Fifteen years ago, HR transformation became a buzzword, and it still is if current job descriptions are anything to go by. Recent developments in HR transformation have focused on payroll, but what is transformation and how can global payroll transform your organisation?
Cambridge Dictionaries Online define transformation as a “complete change in the appearance or character of something or someone, especially so that that thing or person is improved.” This definition suggests that transformation should result in improvements to the organisation.
Before undertaking a transformation, it is important to understand the capabilities and limitations of your current payroll processes and systems.
Certainly the origins of HR transformation were about organisational improvements. In reality, IBM invented it, built on a doctrine of reforming the HR process and delivery model, and then used the most suitable technology to deliver it to the global business. I can remember seeing process and entity maps that looked like a spaghetti factory had exploded. But it worked, and it led the way for other organisations to follow.
Moving forward, payroll has to work with HR, and global payroll transformation is expanding as a concept. While developing nicely as a doctrine, global payroll still needs a “one-size-fits-all” solution that can dominate the market. This has generated an opportunity for payroll, going from the “not very interesting” section to the “quite complex and very lucrative” market. Having worked on payroll projects across the industry from a local council in Staffordshire, England, to a major international corporation, it is truly amazing to see how the payroll market has evolved over the years.
Choices Vary Country to Country
Companies wishing to undertake a global payroll transformation project have a minefield to get through first. Organisations working in an international environment have many different choices; all of which vary country to country.
Some work we did recently identified that organisations considering a global payroll project had 12 sectors they could choose from, including:
- Software companies
For an organisation undertaking this journey, the key is knowing whose advice can be trusted and what solution will fit in the long term, not just for the short term. This is no easy task and a job that should not be treated lightly.
An important aspect of the journey of transformation is to understand HR’s role within the project. For many organisations, integration with HR is essential and must be considered during the early stages of the transformation project.
Know Where Your Payroll Data Is
Next should be the question of where payroll data should be kept: should it live with HR or payroll? My feeling has always been that, in the absence of an integrated solution, HR should hold the contractual information, whilst payroll should hold the manifestation of this on a period-by-period basis and therefore hold a record of who has and who has not been paid.
Wherever the information sits, it is important to know where to find it. CEOs often ask, “How much is the salary bill?” Ten years ago I worked with an organisation where the HR Director’s Payroll Assistant (PA) took six weeks to gather this information from a number of dissimilar spreadsheets every time this question was asked. When looking at a global payroll transformation project, this company naively decided to outsource, and a team of management consultants convinced the company to re-implement a global payroll solution it already had instead of upgrading it. It was already fit for the purpose, but the company did not understand what it already had available and missed the simple trick of upgrading.
Organisations looking to undertake a global payroll transformation project must first understand the current processes and systems. It may be possible to make transformational improvements through simply gaining a better understanding of what is currently done, and what else your system is capable of.
Is the system suitable? If not, then you need to carefully consider your options and the integrity of those offering them to you. Consultants and advisers may be aligned to software or service providers, and if this is the case are they providing advice that is beneficial to you, or to them?
Are those involved in the project the right people? Have you involved HR and finance to integrate and streamline processes which will lead to real business transformation? Or are the areas kept separate from each other?
Most importantly, remember that transformation does not happen overnight, and that this will be a lengthy process which develops over time and with business understanding.