by Peter Bouten
Many global payroll projects with huge potential benefits simply never make it past beginning stages. Reasons can vary, from teams not being able to get the business case approved, having a poor understanding of what payroll services are actually required, an incorrectly assumed size of the retained organization, or the misconception of changing business processes prior to starting a payroll project which are then often compounded with a poorly articulated financial business case.
These challenges are often the result of a lack of experience in executing transformational global payroll projects, an adversarial procurement processes, the misconception that the vendor is trying to take advantage, and ultimately, the fear of change. All of these can be overcome by considering the following elements during the early stages of a global payroll project.
You are not the expert on outsourcing payroll services. Hire a sourcing advisor for your project, ideally one who doesn’t also provide the services you are looking to acquire! Look closely for a boutique and proven sourcing advisory partner who is happy to help you successfully deploy your payroll transformation project in a manner relevant to 2019 and not 1985….. and talk to their most recent clients before you sign with them.
Before you write the RFP or are too far into a project, you should ideally be working with your top two potential vendors to understand how your actual business requirements would align to their standard Scope of Services. In a day’s session, it is possible to understand exactly which services are required across payroll, personal administration, benefits, time and attendance, talent management administration and employee support services; and critically, who will be delivering each service line. The resulting understanding of actual requirements will ensure that both you and the vendor will have a much clearer understanding of requirements, and as important, that your cost quotations will ultimately be easier to compare.
The business case is another element that is often cloaked in a veil of secrecy, with no direct vendor participation in its creation. This is ultimately why so many potential projects never actually begin – a badly written and ill-conceived business case. Embrace your vendor, accept they will (and need to make) a sensible margin, and then work openly to develop a commercially realistic business case that will deliver the benefit to your organization and to the vendor. You’re entering into a long standing relationship, and you both need to reap rewards from the partnership.
It is critical that you spend a day or more in several large-scale payroll outsourcing centers. This is, without a doubt, the most important aspect of the selection process, as it allows you to truly understand the operational elements of payroll outsourcing, compliance, integration and data management. It gives you a first-hand glimpse of what a best practice actually looks like. Be aware that 75% of your time in the center should be with the people who will manage your service, including a floor visit, and not stuck in a boardroom listening to presentations. At NGA HR, we make it a habit to invite future clients to visit at least one NGA service center.
Sharing FTE numbers – both in the vendor’s proposed model and in the client’s current and retained organization – continues to be a sensitive topic. The client doesn’t want to share this data for fear of losing commercial advantage, and the vendor is worried that their ‘secret recipe for success’ will escape. Only an open and honest dialogue (firstly about Scope of Services and then the actual FTE numbers – current client, proposed vendor and client retained) will result in a sensible, well understood project.
It is impossible to first optimize your payroll business process and then undertake a global payroll transformation project that will also include new technology. You need to accept that your future solution will align to your outsourcing partner’s proven best practice and technology. If you insist the vendor uses your processes, you won’t benefit from any future innovations, simply because you don’t use their standards. Running the payroll process is our business, so make sure you benefit from our process expertise. You wouldn’t want your clients to prescribe how to create your products and services, would you?
Designing, developing, launching and successfully delivering a global payroll transformation project requires you to embrace a more open, transparent approach to partnering with your selected vendor. Be open and share your data points and desired outcomes, and demand the same from your vendor. This partnership approach will ensure not only that the contract will have a much greater chance of success, but also that key concepts such as ‘Gain Share’ will be realized. Experience shows that a better outcome will be achieved if you spend twice the amount of time with half the numbers of vendors.