Five Steps to a Successful Compensation Program

Five Steps to a Successful Compensation Program

Implementing a global compensation program, with its demands for effectiveness, coordination and compliance, can be a complex undertaking, demanding organizational buy-in and rigorous planning. In this Insights, we explore the best approaches to implementing a successful compensation program.

With compensation directly affecting individual pay of employees as well as the regulatory and tax compliance of companies, the level of risk and exposure involved is among the greatest of any mobility-related function and makes any new implementation a truly transformational process. Whether it is a transition from an in-house to a third-party provider, or from one provider to another, the change process encompasses nearly every functional area in a company and requires a detailed understanding of local, regional and global regulations, processes, and stakeholders.

Below are five ways to ensure that transition to a new program ensures a compliant and successful outcome.

Know Your Program

As a key first step, make sure you have a holistic view of what compensation looks like in your organization. A common thread across many companies is that they are simply less familiar with regulations outside of their main markets. Lack of local knowledge can result in the misunderstanding that payroll and compensation protocols are similar across locations and that processes should match the headquarter norms and lead to ineffective decisions.

Basic questions to be addressed prior to any transition include:

  • What countries and employee populations are involved?
  • Which functional areas play a role, and how do they interact?
  • What are the currency, regulatory and tax issues involved? Are there reporting issues that need to be considered?
  • Are you experiencing or suspecting compliance risks, and where do they exist?
  • What are the capabilities or limitations of their global payroll and HR teams?

Answering these questions will enable you to begin sizing the scope of the transition and identifying the critical items involved. This information will be critical in appropriately incorporating regional nuances and assessing whether in-country teams have the right process in place to ensure compliance.

Get the Right Resources in Place

Understanding your current processes and programs will help ensure that you not only identify the resources you will need for a smooth transformation, but also that they are available at critical times during the change process. For example, having strong IT support and payroll teams will be key, as will ensuring that they have capacity at the points during the process when they are needed most.

Timing is another critical consideration in implementing a new global compensation program. Never underestimate the amount of time or level of coordination needed to fully outsource and implement a global program. For example, deploying a new mobility payroll process in December would require that payroll teams be available for transition meetings and user testing just when they are trying to close out yearly payrolls – their busiest time of year. Failure to involve stakeholders and provide adequate time to execute can jeopardize the transition process, with adverse impact on both mobile employees and the company.

Ensure Global Buy-in

The scope of the process change means that leadership must be invested in the transformation and that key local stakeholders in both payroll and HR are informed and involved. Education must involve careful planning, strong execution and follow-up in order to identify and mitigate any gaps or concerns.

Communication with individual stakeholders – including, a company’s mobile employees – is also key in any implementation. Clearly explaining the new process up-front and identifying any differences from the previous process can avoid confusion or dissatisfaction and support a positive perception of the change.

Establish a Robust Training Program

In preparation for a new compensation process roll-out, training will be required for all stakeholders involved. Being aware of the processes established by a mobility partner will provide insight into what actions an organization must take to assist the implementation.

That training will be critical for all of an organization’s internal mobility teams, including staff in various functional areas in regional locations. For example, teams will need a detailed review of new payroll instructions, as well as any other new templates or technology platforms being used for the global compensation accumulation and reporting process. And, all employees transitioning to a new system will be supported by detailed instructions in key areas, such as giving them a “before and after” view of balance sheets in the old and the new systems.

A Last Word. . . Keep a Change Mindset!

Implementing a new global compensation program is a rare occurrence in any organization. Transformational change is always demanding, and the compensation area, with its ever-changing regulatory and compliance landscape, requires ongoing commitment, flexibility and collaboration between an organization and their provider. Having a rigorous internal change management change process, as well as keeping a collaborative relationship with key stakeholders and leveraging their expertise will ensure you are putting the best process possible in place for your company.

To learn more about BGRS’s Compensation Administration, click here.