Global payroll never stands still in any organization, which is why one of the hallmarks of a successful manager is their ability to implement change. Global payroll managers and their teams are always having to respond as the company expands, restructures or reacts to yet more legislative adjustments in the countries in which they operate.
The aim of this article is to act as a beginner’s guide for anyone undertaking a major payroll transformation program and provide useful hints and tips. It is the second in a two-part series. Part one focused on how to set clear, fixed objectives and build cross-functional support for the initiative. This one will focus on how to measure success and set key performance indicators (KPIs). It will also offer some tips on budgeting.
How to measure success
Before starting your project, ask yourself this question – how will you know if it has been successful? It may seem like an obvious question to ask, but it is surprisingly difficult to answer. Here are some considerations:
Why is the initiative important?
It is useful to define what benefits you expect to gain from your transformation programme. Doing so will have positive implications both during the implementation in helping you determine if it is on track, and at the close of the initiative. At this point, defining what success looks like will enable you to clearly state once the project is complete so that you can draw a line under it and move onto other things.
How can you best define the expected benefits?
It is important to set clear, measurable objectives for your project, as discussed in part one. For example, if you want to eliminate manual data entry, your expected benefit would be the automation of all data entry fields. Such objectives should always be quantifiable and measurable and ideally be recorded using automated reporting tools.
Beware of relative improvement measures such as “reducing errors by half ”, however. They should only be used if reliable statistics were available on the level of errors before the project began. Otherwise, it will be unclear in what timescales the problem was halved as the size of the initial problem was never clearly scoped out.
Instead, it is preferable to use absolute metrics such as “reduce late payments to 0.5% for all pay slips”. It is easier to measure this type of metric accurately and compare it against targets to see if they have been met.
How to set KPIs
It is up to you what you choose as KPIs because they are simply a way of measuring the performance of your global payroll. KPIs can change and develop over time to reflect your new priorities, but they should be used regularly in order to highlight performance trends.
These factors make KPIs a very useful means of measuring whether payroll transformations are successful. If you are implementing such a project, consider using them to track whether expected improvements are being delivered. For example, if your initiative is designed to reduce bank charges, develop KPIs to monitor the frequency of urgent payments that require expensive wire transfers.
What happens once the project is complete?
Hopefully, all of your hard work will pay off and you will deliver the benefits expected. When this happens, formally close the transformation project and go back to business-as-usual mode so you do not have to rely on project staff indefinitely. Your usual payroll teams staffed at normal levels should be able to deliver the improvements.
Be realistic about project resources
One of the keys to a successful transformation project is to be up-front and clear about the resources you will need during implementation.
Think about the following issues:
-
Why are additional resources important?
Without additional resources such as extra staff or consultants, a large payroll transformation initiative is likely to miss its deadlines as it can only be completed in the existing team’s spare time. Unless they have significant spare capacity, they will be unable to devote the time required to the project, which will understandably be a lower priority for them than producing routine payrolls on time.
- How do we get extra budget for resources?
The major issue in getting hold of extra people is that they cost money, and the budget will likely need to be signed off by senior managers and the finance department. But they will demand to see the benefits generated by the proposed investment.
If this situation takes place, ensure you are well prepared to justify your project. You may need to point to so-called “soft” benefits if it does not generate significant cost savings. For example, improving payroll accuracy and timeliness may not save a great deal of money, but it is likely to have a major impact on staff morale. Being able to show evidence of the negative effect on the workforce of existing problems will help you to make a strong case.
- Factor in busy periods
Payroll has key busy periods over the course of the year such as fiscal year-ends. Having extra resources to hand will keep the project moving during these times. Without them, you need to be realistic and factor in delays due to lack of capacity.
“Without additional resources such as extra staff or consultants, a large payroll transformation initiative is likely to miss its deadlines as it can only be completed in the existing team’s spare time.”
Importance of credibility
All too many people underestimate the additional time and effort that a payroll transformation project requires. Being up-front and realistic about these issues will only add to your credibility in the eyes of the stakeholders. It will also avoid problems that commonly occur during implementation when projects slip behind schedule, creating a vicious circle of negativity that should be avoided if at all possible.
Global payroll never stands still in any organization, which is why one of the hallmarks of a successful manager is their ability to implement change. Global payroll managers and their teams are always having to respond as the company expands, restructures or reacts to yet more legislative adjustments in the countries in which they operate.
The aim of this article is to act as a beginner’s guide for anyone undertaking a major payroll transformation program and provide useful hints and tips. It is the second in a two-part series. Part one focused on how to set clear, fixed objectives and build cross-functional support for the initiative. This one will focus on how to measure success and set key performance indicators (KPIs). It will also offer some tips on budgeting.
How to measure success
Before starting your project, ask yourself this question – how will you know if it has been successful? It may seem like an obvious question to ask, but it is surprisingly difficult to answer. Here are some considerations:
Why is the initiative important?
It is useful to define what benefits you expect to gain from your transformation programme. Doing so will have positive implications both during the implementation in helping you determine if it is on track, and at the close of the initiative. At this point, defining what success looks like will enable you to clearly state once the project is complete so that you can draw a line under it and move onto other things.
How can you best define the expected benefits?
It is important to set clear, measurable objectives for your project, as discussed in part one. For example, if you want to eliminate manual data entry, your expected benefit would be the automation of all data entry fields. Such objectives should always be quantifiable and measurable and ideally be recorded using automated reporting tools.
Beware of relative improvement measures such as “reducing errors by half ”, however. They should only be used if reliable statistics were available on the level of errors before the project began. Otherwise, it will be unclear in what timescales the problem was halved as the size of the initial problem was never clearly scoped out.
Instead, it is preferable to use absolute metrics such as “reduce late payments to 0.5% for all pay slips”. It is easier to measure this type of metric accurately and compare it against targets to see if they have been met.
How to set KPIs
It is up to you what you choose as KPIs because they are simply a way of measuring the performance of your global payroll. KPIs can change and develop over time to reflect your new priorities, but they should be used regularly in order to highlight performance trends.
These factors make KPIs a very useful means of measuring whether payroll transformations are successful. If you are implementing such a project, consider using them to track whether expected improvements are being delivered. For example, if your initiative is designed to reduce bank charges, develop KPIs to monitor the frequency of urgent payments that require expensive wire transfers.
What happens once the project is complete?
Hopefully, all of your hard work will pay off and you will deliver the benefits expected. When this happens, formally close the transformation project and go back to business-as-usual mode so you do not have to rely on project staff indefinitely. Your usual payroll teams staffed at normal levels should be able to deliver the improvements.
Be realistic about project resources
One of the keys to a successful transformation project is to be up-front and clear about the resources you will need during implementation.
Think about the following issues:
-
Why are additional resources important?
Without additional resources such as extra staff or consultants, a large payroll transformation initiative is likely to miss its deadlines as it can only be completed in the existing team’s spare time. Unless they have significant spare capacity, they will be unable to devote the time required to the project, which will understandably be a lower priority for them than producing routine payrolls on time.
- How do we get extra budget for resources?
The major issue in getting hold of extra people is that they cost money, and the budget will likely need to be signed off by senior managers and the finance department. But they will demand to see the benefits generated by the proposed investment.
If this situation takes place, ensure you are well prepared to justify your project. You may need to point to so-called “soft” benefits if it does not generate significant cost savings. For example, improving payroll accuracy and timeliness may not save a great deal of money, but it is likely to have a major impact on staff morale. Being able to show evidence of the negative effect on the workforce of existing problems will help you to make a strong case.
- Factor in busy periods
Payroll has key busy periods over the course of the year such as fiscal year-ends. Having extra resources to hand will keep the project moving during these times. Without them, you need to be realistic and factor in delays due to lack of capacity.
“Without additional resources such as extra staff or consultants, a large payroll transformation initiative is likely to miss its deadlines as it can only be completed in the existing team’s spare time.”
Importance of credibility
All too many people underestimate the additional time and effort that a payroll transformation project requires. Being up-front and realistic about these issues will only add to your credibility in the eyes of the stakeholders. It will also avoid problems that commonly occur during implementation when projects slip behind schedule, creating a vicious circle of negativity that should be avoided if at all possible.
