HR Clarity— Predictive leadership through the fog of digital (& all other!) disruption Accelerating global payroll transformations

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Accelerating global payroll transformations

With multiple incumbent payroll platforms and protocols spanning internal and external stakeholders, legacy HR systems often present inherent complexity in successfully transitioning to new technology. Fortunately, however, things are changing. Recent HR tech advancements have made integration with existing platforms much easier and brought artificial intelligence (AI) and machine learning (ML) capabilities to HR. Streamlining and expediting payroll functions saves HR significant time and money while freeing up HR to focus on more strategic tasks. HR Magazine brought together three global HR stakeholders in a recent webinar to share advice on avoiding pain points of existing payroll systems, and on leveraging AI and ML to make life a lot easier in the world of C&B.

Panelists

David Hogg

Business Support Director PizzaExpress Hong Kong

Bree Campbell

Head of HR Operations, APAC GroupM

Chalapathy

Head, Payroll Implementations Ramco

Payroll change management—key drivers

Payroll transformation is an opportunity to improve efficiency, quality, and output, which gravitates around the critical factors of integration, control, migration, compliance and cost. The question is no longer whether HR should transform payroll or not, but instead, how best to do it.

Integration

To be most effective integration has to happen across the entire ecosystem of various HR, payroll, IT applications and finance products used by an organisation—ensuring that they all talk to each other. David Hogg, Business Support Director, Pizza Express, Hong Kong, noted, “The key to integration lies in picking a ‘suitable ecosystem’.”

R.H. Chalapathy, Head, Payroll Implementations, Ramco Systems, added, “The cloud provides much greater flexibility in integrating service offerings. This service offering flexibility, in turn, depends on an organisation’s geographical spread, headcount and their current IT landscape.”

Control

To facilitate integration, HR must carefully monitor ‘control’ of the process with suitable hosting, leveraging the cloud, allowing accessibility and provision for business continuity planning (BCP). Hogg explained, “Cloudbased systems are stable and built to integrate. Sustaining a true cloudbased system isn’t difficult, as long as it’s not a server-based system that has simply been ‘pushed out’ into the cloud.” Chalapathy noted, “This is the essence of zero-maintenance HR and is an essential part of native cloud applications.”

Migration

After deciding what to integrate, the next step for HR is deciding how to integrate it best. Bree Campbell, Head of HR, GroupM, APAC, advised, “When beginning any digital transformation, it’s best to run parallel systems until you know that you can entirely rely on the new system. GroupM ensures that offices cycle at least two parallel runs before going live with any new payroll system. This is crucial to producing accurate payroll and allows HR to ‘safely’ retire their old system, whilst bringing in the new system and ironing out any teething issues.”

Chalapathy echoed this advice and noted, “Having two parallel runs: a historical run and a live parallel run is the best dress rehearsal for switching over to any new system. The next factor for HR to consider is control, and technology has improved so much that there is an opportunity for them to do much more with less than in the past.”

To enhance change management, Campbell added, “HR teams have to do a significant amount of reporting for their finance and IT teams, which often requires a lot of manual intervention. At GroupM, the switch to AI and demonstrating those time savers for all our teams have helped with change management.”

Compliance

The digitalisation of payroll via AI and ML has helped HR stay on top of regulatory changes, particularly across multiple jurisdictions. Hogg noted, “Previous payroll systems often couldn’t handle more than one market, modern cloud-based systems provide HR with much greater scope and control around the kind of changes you make.

Changes can now also be made much more easily across multiple markets—reducing compliance issues across markets. This is a crucial factor with increasingly frequent regulatory changes that heighten the risk of non-compliance due to COVID. HR must have a payroll system that can quickly adapt to any regulatory changes.”

On audits, Hogg added, “It’s important to know what the auditors are going to find before they turn up—especially when you have disparate systems, and you don’t have complete control over what’s going through those systems.” He added, “You should also ensure that the solution you’re choosing works best for your business. Whether you’re a capital-based business or a cash flow-based business should be considered when implementing significant IT solutions.”

Chalapathy said, “HR no longer needs to worry about server maintenance, as this can now be automatically maintained through the cloud environment’s regulatory changes. Regulatory bodies are increasingly allowing for online submissions, paving the way for paperless HR— supported by the cloud.”

Campbell emphasised, “Compliance is about wanting to do the right thing by the people in GroupM, for the overall business, and in terms of the country we are based in. All of which is more important and prevalent during this pandemic, which has really been driving the new ways of working that we all must adapt to.” She added, “When payroll is handled inhouse this affords flexibility around last-minute changes; however, it also requires additional rigour around your payroll and processes. So, we are moving towards an outsourced model to help with compliance challenges. Moreover, outsourcing affords more control, greater visibility, and with cloud-based technology also significantly reduces compliance risk.”

Technology has improved so much that there is an opportunity for them to do much more with less than in the past.

R.H. Chalapathy Head, Payroll Implementations Ramco Systems

Cost: outsource vs in-house

When considering whether an in-house or outsourced option is best for your organisation, Hogg advised, “Think about the process, the time and the cost—from an outsourcing perspective you have to have a competent provider who can handle anything. Outsourcing also tends to be more attractive for organisations with predominantly full-time workers, and even then can still prove challenging when it comes to exceptions. This is an important caveat to bear in mind when deciding to outsource, as HR tends to be built on exceptions.”

Campbell highlighted the importance of budget, “Cost is becoming such a major driving factor in payroll overall. It’s not just about the cost of the actual systems themselves but having systems that enable us to pull the easily digestible information needed to determine the costs of other systems.”

Multi-country strategy, single source of truth

With a multi-country strategy, there are two key HR considerations. Firstly, if a single vendor is trying to cater to different markets, this can create challenges. Chalapathy noted, “This is why Ramco has a local office in every geography, as every country has its own set of regulations and compliance issues—so it’s important as a vendor that we are close to this.” Secondly, the importance of having software that can cater to these local requirements. On this note, Chalapathy cautioned, “It’s often tempting for HR to go for a single vendor, and then integrate with an external system, but that involves handling three different complex systems simultaneously. So, having both of the aforementioned is crucial for optimum efficacy.” He added, “HR should also try to involve users early in the game, especially with multi-country payroll outsourcing. This is vital, as there is frequently a degree of inertia and resistance to outsourcing. HR should push out a formal communication plan and invest a lot of time on training.”

Transforming payroll also creates the ideal opportunity to harmonise and standardise payroll operations globally. Chalapathy advised, “Ensure that there’s a drive from regional leadership and central leadership in the organisation. Local regulations with the unions are the only area that might demand deference to local leadership, otherwise have a unified view of payroll and the quality of data; clean it up and get it in good shape.” Hogg added, “A good multi-country market strategy is about geography and deciding where your single source of truth lies. HR should enable and nurture a system that fully captures all global payroll data sources to provide comprehensive and accurate multi-country global payroll data at any given time.”

Campbell agreed that the centralised HR approach with a single source of truth was the way to go. She added, “Decision-making at GroupM is done centrally when it comes to payroll as this brings standardisation and harmonisation benefits to the process. We still consult with the local markets and ensure they are part of this decision-making process to build trust.”

Outsourcing affords more control, greater visibility, and with cloud-based technology also significantly reduces compliance risk.

Bree Campbell Head of HR Operations, APAC GroupM

A good multi-country market strategy is about geography and deciding where your single source of truth lies.

David Hogg Business Support Director Pizza Express, Hong Kong

Enhancing the employee experience

A well-run payroll should also enhance the employee experience and having the right outsourcing provider can mean new opportunities in this area. To help sustain a quality employee experience, especially among regional teams, Campbell advised, “HR must consult with all the teams regularly and let them know what’s coming up. It’s about bringing them along for the journey, rather than pushing something onto them—they need to feel involved with the process.” She added, “It’s good to mark key milestones, so everyone can see the changes and improvements that happen as the organisation progresses along the journey.”

Hogg echoed these sentiments and shared, “Having everyone involved and having a clear path forward are crucial, so that HR can work on the big things early on. It’s about improving work, redistributing work and working together as a team.”

The future of payroll

Payroll transformations have moved away from being CFO-centric, and increasingly it is HR who have ownership and are the key decision-makers. Moreover, as payroll is now so tech-intensive, there is a need for a robust IT arm in the decision-making process. Chalapathy summarised, “As we move forward, we are going to see a union of HR and IT in making key payroll decisions. Moreover, we are likely to see a blended approach with the centralisation of strategic payroll policy coupled with local support in each jurisdiction to ensure regulatory compliance and alignment with any significant local union arrangements. This is where we see the future of HR payroll models.” n