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Of all the processes and procedures required to successfully administer a global assignment, global compensation data accumulation arguably has the most stakeholders. How can organizations better prepare themselves? How can data collection improve? Jonathan Frick, Manager, Global Mobility for Ineo Global Mobility, and Christopher Chalk, CRP, SGMS, Global Mobility Manager for Siemens, are set to discuss the best practices of global compensation data collection at this year’s Global Workforce Symposium.
In addition to the global mobility department, the transferee and a third-party service provider, collection of data for compliance purposes typically involves finance, accounts payable, travel and expense, legal, payroll (both home and host) and IT. And that’s just inside the corporation! Now consider the myriad external vendors that are often involved: Specialized departments in relocation management companies or tax services providers, home and host tax teams, mobility technology companies, payroll providers, etc.
With all of these voices, in so many different languages, cultures, subject matter expertise levels and resource capability levels, it’s easy to see why this very important process can become overwhelming, frustrating and stressful. Its complexity is also often blamed for many W2Cs at year-end time. All the moving parts and bottlenecks lead to the processes of collecting, auditing and reporting becoming so much more complicated. It leaves mobility managers wondering what can be done to reduce the noise and smooth the flow.
While every program is unique, there are best practices to leverage that can minimize the stress.
To understand how to ease the burden, one must first understand what global compensation data accumulation is, and why it matters.
Global compensation data accumulation is the systematic collection and reporting of compensation paid to, or on behalf of, a mobile employee. It requires collecting data from the various sources that affect employee payments and consolidating those data sources into one master data accumulation system. The rationale for reporting is varied.
The oft-cited purpose for reporting is compliance, e.g., making sure that all elements are accounted for in the locations where the employee has a tax obligation. While this is the biggest rationale for this process, it is by no means the only one. This central repository of employee compensation is a powerful source for other business purposes, such as finance reporting, budget vs. actual accounting, and SEC proxy reporting. The data can tell the story of the employee experience. It can identify annual benefits, such as home leave, and when the employee would be eligible to take another trip. It can inform the allowance calculations regarding family size, depending on what dependent benefits are accounted for. These are key insights for program administration.
Understanding the opportunity, what can be done to make the process run as smoothly as possible?
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While it may sound obvious, your reports will only be as good as the data that is input into the system. As the adage goes, “garbage in, garbage out.”
To have a good platform of data in the system, you will need to have baseline requirements of what will be received from the various data sources. Great sources of truth include the offer letter, historical compensation received for this and other employees in similar circumstances, and the cost estimate.
It’s also wise to create communication standards for owners of various processes to ensure all payments are reported. For example, off-cycle tax payments made at the host location are often hard to track down. Communicating with your tax provider to determine what tax payments were instructed ensures accuracy of data.
More frequent auditing will help identify the gaps in the data prior to finalizing the reporting and help to avoid a backlog of data entry at the end of the year, when no one has enough time to get everything completed. Best practice is to audit at least quarterly, but if it can be done even more frequently, you’ll reap the benefits in the long run.
The vast majority of data shortfalls can be traced back to a gap in communication between the various stakeholders. Maybe there was a misunderstanding on the deadline for a particular deliverable. Or there was a bottleneck caused by a technical omission that, if communicated to the various stakeholders, adjustments could have been made to avoid this spiraling out of control.
With so many stakeholders contributing data, frequent, concise, and direct communication is the surest way to keep everyone on the same page. Many companies hold a brief monthly call—15 minutes or less—to run through the process, identify potential gaps and strengthen team collaboration.
Many companies are currently holding year-end calls, starting the process a couple of months before the actual year-end storm hits. They get stakeholders together, run through the various timelines and deadlines and get buy-in from all involved. This promotes visibility, accountability and clarity on the steps that need to occur in the busiest time of the year, ahead of time. Everyone has the ability to determine if they have adequate preparation time to complete their assigned tasks. If they decide they do not, there’s still time to work through any expected roadblocks before getting into the thick of it.
It’s also prudent to use a centralized project management system to provide visibility to everyone as to what has been completed and what is outstanding. This will avoid duplicate communications as the real time status will be in a centralized location for easy accessibility to all involved. These tools also can provide automated reminders to stakeholders, increasing chances of success at year-end.
Repetition can make certain tasks significantly easier. This is no exception for global compensation accumulation. If the process of collecting and reporting only occurs once a year, it’s almost certain to make the process more difficult and error-prone.
People shoulder a lot of responsibilities in their jobs. If one of those responsibilities is a once-per-year obligation, they will essentially have to retrain themselves on the process every year. How to avoid mistakes made the previous year will be forgotten, and repeated. Key contributors to the process might leave, resulting in gaps in data collection. Improvements previously identified can be overlooked and not enacted.
With the discipline of quarterly, or even monthly completion of tasks, you and your team can learn to successfully and proactively identify and implement improvements. Additionally, this aligns closely with the need to audit. Without a steady flow of information to review, the audit opportunity becomes null and void.
Finally, local compliance often dictates a frequent collection and reporting of this data. By not completing on a quarterly, sometimes monthly basis, the company exposes itself to the risk of non-compliance penalties and fees. So, bottom line, it is in the best interest to the company to complete the process regularly.
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Almost all global mobility programs can benefit from the review and analysis of their process improvements. There are many technological and human opportunities to improve global compensation data accumulation and tracking. Often times, though, it is good to get back to basics. Are you proactively auditing the data for completeness and accuracy? How is cross-team communication? Could you benefit from completing the process more frequently, so it can become second nature? These are good questions for any program to ask and understand for the betterment of their department.
To learn more about these and other strategies for optimizing your program, plan to attend the “Global Compensation Collection: Best Practice Meets Reality” session at the Worldwide ERC® Global Workforce Symposium in Seattle, WA on Thursday, 18 October, from 11:15 – 11:45 a.m. Questions will be posed and discussed for both the merit and shortfalls of the various solutions to align the best practice for your program.
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