I detailed what a global payroll strategy, and specifically service delivery model, is made up of in a previous article, where you can find the full explanation. But these are the main components: process, people, technology, service levels and vendor strategy. The service levels and vendor strategy are the focus of these blog articles, so it’s worth reiterating what those are:

• Service Levels: choose the fitting service level ranging from in-house to managed service to business process outsourcing. This may also include additional HR, Legal and Tax Advisory Services.
• Vendor Strategy: select the vendors that have the capabilities to support the other characteristics such as Best of Breed. Accountancy Networks, Global Vendors, and Global Payroll Management Platforms such as Payzaar.

Anyone who follows me, knows that since approximately 2010 I have been advocating for hybrid being the only one-size-fits-all approach in global payroll. This ‘hybrid’ means a combination of service levels and a smart mix of vendor types. 

To put this “hybrid statement” to the test and kick off this series of blog articles, I asked my network this question: 

“Do you prefer a global, regional, local, or hybrid payroll provider strategy?”. 

The results speak for themselves:

• 17%: Global: one provider
• 18%: Regional: one per region
• 13%: Local: best local providers
• 52%: Hybrid: mix of the above

So, don’t just believe me; believe your peers! Over 50% indicated that in their global payroll environment they operate a mix of local, regional, and a “global provider”. The other options combined roughly make up the other 50%. Let’s explore why and what this means!

What is a hybrid vendor strategy?

When you manage a global payroll environment, you rarely have the opportunity to start from scratch and build out your service delivery model (incl. service levels and vendor strategy) without any change being forced upon you. There is no “tabula rasa” in global payroll. 

Organisations tend to gradually expand internationally, or on the other spectrum expand at the speed of light - there usually is no middle ground, nor true time to sit down and think it all through. Bring mergers and acquisitions, divestitures, and other impactful organisational changes into the mix and you will end up with a mixed vendor strategy with varying service levels. What usually happens then, is that a payroll transformation, or sometimes called a “consolidation” initiative, is started. Someone, perhaps you, gets tasked to consolidate vendors to standardise the environment and make it more scalable, automated, consistent, and any other objectives. But do you have to? No.

You need a strategy that is agile enough to adapt to future portfolio changes. What if a country scales up or down? What if you acquire or divest a country? What if, what if…

Manage globally, deliver locally

I fully appreciate the sentiment in the poll confirming hybrid is the only one-size-fits-all approach. Based on my experience, especially when managing a scope of say 15+ countries, you will end up with a hybrid vendor strategy. Because you need different service levels (even if you have a clear “outsource all” strategy)

• Your HQ payroll will likely include processing payroll in-house or processing services (i.e. you do all the inputs and approvals, but the actual processing is done by a provider).
• Your other countries will likely be a mix of managed services to BPO (incl. Additional advisory services).

As you have a mix of these services, you will also end up with different providers. While there are global logos out there, having a mix means that “under the hood” they will have different platforms and subcontractors. So of course you’ll still need standardisation and a level of flexibility (to choose the best service level). And that’s fine, and underpinned by 60% of global payroll managers confirming that they find standardisation and flexibility equally important. You will need a global payroll management like Payzaar to consolidate this.

What’s next?

Given the hybrid strategy of a potential customer, you as payroll provider will need to find a way to fit in. From my experience, your flexibility (service levels and technology platform) is what matters most for an end customer so they can plot you into their hybrid vendor strategy. This offers a great opportunity to “beat the global logos” and fit into the global payroll strategy of any multinational. But what does that mean exactly?

We will find out through a series of polls on LinkedIn. I will ask about the most important decisive factor for choosing a single-country or multi-country payroll provider. This will cover choice points around service levels, technology platform, cost, contact person, and country coverage.