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.
Why can’t we get along with payroll? What makes them so different? It really does not matter when Payroll reports up to HR and when they report up to Finance. There always seems to be some friction. Often we like to think that they are just “different” people. HR people are strategic and nurturing and outgoing. Payroll people, well, are like accountants. They are introverts, task oriented, and live in a cube with a spreadsheet. It’s true that there may be some substance to the stereotypes, but at the end of the day, it’s not the type of people we are that causes friction, but our different and unique work experiences.
The payroll experience is definitely one of structure. There are specific rules that one must comply with, specific deadlines, and all of this must be driven by high quality data. HR would like to think that we abide by the same philosophical rules of compliance and process and data quality, but I don’t think our HR world operates in quite the same sphere of severity that payroll does. Lets face it, there is much less flexibility in interpretation for getting your taxes right versus your EEO reports (you simply can’t go “undeclared” for taxes). payroll processes means that if an employee is not in the system when they run paychecks, or if a timecard is still wrong, that payroll still has to run. When HR talks about data quality, we’re often not sure how many people are even employed in the organization on any given day. If payroll if off by $1 for every employee, they will get a mean-spirited phone call for 90% of the population. When we can’t run an accurate headcount, our executives sigh and give us a $1M project to figure it out.
Our core values might be the same, but their consequences are drastically worse when they don’t perform. We don’t like to admit it, but we are the cause of so many of payroll’s problems. There is always another new hire, or some off cycle spiff that has to get processed. Because payroll data is often downstream from HR data from a process perspective, and we don’t understand payroll’s consequence severity, we are not always tolerant of their deadlines and rigid processes.
So be nice to your payroll people. They might be downstream from HR from a data process perspective, but from an employee engagement perspective, payroll is one of our key influencers. Nothing makes employees unhappy faster than bad payrolls.
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.