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We hear a lot about how data breaches and cyber-attacks related to payroll can cause serious disruption and damage to organizations. But these are by no means the only ways payroll can be vulnerable from a technological perspective.
You may have seen news reports on the major issues resulting from an IT system migration at Asda, one of the biggest supermarket chains in the United Kingdom. Despite prior warnings that the planned integration may cause issues with the smooth running of payroll, the firm pressed on – and the damage was extensive.
As many as 30,000 Asda employees received incorrect payslips, with some being underpaid by as much as two weeks of their wages. Many of the employees affected were paid on an hourly basis, meaning they were likely to be lower-paid workers without the financial resilience to cope with the disruption. Indeed, some store managers had to dip into petty cash to help employees cover the temporary shortfall in their personal finances.
This kind of issue can happen to even the most diligent of IT teams and payroll implementations. So to help you minimize the risk of the same thing happening to your organization, this blog explores the big challenges of payroll integration, how to get it right, and the benefits of ticking all the boxes.
The true cost of getting payroll integration wrong
Any new payroll integration, especially one involving a new automated solution, is a major undertaking. It requires considered change management not only for payroll, but for connected processes across HR, IT, finance, and even sales.
It’s absolutely vital to understand what is being integrated with what, how this will take place, and what the benefits and implications are of doing so. All this also has to be balanced with costs, available human resource, and any potential disruption while the change takes place.
Without a rigorous planning process and analyzing every area of change, there is a greater risk of payroll going wrong, in which case everybody stands to lose out:
- Your employees… will feel stressed if their pay is incorrect, or if they suspect there might be problems. Not only does this materially affect their personal lives, but it erodes their trust in their employer
- Your operations… will be disrupted as more efforts go into remediating errors and dealing with complaints. In the long-term, employee dissatisfaction can affect productivity, morale, and ultimately talent retention and acquisition
- Your reputation… will suffer if news of the disruption enters the public domain (as in the Asda case). This can affect public perception, potentially damaging sales, and also employee perception, further damaging the workforce-employer relationship
Five keys to getting payroll integration right
While any technology integration initiative will always have a certain level of risk, most of the issues and impacts listed above can be minimized substantially. Based on our extensive experience of supporting major integrations around the world, we recommend the following five-step process:
- Establish a strong starting point: it’s vital to gather, quantify and understand existing processes, including costs, application licenses processing fees, data flows and middleware. Only by developing this understanding in forensic detail can the right opportunities for integration be identified
- Develop a clear business case: with this insight, you can then put together a compelling business case that translates areas of integration into benefits for the business and workforce as a whole. This should include stated objectives, projected costs, and any contingencies required
- Invest in project management: a project of this magnitude needs a dedicated manager, so that everything is kept under control, and so that the project remains aligned with the stated objectives. If such a person isn’t available in-house, then this expertise should be found through hired consultancy or certified integration instead
- Craft a thorough project plan: all of the above should feed into a comprehensive project plan that can serve as the roadmap toward good decision-making and successful integration. Every step should have an owner, a clear goal and a deadline, and take into account time, cost, required labor, and any resources needed
- Find an executive sponsor: while a strong business case can help achieve senior management buy-in, having confirmed support at board level can be instrumental in getting a project over the line. They can also help guide the project through tough decisions and changes, and engage reluctant stakeholders
In summary: why a focused integration is worth the effort
A payroll integration of this level of detail may seem like a lot of hard work, but the benefits of doing so are well worth it in the end.
Businesses who get it right will find that they have a single, streamlined data source across HCM and payroll, integrating previously siloed systems and eliminating the risk of data duplication and resulting errors. They’re able to centralize global processes across multiple countries and departments, enabling standardized, scalable processes and ironing out inefficiencies. And that consistency also means that they can easily expand into new territories and onboard new employees and teams, whatever the challenges from currency, tax or compliance perspectives.
Those who have realized the greatest benefits tend to have worked with payroll experts, especially those with experience integrating with a wide range of HCM systems, including Oracle, HiBob and Workday.
Take a closer look at the CloudPay approach to HCM integrations and learn more about why our expert support can be so invaluable.