Executive Spotlight: Josep Elias, COO Small Business
Throughout a payroll career spanning three continents, Josep Elias has honed a natural ability to quickly assess processes and personalities, and identify ways to harmonize the two. Since joining CloudPay as COO of Small Business, Josep leverages his passion for people and innovation to help guide the expansion of CloudPay’s technology to smaller enterprises around the world. Here, he sits down with me to discuss the importance of the right attitude in global payroll, why cultures must come first when going global, the necessary tendency to outsource, and more.
David Barak: Prior to joining CloudPay, you oversaw global payroll across all three regions for a large international provider. Can you describe some of the differences you’ve seen across the globe in attitudes toward payroll and the function?
Josep Elias: Certainly from my experience doing global payroll for multinational companies, I think the approach to business differs quite a bit across different parts of the world, and even within a region or in different parts of the same country. What can make you successful in one place can make you fail in another.
This is true across all aspects of business, and it’s particularly important to understand those differences when it comes to delivery and service. Many providers try to harmonize the service experience around the world, but in reality, there can be important differences in attitude. That’s an important word. Attitudes can vary a lot from a person in the northeastern part of the world versus someone in the Mediterranean or from Asia.
For example, in the United States, “no” can be considered a bad word. You don’t say “no” to a customer. You might find another way to communicate how difficult something might be or that it might not be the right choice for the customer, but “no” would not be well received. In contrast, in Eastern Europe, “no” is very common. The people are more direct, and they appreciate you saying either “yes, we can do it” or “no, we can’t,” rather than trying to be nice and trying to make it happen when you don’t know how.
If you look even further east to Asia, you’ll find even greater differences in cultures and attitudes across India, China, Philippines, and more. These differences influence everything from office culture to service culture and even the kinds of conversations you have with customers.
DB: How would you say those attitudes apply specifically to payroll and the function itself? In many organizations in the US, for example, the payroll function is not at senior level management meetings. Would that vary much across the globe?
JE: As far as seniority or participation beyond a certain level, it’s the same everywhere. But there are key differences in the consideration of payroll that are important to understand. For instance, in the US, payroll is a commodity, meaning it’s something I have to do but it doesn’t generate business. I just need to get it right. So in general, companies follow the outsourcing model and let someone else do it because it’s not a priority necessarily to understand payroll as it’s not bringing value to my business.
In Europe, however, the attitudes are very different. Payroll is still a commodity in the sense that it’s not bringing in business, but it’s also very delicate and not getting it right can have a real, negative impact on your business. For example, if you don’t have good negotiations with company committees or unions, or if you don’t apply agreements on time—say you bring in a change a month later than agreed—you can create the opportunity for a strike, which is allowed in many countries in Europe.
Looking at Asia, again, it’s very different. In many areas, a worker’s payslip may be directly tied to their housing or food. For instance, in the Philippines, there is a part of the salary that is designated as part of the worker’s meals. You pay in rice—not literally by giving grains of rice, but you pay money that represents the meal for that worker for the day.
DB: So the payslip has a line that says “food” or “supplemental lunch”?
JE: No, it says specifically “Rice”.
DB: Interesting. How does the attitude towards payroll differ in a scenario like that, in which you’re getting a stipend toward your food?
JE: There’s a direct socioeconomic impact that can be measurable in a person’s basic comfort, like their ability to eat properly or house themselves. Similarly, the difference of being paid before the last working day of the month versus the first working day of the following month can be dramatic depending on the culture. A day’s delay may not be a big issue in some countries, for example, those in which there is a stronger middle class. In other areas, like some parts of Asia, being a day late on bills or loans can cause serious problems. Obviously getting paid on time is extremely relevant everywhere, but you certainly can have more tolerance in some places.
Outsourcing and Technology
DB: When you talk about outsourcing, it’s clear that some organizations have different attitudes about outsourcing various functions. Do you think there’s a strong desire to outsource payroll?
JE: We all know companies are like a tree: the moment they stop growing is the moment they start dying. So the pressure we see on growth and healthy growth is forcing companies to focus on the critical components of their business which can help them innovate and differentiate themselves. That’s not payroll. Outsourcing the more commoditized parts of your business is a must in today’s economy. Capitalism is the driving force, and if you’re not staying competitive, you’re going to lose traction.
Companies today are not against outsourcing. They may not be fully aware of the benefits of outsourcing their key functions, or maybe they haven’t seen a compelling business case that works for them. Sometimes it’s a matter of helping business leaders understand the opportunities facing their companies and see how to organize their resources so they can do something different. The fact is that there are very few multinationals for whom outsourced payroll is not the best option. Part of being a leading global payroll provider is helping the remaining organizations understand why it is the best way for them.
DB: CloudPay has just recently expanded its offering to small enterprises, due in large part to the demand we’ve seen directly from smaller multinationals wanting the same enterprise technology and services as larger companies. What is shifting in how businesses operate that has smaller organizations wanting the same level of sophistication and security around compliance and data protection?
JE: The expectation of a company is not determined by its size, but by its sophistication of understanding. Perhaps a company knows they want to invest less time in payroll, so they want a higher degree of automation. Another might want a higher degree of integration to achieve greater compliance or clarity towards their employees.
And it’s important to acknowledge that none of the companies we’re talking about are small. They’re all multinational enterprises, and by nature of that, they have some similar, specific needs. What we’re focusing on is addressing those needs, regardless of size. That involves delivering the same methodology and processes, but with the distinctions required due to not just size but more so their culture, their industry, their competitive landscape, or their presence in the world. To do that, we’ve worked to become very flexible in terms of our implementation and to adjust processes to suit companies’ needs—all while delivering the same payroll platform and methodology that people rely on us for.
Culture and HR Transformation
DB: You’ve seen a lot of organizations go through HR transformation and payroll transformation. Do you think that has become a more straightforward prospect or is it just as difficult now as it ever was?
JE: HR transformation is a big topic. I think there are some very empty promises being made in today’s market, alluding that adding a piece of software will let you get better people working more efficiently and contributing more to your business. But transforming a function means more than simply adding technology to processes.
DB: Are there some misleading promises on HCM platforms or some misguided ideas organizations may have about what’s possible that ultimately lead HR transformations to fail?
JE: The short answer is yes, although of course it’s not that simple. First, we need to consider what it means to deliver a global service. Today, any HCM platform will say they can do recruiting or admin or workforce management anywhere in the world for you. But they do it the same way across the board. Recruiting an employee in Spain is different from recruiting someone in the Philippines or someone from the Northeastern US or someone from England. Even within England, hiring someone in the north is different from hiring someone in the south. So is this really a global service, or is it asking everyone to subscribe to exactly the same service and have exactly the same process?
In one instance, the service is harmonized across locations; in the other, it’s standardized, which is very different from being global. Having worked across so many different cultures, I’ve come to be a big believer in diversity in the sense that one size does not fit all. I like the “glocal” concept—which means we might have a global concept, mission, vision, aspiration, but then we apply it as best suited for the different areas of the business and the different cultures within the business.
For example, at CloudPay we’re enabling our local payroll experts to engage more directly with customers and vice versa, so that the regular communications around processing payrolls can happen at the local level. Rather than having me, for example, with my background and living in the culture I do, try to understand a requirement or respond to a request from a customer in Romania. It’s more efficient and probably more pleasant for that customer to speak directly with another Romanian.
DB: So one of the reasons you see HR transformations falling short is that the provider or the customer adopts a purely global approach without catering to the idiosyncrasies or needs of the local?
JE: Yes. I’m a big believer in humanity as a concept, and in this era of automation and robotics, I believe there is a huge opportunity for companies like ours, who are willing to maintain the human touch. We’re always looking for efficiencies and opportunities for automation, to improve the technology and the service, but there is always a point of contact. It always comes down to two human beings having a dialogue and understanding each other.
DB: And payroll and HR at the end of the day are about individuals.
JE: Exactly. Actually, it relates to why today’s startup companies are more attractive to talent than big corporations where employees can have big titles, big money, and a long career. The smaller the company is, the easier it is for them to have this specialization, this diversity, this localization towards employees, clients, everyone. The need is not just on the client side or between partners; it’s broader in that it applies to any person within your operation.
DB: It’s a race for talent now between startups and large organizations, and there are so many conversations about larger companies trying to become more nimble. I think that idea of how local you are while you’re being global is really big. Take for example companies like McDonald’s or Apple—really large multinationals who open locations that reflect the architecture of the region or serve food that locals would eat.
JE: Yes, for instance, back to the Philippines: when you order a burger in McDonald’s, you can choose to have fries or a bowl of rice with it. You can apply the same need for personalization to smaller corporations and service providers. Why can’t we do this for our customers? If we say service is an attitude, why don’t we start doing this for our employees?
Payroll KPIs and Service
DB: When it comes to measuring performance and trying to determine if a vendor is providing that kind of optimal service, what are some KPIs that payroll teams should pay attention to?
JE: It’s easy to take a simplified approach to evaluating payroll, because so much of it comes down to three things: is the payroll data on time, is the data complete, and is it accurate? The interesting thing about payroll is that these three metrics apply to both sides, to the customer supplying their payroll data and to the provider processing the data and providing payslips.
The truth is, however, that these three KPIs measure the end result: was everyone paid on time and accurately? They don’t necessarily reveal anything about what happens during the process, which is where the insights into efficiency gains can be found. This is where service can differ significantly across providers.
For instance, with CloudPay, we can measure what we need to move a customer from 350 payslips per head to 800. Do we need to increase the automation in our data handling? Do we need to push back on the level of data completeness coming from the customer rather than trying to solve issues on our own?
These insights can transform the partnership between the customer and the payroll provider. So we can say to the customer, we’ve been looking at our KPIs and these are some areas we’ve identified for improvement, or we’d like to do a workshop with you on this, or improving this step could cut your costs by this much. Currently the payroll industry is very client-driven, but we have the ability to be more proactive and help guide and educate our customers. We have data, experience, and procedural knowledge they don’t have, so it’s down to us to advise them.
DB: One of the things we at CloudPay have been discussing is how do we make sure that we deserve every year of the contract we’ve signed. Every year, we have regular reviews, and we do monthly review meetings with customers, so we’re trying to transform what’s expected from that relationship. How do you think that’s working, and what can the industry learn from that?
JE: That’s getting back to what we spoke about at the beginning. If we create a culture in which service is an attitude, then it’s not about an annual review or a monthly review: it’s every day, every call you have with the client. You have to understand and believe that it doesn’t matter how many times you fall, but rather how often you rise and how quickly—that shapes the perception a client will have of you and the relationship you can have with them.
For example, years ago when I started a previous job, the first thing I had to do was visit five very big clients to say that although we sold you this and promised you that, we don’t have it. All I could do was be straightforward, say I know you’ve been waiting, I know we have a contract, I’m not going to lie to you, I don’t have it. So let’s focus our meeting on talking about what I can do rather than what I cannot do. And with each of them, we started making a plan for how we could progressively deliver on that promise, by making progress over time, getting certain services started, improving other services, and ultimately making the customer happier.
Payroll is a complex industry from a service perspective as well as the solution side. Everybody expects payroll to be correct always. So you don’t get applause for doing your job. Payroll is very binary: either it’s right or it’s wrong. The majority of people in any company doesn’t think about payroll beyond that result. However, if you mess up the payroll of one employee out of 10,000, probably even the CEO will hear that you screwed up that payroll.
This sets the scene for a degree of ingratitude in the service; however, it’s also true that hard feelings can be overwritten by a proactive attitude. So rather than sitting down with customers where you’re supposed to talk for an hour, and they say everything is fine, and you say the numbers look good, and you’re finished in 15 minutes—instead take the next 45 minutes to talk about how we can do things better. Even if everything is fine, how can we improve? That appetite for improvement and innovation is not just for technology. It can be applied to service and the way we interact with clients. That’s the one area we can’t improve through automation. It comes down to the personal interaction.
DB: You’ve worked in payroll now for around 15 years. What is it that keeps you engaged and interested in this space?
JE: The fact that it’s very service-oriented. Payroll has a high degree of technology, and all of this technology empowers you to have a great interaction with your customers. When you look at it from the outside, payroll can look very boring, that it’s just about payslips and data and calculations. But once you get to know the industry, it’s an extraordinary world. Every day is absolutely different. Every day brings something new that you need to challenge. Every day you have a new issue, a new type of request, the chance to think through something differently. So there is a lot of creativity and a lot of space for innovation within the industry, and that’s what makes it very attractive to me.