HR executives seeking corporate approval for new HCM projects must be able to demonstrate an acceptable level of return on the related investments. I would argue the single most important step that can improve these returns is a thorough review of HR and payroll policies, procedures and practices.
Such a review should be a root and branch study of the work done in HR and payroll. Two key questions should be asked of every aspect of this work:
- Does this work still meet corporate objectives, in other words, does it still add value to the organization; and
- Is there a more efficient way of accomplishing these objectives, other than the processes currently being used?
Further, everyone impacted by HR/payroll administration should be canvassed for needs, i.e. corporate objectives, that are not currently being met by HR and/or payroll. In these days, change is a constant fact of life and every organization should periodically reassess its HR/payroll function related to changes in internal and external environments.
However, the key question is when should such reviews be done.
The ideal time would be at the very early stages in any search for a new HCM. There are several advantages of doing this type of review before serious work starts on that search.
First, documentation on new processes, procedures or requirements can feed right into the Request for Proposal process. In other words, vendors should be asked about their ability to perform the processes that have been newly created. This would also be the point when documentation on such processes would be the most reliable.
Second, making changes required before implementing a new HCM will simplify that implementation process. Standard phases in all HCM implementations include validating, converting and loading the organization’s existing HR and payroll data, for the purpose of parallel payroll runs. If an HR/payroll review indicates payroll frequencies should change or if there are opportunities to reduce the number of distinct payroll schedules, doing this work before starting on the HCM implementation will simplify that implementation. Parallel runs involve comparing payroll results between the existing and new HCMs. This will be easier if the payroll schedules used in both are the same. If annual salary is $65,000 per year, and is paid on a semi-monthly basis in the old HCM, but is transitioning to a bi-weekly frequency in the new HCM, running parallels will always involve an extra step of converting earning or deduction values to the same payroll frequency.
However, some changes indicated by an HR/payroll review might be dependent on technology and not be available in the existing HCM. The most obvious example of this is manager and employee self-service workflows related to time and attendance. If the organization wants to improve the efficiency of its employee-related administration by moving to self-service and this functionality is not available in the existing HCM, then obviously, that’s something that’s going to have to wait until the new HCM is implemented.
There is also an argument to wait and perform a thorough HR/payroll review well after the new HCM is implemented and staff have become comfortable with its operation. One reason is the learning curve associated with any new large and complex computer system, such as an HCM. Depending on how systems savvy key staff are, it might take a year, or at least one pass through year-end, before these staff really have a solid understanding of the new system. If the organization makes decisions about new processes during implementation, before that understanding has been achieved, such decisions may be less than optimum.
Similarly, there may be great pressures to accomplish the go-live as quickly as possible, especially for go-lives that are planned for the start of a new tax yeas. Further, if the new HCM is a Software-as-a-Service system, SaaS vendors usually have an aggressive schedule to get the client up and running as soon as possible. Taking the time to review existing processes, design and implement process changes during the middle of an HCM implementation will inevitably lead to complexities and possible delays.
On the other hand, after implementation and the HCM is live, there may simply not be the energy or will to make the setup changes that might be indicated by a thorough going HR/payroll review.
For all of these reasons, my money would be a thorough review of the HR/payroll function at a very early stage in the process of seeking a new HCM.
Alan McEwen is a Vancouver Island-based HRIS/Payroll consultant and freelance writer with over 25 years’ experience in all aspects of payroll. He can be reached at firstname.lastname@example.org or (250) 228-5280. If you like these articles, please sign up to my email list.