This business had acquired several small companies around the world over a period of several years and hadn’t integrated many of their business processes. For example, financial statements were being consolidated at the highest level and accounting systems and processes were managed locally. The accounting process of greatest concern to the CFO was Payroll as each acquired company had unique payroll processes, systems and personnel in each country. As a result, there was considerable risk of delayed or inaccurate payroll processing and benefit provisioning or a failure to meet legal requirements if key Payroll personnel left the company. These types of failures could jeopardize the company’s ability to retain essential employees and deliver on customer commitments. The smaller offices across Europe posed the greatest risk and the larger facilities in the U.S. and India were less critical. The goals of the global Payroll transformation were:
We concluded that a global solution was needed but that several steps might be required to maintain control along the way. Transformation solutions are usually aligned with process standardization, technology implementation, service consolidation, and/or outsourcing.
The first phase of the transformation program was to assess the situation in each country to better understand the current state, then evaluate the transformation options to determine the ideal future state solution, and ultimately create a roadmap of business initiatives that could be resourced and executed over time. My role with to guide executive leadership and their teams through this decision-making process.
In person workshops are preferred for process mapping because it results in faster, more accurate documentation of the current state process. Current technologies, such as Mural, would have been a possible substitute for in-person collaboration. However, strong collaborative technologies were not available at the time and travel was not possible. In some countries, Payroll personnel did not speak English. We kept our current state documentation request as clear and simple as possible, providing an option for video conferencing with senior finance personnel that were English-speaking. Information was collected for each of the 13 countries using a standard process step template (see sample below) and a series of questions. Our summary of the Payroll landscape was that every country had a different Payroll solution with limited potential to leverage any current solution across countries:
The final transformation solution approved by leadership was to select a partner that could provide a global Payroll solution, either through technology, a provider network or both. The implementation sequence would be to target high risk countries first with the goal of rolling the solution out globally. See the summary document below.
In executing this global Payroll transformation over a period of eighteen months, several critical success factors emerged.
We assessed several global Payroll providers and technology solutions both in-house and external to determine the best long-term fit for the company. Selecting the right partner was the foundational success factor for this transformation. We used a due diligence process with a set of critical partner criteria and also evaluated the cultural fit. Our critical partner criteria included the global footprint, the age of their technology platform, software functionality, ease of use, current client feedback on the solution and service quality, the ease of integration and implementation, and pricing. The decision was close between two solution providers and what ultimately determined our selection was the provider’s new technology platform and cultural fit. See our selection criteria below.
We didn’t select the largest or best-known solution provider but our data driven approach and intuition landed us with the right company. The hand off between the sales team and the implementation team was seamless and we had excellent implementation teams in most countries. This partner had very professional, dedicated employees with excellent knowledge and attention to detail. I’ve seen the best and the worst in solution implementation with multiple HR, Payroll, and Finance solution providers. Finding a good partner that follows through on their commitments is like finding gold!
With Payroll transformation projects, there are limited windows of time when implementing a new payroll environment is reasonable or perhaps even feasible. Selecting the best date is important to support local payroll processing cycles and legal requirements including employee tax reporting and provisioning of required benefits. It’s common to identify a critical cut-over date and then create detailed implementation plans backward from that point in time. In this transformation project, each country had different payroll processing cycles, different legal requirements, and in some cases different fiscal tax years. They also had a different level of risk related to their current state technology, provider contracts, personnel availability and in the team’s general openness to change.
A critical success factor was having an overarching plan that kept the Payroll transformation moving forward but also supported unique country-level requirements. We decided to use an agile approach to organize the implementation. We transitioned in waves, focusing country team resources for short sprints, allowing the company to realize value and reduce risk along the way and build momentum before tackling more complex or resistant countries. The wave-based plan also provided the flexibility to pull a country in or push a country out based on the realities on the ground. We could adjust transition priorities and speed to best support country-specific situations.
After 80% of the employee population had been transitioned to the new Payroll solution provider (7 countries), the company made a broader integration decision to implement a global ERP platform. While this decision didn’t change the Payroll transformation strategy or solution, it did impact the transition plan. We needed to plan the ERP/Payroll integration for every country, regardless of their existing environment and to avoid integration conflict or rework, some remaining country transitions would need to be accelerated onto the Payroll solution provider and others delayed.
Having a flexible planning approach allowed us to evaluate the risk factors for each country and drive an implementation schedule that best met the company’s needs.
There were several critical factors in developing the right solution to meet the company’s global Payroll needs. Basic business requirements were captured, configured and in some cases solution customization was required. This work was led by the solution provider. However, to make sure that the global Payroll solution would be successfully integrated into the company’s business environment, required focus in the following areas:
As with any significant transformation, there is need for strong senior level commitment to the endeavor to get the project off the ground. Since the senior leaders at this company were involved in the decision making, they were onboard and prepared to do what was needed to make the transformation project successful. The larger challenge was getting mid-level leaders and stakeholders committed to the project. We focused significant attention to demonstrating to key country leaders and functional leaders that the solution being proposed was workable and had a high likelihood of implementation success.
Focus first on Quick Wins. We intentionally focused were initial implementation in countries that were in high-risk situations and leaders were ready to embrace a new solution quickly. After the first two to three countries were on board, we had a workable transition process to demonstrate to other countries which improved the acceptance of the new Payroll solution. After several European countries had been implemented, we realized that the U.S. was faced with a costly Peoplesoft Payroll upgrade. The decision was made to immediately transition the U.S. to the new global Payroll provider which further solidified it as the global Payroll solution.
Recognize and address pockets of resistance. There were a few teams that were resistant to the change and “hoped” that leadership would abandon the Payroll transformation effort. The first critical success factor was being attuned and aware of this underlying resistance and focusing everyone on making progress rather than “giving up”. Along the way, I used several tactics to address resistance. I was especially accommodating in getting certain stakeholders into solution workshops and leadership meetings so that they couldn’t feign ignorance. I developed more detailed plans for these teams’ deliverables, asked for explicit commitment and made their progress (or lack thereof) visible. Finally, I aggressively addressed concerns and escalations from these stakeholders to keep resistance from gaining momentum. A second critical success factor was recognizing legitimate resistance. Some countries had highly integrated and efficient Payroll systems that had been optimized with their core business processes over time. These countries would experience a less efficient solution with the new Payroll solution provider. However, we needed to move them forward to establish the desired global Payroll solution. This required escalation to senior leadership and partnership with the country leaders to get the team beyond surface level discussions and into detailed design sessions. Through these we were able to document the technical issues, identify specific solutions, review options and establish a fair transition plan.
Through the Global Payroll Transformation program, the company had developed and implemented a solid global Payroll solution to build upon. The Global Payroll Transformation program was folded into the broader ERP platform implementation since the interdependencies were substantial. To successfully implement the ERP platform and ensure Payroll would be operational in every country, we needed to integrate the existing payroll system and process in each country with the new ERP, regardless of the Payroll solution being used. As a result, a tightly integrated project plan was needed between the ERP program and the global Payroll transformation program. The timing for each country's implementation of the new Payroll solution was aligned to the ERP schedule.
Engaging a transformation leader with a strong project management approach, effective leadership skills, and an understanding of transformation best practices provides your company with the best opportunity for success. No significant transformation effort is executed flawlessly but we learn from our experience, improve our approach and hopefully share those insights with others along the way.