The way work gets done has changed so rapidly in recent years that it feels more like revolution than evolution. For several years, we’ve heard about the potential for automation to transform the role of the global payroll professional. If you are just embarking on your automation journey, you may be overwhelmed by the sheer number of technology vendors, types of automation, and opinions about automation. The good news—it’s not as scary as it seems.
What Is Payroll Automation?
Payroll automation is a broad term that has expanded as the industry has evolved. Today, it is more than just a software program that calculates gross to net payroll. It is about optimizing global payroll delivery through implementation of end-to-end process threads that eliminate unnecessary handoffs, enables seamless transfer of data, and minimizes manual effort. As with payroll technology or service delivery, there is not a one-size-fits-all approach.
Global payroll automation can take many forms and utilize an array of tools, from basic functionality imbedded in standard office applications to a fully-integrated ecosystem of enterprise resource planning (ERP) tools. The optimal approach for your organization depends on several factors, including the size of your organization, IT infrastructure and budgets, organizational readiness to transform, and the availability of skilled resources. Examples of the types of tools and potential global payroll use cases include the following:
- Power Query—This is a tool within Microsoft Excel that can extract, transform, and load data from many different data sources to generate reports, perform variance analysis, etc. This requires no additional software or IT resources and has readily available training and online resources. A basic example use case is automation of the headcount reconciliation between payroll cycles. Once the “Power Query” is built, it is just a matter of refreshing the results each month in the Excel file. Refreshing the data creates a list of those paid in one run, but not the other, to be compared against known starters and leavers. A similar process can be used to collate results from multiple payroll vendors for consolidated reporting that includes your long-tail countries.
- Automated Workflows—There are many tools available that support automated data collection, task notifications, and/or approvals. Many enterprise human capital management (HCM)/payroll applications provide this capability, and there are also applications available that are specifically designed to provide workflows. An example use case for global payroll is requests for new earning codes. The request can be submitted and routed automatically to each department that owns a particular data attribute, such as the tax rules or savings plan applicability before final approval, and configuration in the payroll system.
- Robotic Process Automation (RPA)—RPA utilizes specialized robotic software, which are often referred to as bots, to perform rules-based and repetitive tasks previously done by a human being. This can include very basic tasks to more complex end-to-end processes in your company’s ERP system. For example, in our organization we’ve automated the leave payouts for some terminated employees. The bot logs into the HCM system and executes a query to identify new leavers, determines if the employee is in a state requiring same day payouts, and if not, the bot gets the remaining leave hours to be paid and loads those hours for processing in the next on-cycle payroll run.
- Chat Bots—Chat bots are a more advanced option and require specialized software that utilizes conversational artificial intelligence (AI) with natural language processing to simulate human conversation through either voice or text. These are becoming more commonplace as a first point of interaction for any basic customer service questions and answers. Some instances for global payroll include answering basic questions such as, “How do I update my W-4?” or “How much vacation time do I have available to use?”
- Hyper automation—Hyper automation combines multiple tools and technologies to enable complex end-to-end process automation. For example, an employee contacts the payroll department via a chat bot and requests to update their home address. RPA is triggered that logs into the HCM system and enters the update, as well as entering a case in the CRM system that triggers a workflow notifying the employee the update has been completed.
Why Do It?
Automation in global payroll has significant benefits; the most basic of these is the ability to maximize what are all too often scarce resources. This means the time spent previously on repetitive, manual tasks can instead be spent on critical activities, such as staying abreast of rapidly changing regulatory requirements, stakeholder engagement, and supporting enterprise level strategic initiatives. This also leads to a more engaged and fulfilled payroll staff by increasing their visibility as true professionals and strategic partners.
Automation increases speed and accuracy in payroll, which is critical as the baseline expectation is 100% accuracy on time, every time. Time spent inputting data and checking results can instead be spent completing root cause analysis of issues and implementing robust processes to eliminate them in future cycles. This benefits the company by increasing employee satisfaction and reducing the risk associated with errors, such as fines or penalties.
How Do I Begin?
As noted, there is not a one-size-fits all approach to global payroll automation. The first step is to assess where your organization is from a readiness perspective.
Determine if there is an overarching automation strategy that your organization can tap into. Engaging with established processes and tools can accelerate your automation journey, although you will likely need to provide details on the processes and anticipated ROI for each automation candidate.
If global payroll is the first to engage, or if there is not a coordinated strategy, then more work will be needed to identify the approach and tools for consideration. There are several third-party vendors that can be engaged to help with this evaluation and implementation, if desired. Availability of resources, including budget and infrastructure, will help determine the feasibility of implementing automation at scale versus a smaller, targeted approach.
Also, assess your organizational readiness from a cultural perspective. How will your employees perceive this effort? Will they feel threatened or fearful of losing their jobs or are they overwhelmed with the manual work and struggling to get to the things that really motivate them? Develop a plan to get them on board and excited about the opportunities that automation can provide them.
Then, identify processes that are candidates for automation. The best candidates include processes with the following characteristics:
- Rule-based decision making
- Repetitive steps
- High volume manual tasks
- Major pain points
- Significant data manipulation and/or transformation
One of the best ways to identify processes is to ask your teams for input after giving them the above guidelines and some basic education on automation. Consider making it a challenge or competition to help motivate participation.
Before you begin implementing, take another look at your process. Is it as simple and standard as it can be? Are all the rules that drive a decision point in the process clearly documented? Is your data source reliable (data accurate and timely)? Automating a process that is not clearly understood or with questionable inputs will only make a bigger mess faster. Ensure you have a documented process for governance, including implementation and sustainment, monitoring for changes needed as regulations or company policies change, and regression testing. Be sure to include any necessary controls in the process to support Sarbanes-Oxley (SOX) Act compliance and or country-specific audit requirements.
While getting started may seem overwhelming, don’t get hung up on being 100% accurate; just start somewhere. If the process is defined enough for the automation to know where to stop or what to skip or reject, automate as much as you can. Evaluate your ROI and prioritize each option through the lens of both cost/benefit and quality/risk mitigation. Organizations of all sizes can realize the benefits of global payroll automation.
Do you like our content? Join the GPMI community to get free education and articles straight to your inbox!
Kimberly (Kim) Wise is Senior Manager of Global Payroll Operations for Lockheed Martin Corporation. Over the past 31 years, Wise has held numerous roles of increasing responsibility within Lockheed Martin, now responsible for alignment of the global payroll strategy within the Lockheed Martin Corporate strategy. Since assuming the role in 2011, Wise developed the roadmap and led the implementation of the domestic payroll model in identified key countries. Her team now provides leadership and support to the Lockheed Martin business areas and their employees in Australia, Canada, India, New Zealand, United Kingdom, and the United States.