Editor’s Note: Marc-Oliver Fiedler is the founder and CEO of Payzaar, a startup transforming the global payroll space with an innovative open marketplace platform. Fiedler has more than 15 years of international experience with leading technology and software providers, building innovative cloud-based solutions for enterprise clients. Prior to launching Payzaar, he was Head of Strategy, Marketing & Product Management at ADP International. Fiedler previously held global leadership roles at Oracle and Hewlett-Packard, and worked as a management consultant with The Boston Consulting Company. He holds an MBA, MS Industrial Engineering, and BS Electrical Engineering from Stanford University. Payzaar helps multinational companies to connect and streamline their local payroll operations, thereby simplifying operations, strengthening compliance and controls, and improving access to the global payroll data. Payzaar is built on a state-of-the-art technology and applies the latest tools in automation and UX design to further empower today’s modern payroll departments.
Can you describe the changing role of the payroll professional?
Payroll has always had a challenging role in the organization. It is a back-office function that acts behind the scenes. Let’s face it, payroll has the reputation of being a bit boring; a bunch of tactical number crunchers. Most people—even many heads of HR or finance where payroll reports in many organizations—don’t really take notice unless something goes wrong. I always like to compare payroll to the role of a goalie: People expect you to perform flawlessly 100% of the time, and you only really end up in the spotlight when you mess up. At the same time, payroll is extremely critical, which senior management sometimes tend to forget. There is a lot of focus on employee engagement and all sorts of innovative programs and tools being deployed to attract and retain the brightest talents. But guess what? If you mess up someone’s pay, you can be sure that they will be unhappy, and you can undermine all the great work you’re trying to do to get them engaged.
Payroll is being picked up by the trend toward global or regional business centers as part of an HR or finance transformation. Operations are moving to locations away from the employees who are being paid. A key enabler to successfully transition payroll to a center of excellence within the organization is flexible technology platforms that support users in these locations.
I think with the means of modern technology, payroll has the opportunity to get out of its defensive “shadow” existence (no offense, but that’s unfortunately the reality in many organizations) and play a more prominent strategic role for the business. Basic transactional tasks will increasingly be taken over by automation tools, which frees up the payroll professional to focus on more value-add aspects.
An example is how to make payroll information more accessible and easy to understand for the employees (e.g., access to their full payroll history and a comparison of changes over time, proactive explanation of the variations in pay slips to minimize confusion and inquiries, etc.). Or by providing employees with more self-service tools so they can directly see and model how some of their choices (overtime, benefits selections, vacation taken, etc.) reflect in their net take-home pay. Or empowering business leaders with real-time, reliable labor cost information, so they can make better business decisions. Or ensuring quick plug-and-play support for new country entities being set up or for existing ones being divested.
Overall, I believe while some tasks and roles of the traditional payroll landscape will disappear, payroll professionals will be asked to take on more strategic, value-add responsibilities for their organizations.
What are your thoughts on some emerging trends?
Like many other industries, we see global payroll moving through different evolutionary stages as it matures. Originally, running global payroll meant operating on a decentralized, country-by-country basis and working with different local experts in each country, which led to lots of diversity, different processes, different systems, and different data structures, etc. Then, global payroll providers introduced the so-called aggregator model, which promised to harmonize and streamline global payroll operations across countries and simplify global payroll complexities. It has achieved this to varying degrees, however, in many cases at the cost of choice and flexibility. Under the aggregator model, customers are trapped in closed networks of local partners with little choice and negotiating power. As the next stage of the global payroll evolution, we therefore envision a world where the customer has control and choice of which local service experts to rely upon but at the same time benefits from the predictability and simplification of working through one trusted central platform. We refer to this model as an open marketplace model similar to the marketplace concepts that have revolutionized other industries such as the taxi, hotel, restaurant, or airline industries (e.g., Booking.com, Uber, Airbnb, Deliveroo): find the best local service that fits your needs and transact with the local provider via a trusted, easy-to-use, standardized central platform. We are very excited to be in the middle of this industry transformation and to help shape the future of the payroll space.
What are the biggest challenges for payroll teams?
One of the key challenges we find many payroll teams facing today is how to align with and prepare for the rollout of global HR solutions. Eight of the 10 companies we meet have either just rolled out a global HR solution or are planning to roll out such a solution. This creates both disruption and opportunity for the payroll function. Expectations from senior management are high. With a single global HR platform, everything should get much easier, right?
Well, the reality is that the existing local HR systems that had been aligned and integrated with the local payroll solutions—often over many years—get replaced by global HR platforms, making it necessary to reconnect the HR systems to the local payroll solutions. Today’s choice to connect the global HR platforms to local payrolls in automated or semi-automated ways is dissatisfying: Either create custom integrations on a country-by-country basis, which is time-consuming and expensive, or consolidate payroll via a global aggregator model and let the aggregator deal with the data connectivity to local payroll backends—which is even more disruptive and costly. We believe a more open standards-based connectivity hub that allows to connect HCM platforms to the large variety of local payroll backends is needed and where the future is going.
What advice would you give a company moving from a domestic to a global payroll?
Start by defining your objectives. Why are you looking to move to a global payroll model? Reduce cost? Better service? Better compliance and controls? Ability to scale to new countries? From there, consider what is the right internal operating model for you (e.g., local, regional, or country shared services). What kind of change management will be required to transform your existing organization? Only then start to think about your external vendor choices. Evaluate the cost of implementation/setup, the flexibility to obtain the service level you require (i.e., processing, managed, fully outsourced), what exit hurdles exist (i.e., if I want to change vendor, can I keep my local payroll?), and what are the hidden costs (e.g., will you have to pay extra for every correction run or every additional report you require)? Decide on a solution that is future-proof and that gives you control and flexibility (e.g., to make changes in local vendor when needed) and promises to enable your team with state-of-the-art technology innovation.
What are the emerging trends in data management and data security?
One of the biggest trends has arguably been the introduction of the European Union’s (EU’s) General Data Protection Regulation (GDPR) and the more stringent controls required to manage sensitive, personal employee data. And while GDPR is first and foremost an EU regulation, many other countries and regions are following similar trends toward better protecting personal data. For the payroll function, the new regulations bring sweeping changes: where data used to be transmitted via email and file attachments and stored on local file servers, those practices will no longer hold up against the expectations set by GDPR and create a significant exposure risk. Companies operating across the EU and beyond should adopt digitized workflows and secure centrally hosted collaboration and communication tools that allow them to oversee and control exactly where the data is at any given point in time and strictly control who is given access to the data based on their role in the organization. Having appropriate controls in place to comply with all GDPR requirements in terms of data protection, data purging, data access, etc., becomes virtually impossible to manage in a decentralized, heterogeneous environment that relies on each country to find its own way to ensure compliance. Only moving to a central and consistent data management framework will enable the organization to guarantee appropriate global security and data protection.
What are some of the considerations a company should ask to determine if there is a good fit with a prospective vendor?
I believe you want to fully understand what kinds of options you have before you get engaged with a vendor. We’ve heard many stories where the customer didn’t read the fine print and got stuck with an agreement that ended up creating discontent. Here are some of the questions that you should ask a prospective vendor before taking the plunge:
- Can I continue to process some of my countries in-house or move countries back in-house if I choose?
- How do you track and report the performance of your local service partners? Do we have real-time access to all the local providers’ key performance indicators (e.g., timeliness, quality of service, responsiveness, etc.)?
- What happens if we are not satisfied with a local partner and can’t resolve our differences with that partner despite best attempts on both sides? What alternatives do you offer?
- What kind of add-ons and extras do you charge for (e.g., extra payroll runs, local filings, extra reports, etc.)?
- What happens when I want to decommission from your service? What does the transition look like and can I continue to work with the local partners that have supported me? (Unbeknownst to many customers, the answer to that question is: “You get your data on a disk and no, you cannot work with the local vendors that have supported you under our umbrella.”)
The answers to these and similar questions will tell you a lot about how flexible and forthcoming your partner on the other side is to support your specific needs in the best possible way.
Why and how did you become involved in payroll?
Like many people in the payroll industry, I didn’t set off on my career thinking, “Wow, I really want to dedicate myself to the world of payroll.” I would say I ended up where I am today through a number of “fortunate” circumstances. I am an electrical and industrial engineer by education and started my career as a management consultant. I knew that I wanted to work in the tech industry to help shape the way technology improves our personal and professional lives. Over the last 15+ years, I have increasingly sharpened my focus to ultimately get deeply involved in the payroll space. On my journey into the payroll world, I started off in a fairly broad, general IT role at Hewlett-Packard, then helped pioneer cloud solutions as a new business model for Oracle, and finally ended up defining and building HCM cloud solutions at ADP. While at ADP, I became immersed in the challenges that multinational companies are facing in managing their global payrolls and felt there was a better, more modern, and more customer-oriented way to address those challenges than the traditional models offered by the industry incumbents.
This ultimately led to the launch of Payzaar, where we’re working hard on revolutionizing the global payroll space with the first open marketplace that really puts customers back in control of their global payroll experience.
How do you manage to balance work and pleasure?
I’ve always been a very active person, and I love sports. So, even when things get hectic at work and I am extremely busy, I consciously carve out time in my weekly schedule to do sports, whether that’s early in the morning or after work in the evening. I swim regularly. I go to the gym. I run, play tennis, or golf with friends, and in the winter I snowboard. It’s an important way for me leave work behind for a few hours and to recharge, both physically and mentally, in order to get ready for the next challenge ahead.
Do you like our content? Join the GPMI community to get free education and articles straight to your inbox!