This presentation highlights the findings from Ernst & Young’s Global Payroll Survey, the three core challenges identified by survey participants and the key questions for global payroll improvement.

1. 2012 Human Capital Conference
23–26 October
Global payroll: myth or reality

2. Disclaimer
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Ernst & Young Global Limited, each of which is a separate legal entity.
Ernst & Young LLP is a client-serving member firm of Ernst & Young
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► The views expressed by panelists in this session are not necessarily
those of Ernst & Young LLP LLP.
Page 2 Global payroll: myth or reality

3. Presenters
► Jeff Brown ► Vinay Singh
y g
► Ernst & Young LLP ► Ernst & Young LLP (UK)
► jeff.brown@ey.com ► vsingh@uk.ey.com
Page 3 Global payroll: myth or reality

4. Agenda
► Global payroll: myth or reality?
► Key survey highlights
► Global payroll challenges
► Key questions for global payroll improvement
Page 4 Global payroll: myth or reality

5. Global payroll: myth or reality?
Vendor Buyer
perspective perspective
Page 5 Global payroll: myth or reality

6. Do you believe there is a single vendor who
can handle all your global payroll needs?
Yes 30%
No
N 55%
70% of respondents are not
Unsure 15% confident there is a truly
global vendor.
0% 10% 20% 30% 40% 50% 60%
Page 6 Global payroll: myth or reality

7. Global payroll survey
Key highlights
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8. Survey profile
► Local language telephone interviews with 161
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multinational organizations
► Headquartered in 13 countries across five continents
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► Respondents — the most senior person with responsibility
for global payroll:
► Global payroll leader
► Senior payroll manager/Director
► Controller
C t ll
► HR director
► CFO/COO
► Head of shared services
Page 8 Global payroll: myth or reality

9. Which of the following is the main driver for
your existing payroll operating model?
Historic
Hi t i practice
ti 54% ► If it isn t broken, don’t fix it!
isn’t broken don t
► It probably is being fixed:
Cost 14% ► Manually
Lack of confidence in ► At high cost
7%
alternative models ► A resource drain
Control/risk
6%
management
Other 19%
0% 20% 40% 60%
Page 9 Global payroll: myth or reality

10. How is your payroll operation currently
serviced?
Hybrid Public Private
60%
operation
sector sector
In-house 28% 80% 80%
in-house outsourced
Outsourced 12% 20% 20%
outsourced in-house
0% 50% 100%
None of the US organizations interviewed had a purely in house payroll operation
in-house operation.
Page 10 Global payroll: myth or reality

11. Does your current payroll outsourcing model
vary by geography?
China
Global results
No
No 100%
22%
No
Yes 19%
US
78%
Yes
81%
Page 11 Global payroll: myth or reality

12. Are you considering switching to a new
outsource payroll vendor in the next 12 months?
► The US is more tolerant of
Yes
54% change.
38%
► The US payroll offering is
p y g
changing, e.g., technology
No
40% evolution drives vendor
57% change.
h
► Legislative change in the
Unsure
6% UK (RTI) and US (health
5% care reform) is forcing
focus on payroll.
0% 20% 40% 60%
US Global
Page 12 Global payroll: myth or reality

13. Are you planning to make a change?
Are you considering switching to a new Where in the planning process are
outsource payroll vendor in the next 12 you in adjusting your payroll model?
months?
Not considering at
this time
hi i 40%
Yes 38%
Considered/in initial
discussions 23%
In planning stage but
No 58% not implementing 18%
Actively pursuing
implementation 11%
Unsure 4%
Other 8%
0% 50% 100% 0% 20% 40% 60%
Page 13 Global payroll: myth or reality

14. Are you considering bringing any portion of
your payroll in-house in the next 12 months?
in house
Unsure
4%
► Does this mean
organizations are happy
Yes
19% with their outsource
service provision?
No
77%
Page 14 Global payroll: myth or reality

15. Global consistency and effectiveness
What percentage of your internal payroll How would you rate the effectiveness of your
operations and policies are consistent across current payroll policies and practices on a
a countries?
all cou t es g oba sca e
global scale?
80%–100% of
46% Best practice 15%
processes
60%–79% of
22% Good 54%
processes
40%–59% of
14% Average 23%
processes
20%–39% of
6% Below average 7%
processes
0%–19% of Needs immediate
12% 1%
processes attention
0% 20% 40% 60% 0% 20% 40% 60%
Page 15 Global payroll: myth or reality

16. Do you have a knowledge base or tracking
system to facilitate resolution of payroll issues?
► Typically more than 90% of
employee issues and
questions are repeated
No
42% ► A robust self-service
system results in a faster
Yes and more cost-effective
58% resolution
Page 16 Global payroll: myth or reality

17. Regardless of whether you currently outsource your global
payroll, what are (or would be) your challenges to
implementation?
i l t ti ?
Cost 19%
15%
%
Consistency 17%
17%
Vendor understanding requirements 16%
11%
Legal and regulatory requirements 13%
14%
Geographic capability 11%
14%
Loss of control
L f t l 7%
10%
Technology 6% 6%
Culture/language/time zone
g g 6%
10%
Change management 5%
2%
Contract management 0%
1%
0% 5% 10% 15% 20%
Largest challenge Second largest challenge
Page 17 Global payroll: myth or reality

18. Regardless of whether you currently outsource your global payroll,
what are (or would be) your challenges to implementation?
► “A vendor who can handle a lot
of small countries at a low cost”
cost
► “Home and host tax issues
make it a challenge to be
compliant”
► “I would say getting everyone on
board across the group would
be our largest challenge”
► “Resistance from each local
country and trying to get them to
t dt i t t th t ► “Standardization of the working
change their process” model and putting that into a
► “The ability to demonstrate the
y system
system”
return on investment” ► “No true global payroll provider
out there”
Page 18 Global payroll: myth or reality

19. Regardless of whether you currently outsource your global
payroll, what are your current global payroll issues?
Legislative
L i l ti compliance
li 36%
16%
Org. consistency in payroll processes 28%
21%
Finding the right payroll talent %
11%
10%
8%
Administration cost 16%
6%
Management reporting 12%
6%
Regional capability 9%
5%
Org. consistency in remuneration and benefits 9%
0%
Managing mobile employees 5%
0%
Audits, info requests and remediation
2%
0% 5% 10% 15% 20% 25% 30% 35% 40%
Primary issue Second highest issue
Page 19 Global payroll: myth or reality

20. How would you characterize your current capabilities in
employee and manager payroll self-service?
► Employees are more
p y
technology driven.
14%
► 60% or HR admin time is
35% spent on calls answering
17% basic queries.
► The opportunity for
organizations to mine
employee data is lost
lost.
34%
Basic Intermediate
Advanced None available
Page 20 Global payroll: myth or reality

21. If you were to select a new vendor for global
payroll, what would your top three criteria be?
Cost
C t 24%
Global capability 23%
Technology platform 13%
Managing mobile employees 10%
Would you expect
Accuracy of payroll delivery
y p y y 8%
“technology
technology
Relationship mgmt model 8%
platform” to be in
Standardized payroll model 5% third place?
p
Reducing compliance risks 4%
Customer support availability 4%
Cultural intelligence 1%
0% 5% 10% 15% 20% 25% 30%
Page 21 Global payroll: myth or reality

22. Which of the following services would you consider
receiving from a global payroll vendor?
g g p y
Payroll operations for mobile employees 70%
Cross-border payroll reporting
65%
for business travelers
Comp mgmt for mobile employees 60%
Time and attendance tracking 58%
Health and welfare 47%
Learning and development 37%
Onboarding/recruitment 35%
Other 20%
0% 10% 20% 30% 40% 50% 60% 70% 80%
Page 22 Global payroll: myth or reality

23. Vendor added value options
59%
Our organization would
not be willing to pay more
67%
Local employee support
24/7 vendor support
41%
Our organization would be
willing to pay more
33%
0% 20% 40% 60% 80%
Page 23 Global payroll: myth or reality

24. Global payroll challenges

25. We have identified three core challenges
► Consistent payroll delivery when expanding into new
markets
k t
► Vendor selection — including determining the best
operational model
► Reaping the benefits of an outsourced model
Page 25 Global payroll: myth or reality

26. Key questions for global payroll
improvement

27. Key questions for global payroll
improvement
► Is your global payroll model ► When was the model last
aligned with the overall reviewed?
RATEGIC
C
business strategy and the
YBRID
► Have you validated the art of
vision for support services? the possible — which
Do you have a five year plan
five-year aspects of payroll can be
HY
►
STR
for your payroll operations? outsourced and which do you
need to keep in-house?
► Do you have a good source ► Did payroll outsourcing yield
of skilled payroll technicians?
p y the expected savings?
p g
ED
SOURCE
HOUSE
► Have you championed the ► Are your Key Performance
implementation of employee Indicators (KPIs) and Service
self service
self-service for a broad range Level Agreements (SLAs)
IN-H
OUTS
of payroll events? measuring things you feel
are indicative of your
payroll s
payroll’s quality?
Page 27 Global payroll: myth or reality

28. Questions
Page 28 Global payroll: myth or reality