HR Technology Conference 2014: Global Payroll

If you read this blog, you know I like order and simplicity.  I want everything in one place.  My scale at home weighs me and integrates to my calorie tracker.  my calorie tracker integrates with my fitness tracker.  I know how many calories I’ve eaten, how many I’ve expended, and if my weight trend is on target or not.  It’s all in one app even though all the data gets entered in separate places.  This is the world I want for global payrolls, but…

Seriously, global payroll is such a PITA.  It’s just too hard to figure out how to get all of your payroll vendors on a single platform or even a single vendor.  Local countries want their own autonomy, but corporate controls want centralized reporting and GL integrations.  Because if the very disparate local compliance issues, it’s incredibly difficult to normalize much of the global payroll environment.  Here are a couple of quick vendor thoughts that have been coming into focus and reality for a couple years:

  • ADP Streamline.  I don’t quite understand this service, but Streamline can basically take ADP global payrolls and consolidate much of the payroll data into one place.  This allows for generally centralized reporting and results.  The weakness of this model is that it’s not in the ADP HCM applications and can’t do reporting that has HCM data in it (afaik)
  • Ceridian Dayforce Payroll.  I don’t remember the name of their product, but Dayforce HCM is basically able to take Ceridian global payrolls and dump things into the Dayforce application, again providing consolidated reporting.  The weakness of this is that it’s in Dayforce HCM, and not everybody wants to run Dayforce HCM.
  • There are other great global payroll vendors that I like (Celergo comes to mind) but I didn’t visit them this particular HR Tech, so I won’t comment.

The idea of having a single payroll vendor doing all of the work in one place is fantastic, but it’s really pretty mythical.  Not one vendor can cover the entire globe, and most companies will have a gap somewhere, even with the big vendors like ADP and Ceridian.  Most organizations will try to get to 2-3 vendors to cover the globe, and some of them use outsourced BPO arrangements like AonHewitt or NorthgateArinso to coordinate these services.  Either way, single consolidated global payroll data is either on multiple vendors, or you spent millions of dollars and years of time consolidating on legacy HCM like SAP or PeopleSoft.

The other observation I’d make is that most global payroll organizations have to stack rank their companies for who is going onto a centralized platform and who is not.  For example, most companies decide on an employee count threshold to determine if it’s worth moving them to Streamline; under 100 employees and the cost of adding a Streamline country may not be worth the ROI.  These smaller countries are often left to their own devices and more manual integrations.

All in all, global consolidated payroll is still a bit mythical, but the last couple of years brought significant capabilities where the major vendors now have the ability to consolidate more than they had in the past.  As country footprints continue to increase, maybe a single global payroll provider is not such a distant future.

HRaaS

Every now and then I think I have a thought that is pure genius. This is not one of them. Instead, every now and then I have a thought that simply entertains me for longer than it should. This is definitely one of those.

I have not yet figured out the appropriate pronunciation for this. It might either be HR-ass, or harass. Either way, the thought popped up in my head while pondering the wonders of HR outsourcing. I mean, if we think about HRO, all we are really talking about is HR as a service, right? You subscribe to a service whether it is payroll or benefits outsourcing, or technology and call centers. You expect that the vendor will keep up with best practices, update their technologies as needed, have the right staffing ratios as your organization grows (or not), and maintain all the service levels you have negotiated. It really does sound like HR as a Service to me. It is unfortunate that HRO organizations have not adopted the acronym however.

We talk about it as HR service delivery after all, so why do we call the relationship HR outsourcing? Sure we have outsourced the delivery of parts of the service chain to someone else, but at the end of the day, it really does not matter if the service is internally or externally delivered. It’s simply a component of HR services that our employees and managers expect to get from us. What matters most to us is that the employees get the best experience possible in a scalable and cost effective solutions. (ok, so they really don’t care about the last 2). I mean, let’s think about the value proposition that HRO gives us. They can scale better, they can add technology with more agility, and and they are supposed to be rurally good at executing their core.

So next time you have a HR transformation project that includes HRO, I dare you. No, I double dare you. Brand your project HRaaS. (come on, I at least got a chuckle out of you, right? I really prefer not to laugh alone.)

Lack of Use

It’s been a while since I was on a bike.  All for good reasons, I haven’t actually been home in about 3 weeks.  I mean, you do need to have a bike available to you and decent roads to go for a ride.  I’m not sure that 3 weeks in NYC qualify.  First, I’m afraid of the incredible dust in the city – while I’m not afraid of traffic, I am extraordinarily afraid of dust and allergies that stay with me for days.  Back to the point though.  This morning, I went on my first bike ride since May 15 when I rode a meager 52 miles.  (yes, I have a diary of all this stuff, and yes, it’s fully GPS’d)  Just 3 months ago, I was riding about 80-90 miles without really suffering too much.  But this morning, I rode an easy 48 miles, and I swear my legs were about to fall off.  In what amounts to about 3 weeks, I have gone from barely competent to completely incompetent.  What is worse, in about 3 months, I have gone from decent to my current state.  There is good news though.  With hard work and training, I can get it all back.

The problem with HR competencies is not that most of us don’t have them, it’s that we’ve consciously decided to let some of it go.  Back in the day (all of 7 years ago), during the first major wave of HR outsourcing, organizations decided to outsource functions and thought that they didn’t need to retain the competency and roles.  After all, we were giving up these activities and people to someone who was going to take care of us.  These HRO organizations were going to be more efficient, save us money AND provide better service all at the same time.

Somewhere down the road, we realized that maybe it wasn’t all true.  As HRO organizations’ matured for the second wave of HR outsourcing, they realized that mentioning a retained organization might be a good idea.  The problem is that we didn’t really understand what the retained organization was all about yet, and there really weren’t leading practices around it.  So we kept a few people around in strategic capacities, and didn’t assume that the vendor was going to be the “be all, end all” for each of the outsourced functions.

Problem is that it took us a pretty long time to figure out what we were missing.  For example, it was often when we had a major PeopleSoft or SAP upgrade that we realized nobody was looking after HRIT in quite the same way we did ourselves.  We realized that as much as a vendor’s vanilla processes for performance management were nice starting points, real process design by people who knew the organization just wasn’t available.  We realized that we had gotten rid of a few too many people and the HRO didn’t pick up the slack they way we thought they might.

Not only did it take us a while to figure out what was missing, but after 3 or 5 or 7 years, we often didn’t really know how to fill the void that we felt within our organizations.  Writing job descriptions was hit and miss.  After all, these roles may have existed prior to outsourcing, but more often than not, they existed within multiple people, and figuring out what pieces of which people was getting pretty challenging.

We’re still struggling with this problem, but I think we’re struggling in the wrong way.  We’re writing job descriptions in the traditional way.  We are writing roles, tasks, responsibilities, etc.  But these roles are really more about competencies than tasks and responsibilities.  These roles used to be filled by a few people, and so many times they are cross functional, don’t require huge depth in subject matter expertise, and break down communication barriers between vendor/client, HR/technology, or functional areas.  Retained counterparts to outsourced organizations become communicators and translators, but it will take time to create these new roles and for us to understand and mold how they fit with our organizations and our vendors.  Luckily, we are finally at the point where we probably do get what we need, and how to fill that void, but it might take some time before we get it just right.

For me, I just need to get back on the bike…

HRO is not Dead

HRO has seemed dead for at least a couple of years now.  A couple years ago it was almost all I was writing about, and there were mega deals to be had every other month.  All consultants were talking about to their clients was deciding if they should outsource or not.  At the time, HRO was really the domain of the Fortune 100, maybe the Fortune 250, those who had the financial ability to spend that type of money on mega HRO.  Unfortunately for the HRO industry, outsourcing HR was not necessarily as easy as ITO or FAO.  The people factor sitting in the background was actually a factor that should have been sitting in the foreground, and large outsourcers who were used to technology or financial transactions were not as able to translate their business into HR.

We’ve lost track of HRO, but it’s really not that dead.  The fact is that while the mega HRO deals were going on, we figured out what works and what doesn’t.  What works are the things that always did.  Outsourcing technology, payroll and benefits.  But we’ve always outsourced that stuff.  I think the one new area that is starting to get outsourced is RPO.  We’re seeing more outsourcing in the sourcing area of recruiting.  As usual though, we’ve learned that it’s the transactional areas that are perhaps less strategic.   For payroll, wage and hour policy is still usually held internally, although the outsourcers are really the experts on compliance.  Benefits design is pretty much in-house, and the transactions are easily outsourced, and for recruiting, sourcing can be removed but the decision making is left for the hiring managers.

In the last wave of HRO, we started to see organizations start to outsource stuff like talent.  I’m not quite sure how this worked beyond technology, but apparently people were doing it.  As the economy comes back in 2010, I think I’m expecting transaction outsourcing to come back in a major way.  Organizations will be coming out of cost containment and looking to spend on implementations that allow them to capture more cost savings that they could not spend the money implementing in 2009.

For more on BPO and a couple comments reflecting my own here, see Phil Fersht’s blog here.