Consider the Source

Essential Building Blocks to Global Payroll Efficiencies

By Julie Fernandez, Director - CHRO, TPI

It seems so intuitive.

You have 40 payroll providers across 35 countries. Surely there are ways to consolidate vendors and contracts, stand up payroll in new countries, scale for growth, and have visibility into compliance and risk concerns with your employee pay. Right?? 

These TPI Top 5 tips from the trenches of global payroll will help you find and tap into those elusive efficiencies:

1. Skip the RFI. The global payroll market is no stranger to requests for information (RFI). The typical RFI is infamously all-inclusive, without nuance for large or small country needs and lacking a business case. RFIs consistently demand a world of fee estimates, which are seldom binding, ill-fitted for the all-inclusive scope, and dismiss numerous complexities. Payroll providers still feel obligated to respond, though RFIs are almost always sent too early and represent a client’s great idea turned into a fishing expedition with little mandate or funding.
   
   
2. Build your buddy list. Rarely is there a single owner for payroll in an enterprise. In most companies, payroll reports to HR in some countries and Finance in others. Payroll services and full time equivalent (FTE) resources can often get mixed in with staff and budgeted as part of the business unit’s in-country operations. Only your largest countries are “on the radar” of your procurement (payroll vendors) or IT (payroll systems) departments. Rather than distress over the lack of a single owner, take time to make a broad network of friends. All levels of the corporate organization chart need to buy in to the value of change, if only to be a better corporate citizen in a more strategic relationship. Forging new bonds in the company is important; beyond the challenge of adopting a new payroll is the even greater challenge of funding it.
   
   
3. Know your global platforms. Because payroll often runs on a shoestring, quantifying cost avoidance is critical to building your business case. Get to know your HR information systems, timekeeping, and general ledger platforms, as they all interface with payroll. Corporate projects to expand these platforms means that there will be development and maintenance costs associated with their touch points to payroll. Be able to estimate the savings from these interfaces to prove your case for change.
   
   
4. Point to leakage. Sadly, the business case for payroll often depends largely on business value that is not easily accounted for in the reduced budgets of payroll operations. By far, the biggest opportunity for savings comes from abating “leakage” of payroll dollars to overpayments, retroactive changes, error corrections, and financial controls that decrease compliance and financial risk. Unfortunately, no magic formula will quantify leakage. Find the types of leakage occurring in your current payroll model, and look for isolated, known examples that demonstrate its magnitude. TPI has the tools to help you approach business value and to find your most viable business case alternatives.
   
   
5. Identify regional champions. One size does not fit all in a global payroll strategy; accordingly, the governance structure should span corporate, regional, and local levels of the organization. When setting up your governance program, be sure to define how small countries participate as part of their regional teams for both in-house and outsourced payroll models. Identify resources that already function in a multi-country or regional fashion, and if you truly have nothing in place, consider using your global payroll project team to begin tapping resources to assume broader geographic roles.

As you consider the five building blocks of a more efficient payroll model, remember that progress is not defined by your ability to push all countries into a single system, single vendor, or single model. Progress happens when you can articulate your strategy and build a business case that makes some part of your strategy actionable.

For more information or help with global payroll strategy, service provider identification, and your global payroll RFP and business case, contact Julie Fernandez, Director — CHRO, TPI.

 

ACS and ExcellerateHRO: Implications for the Benefits Outsourcing Market

By Tony Herron, Partner, CHRO Services

 

On May 25, ACS (a Xerox Company) announced its intention to acquire ExcellerateHRO from HP. The acquisition is expected to be completed by July 1.

 

ExcellerateHRO has been for sale since early 2009. The uncertainty surrounding its future made it difficult to acquire new clients, and retaining current clients at contract renewal has also been challenging. In addition, the potential sale caused uncertainty regarding the future for existing staff. In spite of the circumstances, ExcellerateHRO has won a number of brand-name clients during this time on the strength of its refurbished technology platform, including Bayer, Fluor, Kraft, Heinz and Rite Aid.

At the same time, ACS has been one of the most dominant players in the benefits outsourcing market over the past year, winning competitive bidding processes with ArvinMeritor, Catholic Health Partners, Dana, Ford, Stanford University, State Street, and other well-known employers. It won these clients through innovation, market-changing approaches to pricing services, flexibility in its approach to service delivery and an enhanced technology platform.

We believe the combination of ACS and ExcellerateHRO will be a powerful force in the benefits outsourcing market and could represent a game-changing event in the mega-market. However, aside from offering some additional relocation clients and resources, we don’t think the acquisition does much to bolster ACS’ HR outsourcing (HRO) business.

The advantages of this acquisition include:

· Confirming that Xerox is committed to the benefits outsourcing and HRO markets

· Expanding ACS’ footprint in Canada and Europe and better positioning it to offer a global benefits administration solution

· Increasing ACS’ scale in all areas – implementation resources, administration expertise, clients, technology, etc.

· Making ACS a more formidable competitor in all market segments, especially the large- and mega-market

· Providing ACS a market-leading DB and H&W co-sourcing capability

· Stabilizing the ExcellerateHRO client and employee base

The only real downside to the acquisition is it takes a top-tier DB and H&W administration firm out of an already small service provider market.

Want to discuss further? Call me at 574-257-7825 or drop me a line at tony.herron@tpi.net.

Investing in Future Talent

By: Hary Bottka, Project Director, CHRO Services

I recently had an opportunity to blog for Pinstripe, in which I discuss why forward thinking organizations are using the economy to invest in their future talent pool.  I was taken aback by some statistics that I heard at a recent Roadshow by Taleo which supports my point:  42% of employed workers are disengaged from their jobs.  The reality is these statistics underscore the need for the RPO industry to prepare for the future.

Stay tuned for more insights on the latest RPO and HRO market issues as our HRO Group will be making more appearances on Pinstripe. 

Top 5 Actions to Heighten the Strategic Impact of Your Procurement Organization

By Bill Huber, Director, CPO Services, TPI

During tough economic times, procurement is often called upon to “win” price and payment term concessions from suppliers and service providers in order to boost the bottom line. While there is no question that part of procurement’s role is to ensure that a company is paying the best price, the “blunt instrument” approach tends to simply focus on supplier profit margins without doing anything to improve quality or drive innovation that ultimately, permanently removes real costs from the supply chain. 

                                                                                              

Here are five actions that you can take to raise the strategic impact of your procurement organization.

1. Define the target role for your procurement organization. Review your department objectives and formalize the role and results that you would like procurement to achieve for your company during tough economic times. Set strategic objectives in terms of innovation, quality, cost savings and customer service that the procurement organization will embrace as a response to recessionary times, and measure your progress toward those goals.

2. Segment your supply base. A formal tiering of your supply base, with best-practice supplier management processes for the top tier, can have a dramatic effect on the value that you derive from your most important suppliers. Set frequencies for reporting, monitoring, collaboration and financial reviews with each, and require that your most strategic suppliers bring a certain number of innovation suggestions to the table each period. Set a formal process whereby these suggestions will be vetted, with the best ideas submitted for review by an executive-level procurement governance team.

3. Realign your resources. Identify underutilized or misaligned resources, and shift roles to focus talent on your greatest areas of opportunity. Often individuals who have been focused on a particular commodity because of their expertise could bring a fresh perspective to other categories. People who make the greatest impact in their current areas can have an even greater effect on an entirely different category.   

4. Review processes and technology to identify roadblocks and underutilized capabilities. Processes can be slower and more cumbersome than they need to be. Stay on the lookout for procurement processes that were designed to address a past problem that is no longer relevant today. Also, organizations often have only partially deployed procurement technology solutions for lack of resources to support a more ambitious rollout. A second look can reveal underutilized technology that could be leveraged with a different support model to drive faster cost savings or improve visibility or user satisfaction.

5. Evaluate governance structures, and change if necessary. Good procurement governance should enable transparency and balanced decision making. In order for it to be effective, procurement governance must be designed to ensure that important decisions are made at the right level to balance risks with rewards, and to ensure a timely flow of information to the right levels of the organization.  

Implementation of these five actions could ultimately improve the effectiveness of your procurement organization by 3 to 5 percent or more, increasing your impact on the bottom line and transforming the role that procurement plays within your company.

TPI’s CPO Services experts can collaborate with you to assess your current procurement processes, then help you identify and implement strategies to improve quality, drive innovation and permanently remove real costs from the supply chain.

Contact us today to begin the dialogue.

Getting a Handle on Total Absence Management

By Felicia Palmer, Director, HRO Services, TPI

Did you catch the tidbit about a new leave bill proposed on Capitol Hill?

In case it escaped your notice, it essentially builds on the Family Medical Leave Act and offers the same 12-week leave on a “paid” basis. Yes, “paid”. It strikes me that the number of births, adoptions and ill parents to care for is going to skyrocket – once foregone compensation is no longer a factor in an employee’s decision. Note that this legislation was proposed in 2008 and is being re-proposed in the new session of Congress. Technically speaking, it is bill 1723, the “Family Leave Insurance Act of 2009”.

For HR professionals trying to get a handle on absence management, this is just one more dynamic – albeit dramatic – one to consider when grappling with managing absence. The topic of Total Absence Management (TAM) is getting more attention as employers come to realize there is an opportunity to influence the quality and cost of this HR function.

So, some of the key issues facing companies with respect to leave administration include:

• Decentralized management, which results in inconsistent application of policies
• HRIS systems don’t generally provide effective functionality to support comprehensive intake and management of leaves
• Employers without adequate tools to manage absence are likely less restrictive in granting leave, thereby increasing loss of productivity unnecessarily
• These factors, in combination, increase the risk of noncompliance with regulations governing leaves

And the financial aspect is intriguing, if not compelling – per Mercer Consulting, the direct and indirect costs of absence - including overtime, lost productivity, overstaffing and hiring/training of replacements - can exceed 14% of payroll.

So, as an unscientific sample, where is your dial as it relates to TAM? Is it an area of concern where you see a need to tighten and/or improve the process? Is it on the radar at all?