of her travels through the Land of White Moors in the 1930's (Pieds nus à travers la Mauritanie)  is a great, authentic read. 

Traditional Moorish architecture.
(From the blogger's own copy)

The beautiful coffee table book Mauritanie: Aux confins du Maghreb is a must-read: not only does it boast splendid photography but the research and writing are first rate. 

More recent titles include Nouakchott: Au carrefour de la Mauritanie et du monde, by an academic (2009) and Bienvenue à Nouakchott (2011) by French spy/thriller writer Gérard de Villiers who has sold 150 million copies of his books, mainly in the French-speaking world.) Finally, from researcher Aline Tauzin, published in 1995, is a collection of Moorish tales in a bilingual edition (French/Mauritanian Arabic) under the title Contes arabes de Mauritanie (Arab Tales from Mauritania) which holds special appeal to me as many were told to me, as a child, by my grandmother and the aunt who lived with her. 

There are several books in Spanish due to the links between Spain and the western part of the Moorish lands, a Spanish colony under the name "Rio de Oro" and now occupied by Morocco. Fernando Pinto Cebrian, probably the Spaniard who best knows the Western Sahara, wrote Adivinanzas Saharauis and Proverbios Saharauis. There is also a compendium of lovely Moorish tales from the Sahara edited by Ramon Mayrata and published under Relatos del Sahara Español, the Spanish-language counterpart to the Aline Tauzin book.

If you are, like me,  a  movie buff, I am afraid Mauritania is unlikely to beat Hollywood as a source of great cinematic creativity, at least not in the short run. This being said, there are a couple of respected directors - literally: I only know two, Med Hondo and Abderrahmane Sissako, the latter being of mixed Moorish-African heritage. The best movie yet made in Mauritania is Sissako's delightful autobiographical comedy-drama Waiting for Happiness (2002, in French and Mauritanian Arabic). Here's a good French-language review .