Payroll Transformation: Know Your Requirements

Debbie Land, Associate Senior Consultant

Debbie Land - head shot

Payroll Transformation: Know Your Requirements

Debbie Land, Associate Senior Consultant

Employee perks and benefits are differentiators for your employer brand. But there’s nothing more emotive than someone’s pay – and getting payroll wrong can have far reaching implications.

In this expert series, we look at why the requirements for transforming payroll are so often rushed, and how investing as much time in getting them right as you do in delivering a new system, can really reap rewards.

Critical Project Pathway

Quite often payroll transformation projects purely focus on implementing a new system. We often hear people say they’re doing a “lift and shift” – but all too often this can mean automating or transferring existing problems to a new system.

For any systems change, but especially for payroll where accuracy and timing are so vital for both employee and employer care and compliance, your requirements analysis is the critical success factor. Your systems vendor has the objective of implementing their system to your requirements; the responsibility for optimising your requirements to make real business improvements sits with you.

And at the root of that is looking at your Payroll, HR, Time Management and Finance data, and what issues it highlights, before you start the project, not once you’re in migration. This is especially important since reporting and analysis of payroll performance is a key pain point your transformation will need to address.

Starting this data work early will also then give you the time to cleanse your data – for example where your current system has no address validation so formats are inconsistent – before you attempt to automate or import it in a new system.

What’s your payroll culture?

Is the company prepared to champion change or is it risk averse?

How does your organisation treat its employees and where does their pay fit in that? Is paying people seen as functional or do you recognise it as the most critical employee benefit to get right?

One of the biggest mistakes we see in payroll transformation projects is that that payroll experts are excluded from key stages such as system selection. They should also be involved in helping to set the requirements and will be instrumental in making the project work. They will be the people who get all the flack if employees are paid incorrectly!

Payroll people are detail people – they have to be. This means they can need help to summarise their requirements in a way that engages senior managers or HR teams. But they are also the people who know all of the reasons why your current system doesn’t work, and which problems, if fixed, could really transform your payroll operation to become a flexible tool that helps you offer creative packages that will attract employees.

We always prefer payroll to be part of the team and involve them in writing the As-Is processes, developing the requirements and testing new systems and To-Be processes. They are the people most invested in it being right. We often engage some of the more vocal members of the team with the preparation work. There is a fine balance to strike between identifying the issues and managing expectation, but the payrollers know what doesn’t work and will have valid input as to where the biggest opportunities for improvements lie.

Manual processes are a system too

Do you consider the “system” as what happens in the technology? Automating manual tasks is critical for payroll transformation, but it’s manual today for a reason. Something about the data in or final output doesn’t work without that manual step, and it’s so easy for these steps to be overlooked by someone scoping the solution as simply “technology”. Processes make or break systems, and people make or break processes – often for valid reasons that aren’t always self-evident unless you ask.

Know your I’s, P’s and Q’s

Requests to vendors come in three sizes and three stages.

A request for information (RFI) is about explaining why you’re making the change and whether that vendor might have a potential solution that fixes the problem. It’s helpful to know the most important benefits you’re looking to deliver and the key principles your investment case is built upon – e.g. reducing manual payslips, enabling more flexible pay packages, etc.

A request for a proposal (RFP) is asking for a more formal, detailed proposal for your project. It’s helpful to have analysed your data, and understood the specific issues and their root causes, before you ask for this proposal. Knowing what process changes you’re looking for, not just a list of technical features, is one of the most important things we help client achieve to get much more accurate vendor proposals. Ideally, your As-Is analysis will be completed before you do this.

A request for quote (RFQ) allows you to understand the costs of the project in a standard, comparable format, to meet a specific To-Be specification.

Time it right, to get it right

Timelines for implementing a new payroll are often under-estimated, especially if there are significant, overlooked requirements relating to Time & Attendance, HR and Finance systems.

With that in mind, also consider when is the best time for your new payroll to land. Avoid periods when payroll are stretched – like bonus time or December where the cycle time is shorter to pay people early. But also respect bad times for your other stakeholders too – end of financial year, appraisal time or annual sales launches can often mean useful stakeholders are less likely to give your project their best.

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