Businesses can often leave a slew of patched and broken processes in their wake when it comes to global expansion. We see this as departments grow, business entities are established, and new vendors are brought into the system. And with all that comes growth in the HR, finance, and legal teams that manage these processes. One of the processes that often becomes impaired or overlooked in this growth is global payroll.
For example, a 2019 EY survey report found that 35% of companies don’t have a formalized payroll strategy in place, and 28% of companies report “very low” standardization globally for payroll processing. This means that as your organization expands, you might discover that the processes you created to facilitate HR in one new region leave you with problems in the next one.
Your organization might be suffering from impaired payroll processing—low standardization—if you’re dealing with any or all of these issues, which may include the following:
- Lapses where payroll stops being handled by software and relies on manual intervention (i.e., spreadsheets)
- Manual payroll processing leading to security issues, such as un-sanitized payroll data getting passed along chains of custody that exposes sensitive employee information to people who shouldn’t be seeing it
- Utilizing a one-size-fits-all approach by trying to use payroll processes designed for one country in another country where different pay practices and data exist
- Offsetting your lack of region-ready HR with a patchwork of payroll and human resource outsourcing (HRO) vendors, all of whom ask you for different data and provide different outputs back (these outputs must be merged by your team when you want a report)
No matter how many of these payroll processing issues your business is facing, it’s a sign that immediate change is needed—and that’s where a payroll transformation professional comes in.
Decide If a Payroll Transformation Manager Should Be Hired
Because payroll is fed by data from your HR team, payroll transformation should never take place in a vacuum. You probably need to conduct a thorough audit and transformation of your HR team, systems, and processes first. Data on your employees—their pay rates, classifications, roles, and benefits—need to be lifted out of the many human capital management (HCM) systems that tend to proliferate in growing organizations and centralized into a single system of record or as few systems as possible.
Analytics that are done manually need to start being performed digitally. And you’ll need to connect the network of new digital systems: your training modules need to talk to your career modules and your career modules to your time-and-attendance modules. Thus, revamping your network will make your growth less painful and your company leaner and more agile.
This process is long but may leave you with personnel who are ready to take on the task of payroll transformation. Or you might find you need a real expert in global payroll to carry the load.
What a Payroll Transformation Manager Will Do
A payroll transformation manager or director takes the lead on a payroll transformation project. This role plays an integral part in project managing and centralizing resources and processes, in addition to implementing best-in-class new vendor solutions. They will be tasked with auditing the company’s current payroll process and creating an actionable improvement plan from their findings.
The first 90-180 days in this role will include evaluating current payroll processes, conducting interviews with payroll owners and stakeholders to discover pain points, and auditing the ecosystem that currently supports payroll from the HCM platform to multi-country payroll (MCP) vendors, to determine if they—or the way they’re being used—are the source of the problem.
Your payroll transformation professional will figure out if it’s time to switch providers, utilize different services with the current provider, or even consolidate providers. By completing this thorough audit, they will present an actionable plan to improve the company’s payroll process.
KPIs —Measuring Success for Your Payroll Transformation
During the audit, the payroll transformation professional will examine your organization’s key performance indicators (KPIs) to see where the company is currently and revisit them after the transformation to see how much they have improved. KPIs include the following:
- Accuracy rate/number of errors in payroll—When an employee gets paid all or a portion of their salary wrong or late
- Time to run payroll—How many hours per paycheck or entity it takes to run payroll can give you an idea of which regions need the most help
- Total cost of running payroll—Indexing how much labor is required (or how much expenditure, if using a vendor) will give you a baseline to compare against when deciding on new vendors
These KPIs help the payroll transformation professional determine how many errors your team (or current vendor) are making when processing payroll, how long it’s taking to process payroll, and how much it’s costing you—especially if you are being charged fines and fees due to noncompliance issues.
Beyond auditing and creating an improvement plan, the payroll transformation professional will often have to do the following:
- Assess and adjust end-to-end processes
- Provide training and coaching to their team and others within the organization
- Implement standards and KPIs while managing vendors
- Identify and align stakeholders by researching and developing relationships
In rare cases, some companies may have a new vendor purchased that they’d like to move forward with, and the transformation professional will be brought in to implement the new vendor. Or the company may already have someone in mind who could be promoted from within.
What a Payroll Transformation Professional Can Do for Your Global Business
So, what exactly does “overhauling payroll processes” mean for your global business?
It means tremendous improvements for both your payroll and/or HR teams but also your workforce, with improvements that include the following:
- A happier workforce due to payroll accuracy
- Receiving the holistic insights that you need to grow strategically and make smart decisions about where to expand and how it can save your HR personnel time in the routine drudgery of the payroll cycle. This allows HR to focus on more strategic business tasks like monitoring trends in compensation and advising the executive team on opportunities in the labor market.
- Better security—no more worry of spreadsheets being emailed to the wrong person
- One of the often-overlooked risks of the kind of payroll mayhem that happens when you grow is that using processes not suited to a country can actually result in fines from failing to comply with local legislation, especially surrounding terminations: a cleaner, more rational process can save you running afoul of these rules and regulations
To help reach these goals, it might be time to consider hiring someone to take the lead on transforming your payroll.
Skill Sets That Define a Payroll Transformation Manager
Successful payroll transformation candidates often possess hard and soft skills like the following:
- Critical thinking
- Problem solving
- Project management
- Payroll vendor and systems knowledge
- Payroll implementation experience
Questions in the interview process should aim to find out if a candidate has experience spearheading a similar initiative, successfully launching it, and aligning stakeholders.
Most current openings call for around seven to ten years of experience in payroll and workforce management, experience leading a team, and expertise with common payroll solutions. And many current payroll transformation managers/directors come from a background in program management or project management or as service delivery managers for shared payroll service centers.
Making the Case for Payroll Transformation
Whether your payroll process needs improvement now or you're planning further business growth and know that the status quo won’t work for you much longer, a payroll transformation professional could be a key resource for your organization.
The business case for payroll transformation is undeniable. For a global business, payroll (and HR more generally) is a business-critical function. The better you are at executing it—the fewer errors you have and the less maladapted you are to the countries where you work—the more competitive and set up for success you’ll be.
You’ll have happier employees, more accessible data and insights, and most importantly, a solid foundation to plan for future expansion.
Another advantage of implementing a global payroll provider—or utilizing the right services by the one you already have in place—is the ability to hire beyond your own backyard or even borders. It’s no secret that there is a significant and ongoing global talent shortage. In fact, companies risk losing $8.4 trillion in revenue by 2030 if this global labor shortage continues, according to Forbes.
But, by adopting the right processes—led by the right people—and working with the right vendors, you’ll be ready to compete globally.