“We are making tremendous progress. Many of our big ideas are now a reality.”
Karen Latter has worked at US-based multinational company, GE, for 32 years. She started off in the world of finance before moving into payroll in 2003 to help implement a pay and benefits system for the organisation’s domestic market.
Between 2007 and 2013, Karen headed up GE’s US and Canadian operational payroll and benefit teams. Taking advantage of what she had learned, she subsequently went on to lead a team involved in developing an enterprise-wide payroll process and technology standard that touches the lives of more than 300,000 employees in 180 countries.
As GE’s global payroll process leader, Karen now owns and governs that standard and works with regional teams to implement it and ensure that it works effectively across the enterprise.
Why did GE decide to standardise its payroll operations around the world?
We were refocusing GE as a high-tech leader, selling off more than half of the company where we lacked competitive advantage and rebuilding our core franchises. At the same time, we accelerated our transformation as a leader in the Industrial Internet by applying network sensors, big data and analytics to our machines and systems. The aim was to make it easier for customers to do business with us.
At the start, each GE business had its own shared services team handling activities ranging from HR and finance to IT. So we consolidated them all in to a global, multi-functional shared services organisation known as GE Global Operations.
Doing so has enabled us to streamline and standardise our operating processes, reduce costs and ensure consistent quality across the enterprise.
How have you rolled out change at the regional level?
GE Global Operations has a matrix management structure. Global process owners including myself who deals with payroll, make decisions about processes, technology and suppliers. We are domain experts who are responsible for ensuring that core processes work consistently and in line with the standards set out.
We also work closely with local and regional teams across all of our operations, and it is they who implement the standard. Taking this approach enables us to develop deep domain expertise and assert control over governance and supplier decisions. It also provides an efficient, centralised means of introducing change.
We are making tremendous progress. Many of our big ideas are now a reality. But the goals we set for ourselves were not simply incremental improvements that could be achieved in a few years. They were about transforming the way we work in an aspirational way so that we could operate our processes at a world-class cost, speed and quality.
It’s a journey and we’re learning as we go. As we learn, we might change course, but we’re always moving onwards towards realising our vision.
Work began by focusing on our data input processes. The aim was to ensure that each of our payrolls received data input in a standard, automated way, using common, global tools and processes in a pre-defined timeframe. We’re now addressing our downstream payroll outputs such as payslip delivery and accounting processes. But there’s still a lot to do, and every year it seems we discover new opportunities for further simplification and automation.
What do world class payroll processes look like and what changes have you introduced to get there?
For us, world-class is about:
• Competitive costs per payee
• Pay accuracy
• Payroll paid within five days
• Ensuring a learning culture
• Automated inputs.
Prior to the change process, we undertook external benchmarking and have set aggressive targets for cost per payee. But while cost of operations is definitely an important factor, quality and speed are just as important and are often a precursor to lower costs.
It’s about delivering accurate and timely payroll. This means operating in a culture that encourages people to raise issues and learn from their mistakes to ensure they’re not repeated. But it’s also about fully automating everything from data input to journal entry in order to ensure that the full payroll cycle - from the cut-off point for data input to paying salaries - takes just five days. This is not easy to do, but you need to set it as a goal or you’ll never get there.
One key premise that’s true for every process, however, is, if you put bad data in, you’ll get bad data out. We realised that 70% to 80% of our errors were due to data being entered incorrectly or late. As a result, about 35% of our team resources were devoted to manually entering, checking and cleaning those data inputs.
So in order to achieve world class payroll, we created a master data plan that defines our system of record and outlines how to automate the information flow to our various payrolls. We also built a tool that enables data from authorised sources to be sent directly to the system. All of our external payroll suppliers and in-house operations are now required to implement this interface.
Why do you have a mix of inhouse and third party suppliers to operate your payroll and who deals with what?
In GE Global Operations, our model is to have a shared services organisation due to the value that can be obtained from economies of scale across all of our payroll services. The decision to buy or undertake our own payroll processing is one that we look at on a case-by-case basis. It depends on the scale of the support needed, and the complexity of the payroll involved.
In-house operations can be more cost-effective for larger scale businesses, as long as you invest in maintaining your systems. Otherwise you may end up with applications that can no longer be supported and face a big, expensive re-implementation as a result.
It’s also important to invest in your talent, and ensure that you comply with the payroll regulatory and tax requirements of the countries you operate in. In some countries, investments like this don’t make sense and so we rely on suppliers. There is no ‘one size fits all.’
“Remember to focus on fixing your own business processes and don’t expect suppliers to do it for you. Too often we blame them for not delivering when, in reality, sometimes it is our bad processes that are the problem.”
What key lessons have you learned from your experiences so far and what advice would you give to anyone thinking of starting a big transformation project such as yours?
Change is hard. It should always start with a vision that everyone can understand and buy into - and for us, that’s been key to success. We defined what ‘excellence’ looks like at the start and communicated it in a simple way over and over again. The time you invest in upfront communications will pay you back many times and ensure that everyone is progressing towards the same goal.
It’s also important to build a global framework that allows for local complexity. Build to cater to 80% of your requirements, and have a process to address the other 20% non-standard ways of working.
But remember to focus on fixing your own business processes and don’t expect suppliers to do it for you. Too often we blame them for not delivering when, in reality, sometimes it is our bad processes that are the problem. Having a strong payroll system is critical, but that alone will not be enough to make your processes world-class.
Metrics are also key as they are effective tools for demonstrating positive performance and identifying service errors. They help you to define what success means and ensure that leaders can see progress. Most importantly of all, they help you discover how to do even better.
Finally, always protect and reward your teams. In GE Global Operations, we don’t make a product - we are a people business. This means we get results when we treat people well. But mistakes will be made so expect them and deal with them appropriately by addressing root causes. Empower your teams and you’ll be more successful than you could imagine.
“We are making tremendous progress. Many of our big ideas are now a reality.”
Karen Latter has worked at US-based multinational company, GE, for 32 years. She started off in the world of finance before moving into payroll in 2003 to help implement a pay and benefits system for the organisation’s domestic market.
Between 2007 and 2013, Karen headed up GE’s US and Canadian operational payroll and benefit teams. Taking advantage of what she had learned, she subsequently went on to lead a team involved in developing an enterprise-wide payroll process and technology standard that touches the lives of more than 300,000 employees in 180 countries.
As GE’s global payroll process leader, Karen now owns and governs that standard and works with regional teams to implement it and ensure that it works effectively across the enterprise.
Why did GE decide to standardise its payroll operations around the world?
We were refocusing GE as a high-tech leader, selling off more than half of the company where we lacked competitive advantage and rebuilding our core franchises. At the same time, we accelerated our transformation as a leader in the Industrial Internet by applying network sensors, big data and analytics to our machines and systems. The aim was to make it easier for customers to do business with us.
At the start, each GE business had its own shared services team handling activities ranging from HR and finance to IT. So we consolidated them all in to a global, multi-functional shared services organisation known as GE Global Operations.
Doing so has enabled us to streamline and standardise our operating processes, reduce costs and ensure consistent quality across the enterprise.
How have you rolled out change at the regional level?
GE Global Operations has a matrix management structure. Global process owners including myself who deals with payroll, make decisions about processes, technology and suppliers. We are domain experts who are responsible for ensuring that core processes work consistently and in line with the standards set out.
We also work closely with local and regional teams across all of our operations, and it is they who implement the standard. Taking this approach enables us to develop deep domain expertise and assert control over governance and supplier decisions. It also provides an efficient, centralised means of introducing change.
We are making tremendous progress. Many of our big ideas are now a reality. But the goals we set for ourselves were not simply incremental improvements that could be achieved in a few years. They were about transforming the way we work in an aspirational way so that we could operate our processes at a world-class cost, speed and quality.
It’s a journey and we’re learning as we go. As we learn, we might change course, but we’re always moving onwards towards realising our vision.
Work began by focusing on our data input processes. The aim was to ensure that each of our payrolls received data input in a standard, automated way, using common, global tools and processes in a pre-defined timeframe. We’re now addressing our downstream payroll outputs such as payslip delivery and accounting processes. But there’s still a lot to do, and every year it seems we discover new opportunities for further simplification and automation.
What do world class payroll processes look like and what changes have you introduced to get there?
For us, world-class is about:
• Competitive costs per payee
• Pay accuracy
• Payroll paid within five days
• Ensuring a learning culture
• Automated inputs.
Prior to the change process, we undertook external benchmarking and have set aggressive targets for cost per payee. But while cost of operations is definitely an important factor, quality and speed are just as important and are often a precursor to lower costs.
It’s about delivering accurate and timely payroll. This means operating in a culture that encourages people to raise issues and learn from their mistakes to ensure they’re not repeated. But it’s also about fully automating everything from data input to journal entry in order to ensure that the full payroll cycle - from the cut-off point for data input to paying salaries - takes just five days. This is not easy to do, but you need to set it as a goal or you’ll never get there.
One key premise that’s true for every process, however, is, if you put bad data in, you’ll get bad data out. We realised that 70% to 80% of our errors were due to data being entered incorrectly or late. As a result, about 35% of our team resources were devoted to manually entering, checking and cleaning those data inputs.
So in order to achieve world class payroll, we created a master data plan that defines our system of record and outlines how to automate the information flow to our various payrolls. We also built a tool that enables data from authorised sources to be sent directly to the system. All of our external payroll suppliers and in-house operations are now required to implement this interface.
Why do you have a mix of inhouse and third party suppliers to operate your payroll and who deals with what?
In GE Global Operations, our model is to have a shared services organisation due to the value that can be obtained from economies of scale across all of our payroll services. The decision to buy or undertake our own payroll processing is one that we look at on a case-by-case basis. It depends on the scale of the support needed, and the complexity of the payroll involved.
In-house operations can be more cost-effective for larger scale businesses, as long as you invest in maintaining your systems. Otherwise you may end up with applications that can no longer be supported and face a big, expensive re-implementation as a result.
It’s also important to invest in your talent, and ensure that you comply with the payroll regulatory and tax requirements of the countries you operate in. In some countries, investments like this don’t make sense and so we rely on suppliers. There is no ‘one size fits all.’
“Remember to focus on fixing your own business processes and don’t expect suppliers to do it for you. Too often we blame them for not delivering when, in reality, sometimes it is our bad processes that are the problem.”
What key lessons have you learned from your experiences so far and what advice would you give to anyone thinking of starting a big transformation project such as yours?
Change is hard. It should always start with a vision that everyone can understand and buy into - and for us, that’s been key to success. We defined what ‘excellence’ looks like at the start and communicated it in a simple way over and over again. The time you invest in upfront communications will pay you back many times and ensure that everyone is progressing towards the same goal.
It’s also important to build a global framework that allows for local complexity. Build to cater to 80% of your requirements, and have a process to address the other 20% non-standard ways of working.
But remember to focus on fixing your own business processes and don’t expect suppliers to do it for you. Too often we blame them for not delivering when, in reality, sometimes it is our bad processes that are the problem. Having a strong payroll system is critical, but that alone will not be enough to make your processes world-class.
Metrics are also key as they are effective tools for demonstrating positive performance and identifying service errors. They help you to define what success means and ensure that leaders can see progress. Most importantly of all, they help you discover how to do even better.
Finally, always protect and reward your teams. In GE Global Operations, we don’t make a product - we are a people business. This means we get results when we treat people well. But mistakes will be made so expect them and deal with them appropriately by addressing root causes. Empower your teams and you’ll be more successful than you could imagine.
