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Global Payroll Transformation: Moving Toward Payroll 2.0

By Erin “Iggy” Svoboda, CPP

 
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Working in payroll is like a love story. And, like every relationship, there are always some problems. After 17 years as a payroll professional, I was ready to quit. But what was I going to do? Return to school and try a different career? I didn’t go to school for payroll anyway. I fell into it (as many of us do), but I also fell in love with it. Reflecting on the “honeymoon period” I had with payroll, I remember feeling how important my work was because of how it impacted people’s lives.

Striving to make an impact only for the better, I realized I need to take pride in developing myself as a payroll professional because it truly was a career I loved. I obtained my Certified Payroll Professional (CPP) accreditation and became an expert in technology and compliance. Love is a lifelong commitment.

But in 2016, I briefly fell out of love with payroll. I was tired of the companies I worked for not having a transformation plan. This was important to me because I desired to work for an innovative and healthy organization where evolution was part of its integral plan. The ever-changing landscape of payroll demands an agile operation to effectively support constantly moving targets, such as jurisdiction rules and the evolving workforce expectations of future generations. An optimized payroll operation will be at the heart of a company with an ongoing strategy to change the way its business is conducted, which is what it means to truly perform a transformation. Without transformation, the business will likely fail on all levels, not just in payroll operations.

Technology Isn’t Everything

Early on in my career, I had the mindset that innovation was achieved simply by using new technologies to solve old problems. Passionate and naïve, my enthusiasm led me to running projects ranging from HR systems of record to time management, payroll, and accounting systems. Those new technologies did improve many payroll tasks, but it was not enough. There was still a significant gap in the accuracy and integrity of the information submitted to payroll. A common example I experienced all too often involved noncompliant timecard approval policies. On one project, approvals were not being consistently executed on the paper form every week. The assumption was that the new technology would fix this old problem by making it easier for everyone to approve using digital timesheets and attestations. Just simply click a button at the end of the week; everyone can do it. However, after the system was launched, approvals were still missing. It turns out, it didn’t matter if the user engaged with paper or a system. The problem was with the lack of user engagement.

The reason a system implementation is not transformative by itself is because those projects alone mostly focus only on a combination of digitization—the process of converting information locked in physical documents from analog to digital—and digitalization—the process of using digitized information to work more simply and efficiently. Yes, digitization and digitalization are a helpful first step toward transformation because of how they create a shift to improve how a task is performed by creating efficiencies, accuracy, and reporting of data. What’s missing is the maximum optimization of the systems and how the people will use it. A key element of executing transformation is to understand the true potential of the technology used by the business.

Why was my experience hung up on digitization and digitalization when there are dozens of reports about successful transformations? The main difference I discovered is that success stories primarily highlight large companies creating highly efficient and compliant payroll operations. They didn’t include the mid- to small-sized companies, from which my experience was mainly derived. The main difference is that those larger companies have executive payroll leaders sitting at the table when significant business decisions are being made. The smaller companies don’t have those same executives in payroll, and yet they are still making attempts to transform how payroll business is conducted by leveraging outsourcing options.

Size Doesn’t Matter in Transformation

According to research by Pete Tiliakos, Principal Analyst at NelsonHall, in the report “Next Generation Payroll Services,” mid-market buyers remain the largest adopters of managed payroll services. Tiliakos elaborates that this is largely because the mid-market is the largest population of buyers and they tend to have a more mature operation. Imagine what else could be done if there were a payroll presence at the executive level for those smaller, mid-market companies, too.

Nothing is perfect. No matter the size of the company, it is still very possible, and far too often likely, that transformation is not achieved. In the blog article “Global Payroll Transformation: Why is it so hard and how to make it work!” author Trevor Townsend examines transformation programs and cites research by McKinsey & Company on the fragile alignment with the business case. Townsend explains the three main reasons why 70% of transformation programs fail in the following ways:

  1. Failure to launch with no alignment from the business on approach
  2. Failure to scale when change is not adopted into the day-to-day payroll operations resulting in people falling back on old habits, processes, and tools
  3. Failure to sustain because leadership has limited bandwidth due to multiple other initiatives

Townsend’s experience clarifies that the absence of payroll executives will ensure all three points of failure will occur. If the payroll manager is kept busy doing data entry and chasing managers to approve timecards (and is therefore not attending strategy meetings), how will they ever get aligned on the business approach, break out of old habits, or keep tabs on other projects around the company? There is unlocked potential in the average payroll professional to get more involved in the business. Only then is the start of transformation even possible.

Transformation Journey Starts With Strategy

Technology advances are a critical component to elevating the role of the payroll professional. Speaking at the 2019 American Payroll Association’s (APA) Payroll Leaders Conference, Tiliakos said, “Advances in technology leads people and roles to being more strategic.” Yet, even before implementing new technology, one must already start the journey of becoming a strategic partner. First, lean into a leadership role by taking time to understand the organization’s need beyond just the payroll operation’s needs, and tie the business objectives to the payroll operation objectives. Treat an executive to coffee to get as much information as you can in a casual way, rather than demand a seat at the meeting right out of the gate.

Second, socialize the payroll operation intent with other leaders to ensure they understand why and what the benefits are for them. Third, make a compelling business case demonstrating clear return on investment. Most importantly, take time to understand the organization’s decision-making process, so you know what to do when the time comes to approve the changes you are proposing.

All that pre-work may feel distracting from the in-the-weeds payroll operations, but to truly transform your global payroll process requires getting out of the weeds and becoming an influencer in the business operations. In general, this is not typically part of a global payroll professional’s prior training. So, the time is now for the payroll professional’s role to shift into being a strategic partner, and this is ever more critical on the global side.

Address Three Essentials With Standardization

All payroll operations, at any sized company, want to streamline and standardize processes to address three essentials—a manageable, legally compliant, and accurate model. What’s clear is that the size of a company doesn’t matter. Smaller companies still have big-company global problems. What is also clear is that technology is a critical factor in transformation, but it alone will not change the business operations. Existing processes and the tools to support them must be thoroughly analyzed to identify the gap between the best in class and where the operation currently stands. Only then can the company change the way business is conducted to achieve full transformation.

Over the years, I’ve worked on letting go of the details to other team members so I could focus on transformation in the future rather than getting stuck and bogged down in the now. I’ve renewed my love for payroll, specifically global payroll, and I am currently leading a genuine transformation project in global time and labor management. Before selecting a vendor and signing a contract, I spent more than a year meeting and collaborating with all the leaders of every location across the world to understand what they need and want to solve related to scheduling and time management. I took time to understand the business.

As a result, I am now recognized as a leader and trusted adviser for the labor management needs. In the future, I’ll hope to be recognized for more as I continue to deepen my involvement and interest in the all aspects of the business. Lessons learned: Don’t give up, plan several years out, be patient, and take the time to align the business with payroll business. Forever in love, till death do us part … or retirement.

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Iggy_Svoboda

Erin “Iggy” Svoboda, CPP, is the Payroll Manager for Clif Bar & Company headquartered in Emeryville, California. At Clif Bar, Svoboda supports U.S., Canada, U.K., Netherlands, and Germany payroll operations. She has been a payroll professional since 1999, specializing in time management, payroll accounting, and global expansion. Svoboda’s passion for payroll knowledge led her to volunteer in the payroll community by joining the board of the San Francisco Bay Area Chapter of the APA in 2007. In 2019, she expanded her volunteering efforts by joining the National Speakers Bureau at the APA, where she continues to share her discoveries to the payroll community.