As the global economy continues to expand, many companies have grown international operations, resulting in new performance demands and challenges to standardize processes and efficiencies. Historically, companies employed decentralized models to pay global employees, but emerging factors such as foreign government taxes, expanding environments and off-shoring/COEs have driven fresh, consolidated approaches. Enter the era of “global payroll transformation," an emerging concept that describes not just the delivery of an effective global payroll system, but the widespread acceptance and usage of that system to truly drive performance and consistency throughout the organization.
To achieve this, corporations are redefining the way they view and perform global payroll operations. In order to achieve initial and, more importantly, sustained success, Organizational Change Management (OCM) strategies and methods must be integrated into the delivery of global payroll solutions. A well-defined and executed OCM program prepares the organization to accept, engage and ensure active participation in the change, educate the workforce and sustain the desired behavior through ongoing assessment and support.
Most organizations have learned that any significant change to their processes, such as the implementation of a new global payroll system, require some level of focused change management for success. Baseline change management activities like training and communication are still essential, but not sufficient to drive change at the scale and pace required today. In fact, initiatives that require organizational change often fail to achieve sustained success due to a lack of continued support of the new processes or behavior beyond “go-live.”
When considering OCM in the context of Global Payroll, one must understand the effects to an organization.
7 Typical Areas Effected by a Global Payroll System
1. Process changes
2. New payroll providers in-country
3. Adherence to local regulations (e.g., requirements for signatures)
4. New roles & responsibilities for HR, Finance, Payroll
5. New governance models for payroll delivery and vendor management
6. Timing and methods of payment may change (monthly/bi-weekly, check, ACH)
7. Changes to underlying systems/platforms
Role Sorting provides a specific example of how OCM adds value in a global payroll implementation.
As a company sets up a Global Payroll Center of Excellence (COE), the number of roles in any given COE is assessed, and each employee in the role is interviewed to determine what the work process looks like today. This entails breaking down individual processes or steps into an estimate of time. The sensitive process of role sorting and information gathering must be conducted in a manner that limits panic or attrition amongst employees. With the resulting data, trends can be identified and assessed, such as processes that are taking up more time than others, where overlaps exist and when consolidation can be employed. Past engagements have shown the results are often consistent in locations around the globe, regardless of the size of the country or COE. The gathered data from role sorting can then be applied to make key determinations such as:
- Who is employed or re-deployed
- How are employees and roles optimally reorganized
- What payroll functions should be relocated to new locations
Employing OCM in the strategic process helps minimize costly tactical errors when implementing a global payroll solution and can help determine optimal operating models for new shared service centers. But OCM also plays a pivotal role in preparing the organization for adoption of change. Change is disruptive to employees lives. An enhanced understanding at the management level, coupled with effective communication with employees during and after the transition is key. Only then can the organization prepare appropriate action plans, including effective levels of sensitivity, support and guidance.