Before 2020, digital transformation was often seen as a nice-to-have, especially in business functions like HR and payroll.
Since the pandemic, the world has seen a greater urgency in digital transformation projects. Digital transformation is no longer a nice-to-have. Companies that do not pursue it lack the agility to meet whatever challenges the future will present.
For companies planning a digital transformation project in their payroll, HR or finance functions, we recommend uniting all three under a single transformation project. There’s real business value in digitizing these connected departments because they share essential data. Transforming one without the others represents a missed opportunity.
Below are three capabilities organizations unlock when they pursue unified digital transformation across HR, payroll and finance.
Facilitating executive decision-making
The data that flows across all three functions of HR, payroll and finance can be crucial in informing big-picture company decisions.
All three functions rely on related data. If you make it easy for those departments to access and share that data, you drive efficiencies across all three. Digitizing payroll alone, for example, leaves certain opportunities unrealized.
Deloitte has a whitepaper on HR transformation whose principal authors are Jason Geller and Arthur H. Mazor. In that paper, Geller and Mazor effectively make the case for co-transforming HR, payroll and finance at once, and they describe this transformation through the lens of a global payroll service delivery model.
Such a model, they write, would help the finance team manage tax obligations (and reduce penalties), get more accurate payroll data, and give the company “better control of financial resources.”
An example of this level of control appears in another section of the whitepaper. Imagine the core HR team, the benefits team and payroll all had independent responsibility for managing vendor relationships. This often happens in global companies.
“If left to focus solely on what works for their particular functions, groups may end up choosing solutions that do not integrate well with other solutions, or negotiating contracts that do not induce providers to integrate into a broader service delivery model,” the authors write.
Instead of this fragmentation, the company could create a cross-functional team that would vet and select vendors that fit into the company’s larger business goals. “Include IT and finance as well, especially if payroll is in scope for the implementation,” they write.
“A team that understands the overall requirements for each functional area will help establish a collective approach that focuses on the solutions and vendors that suit the overall needs of the organization.”
A shared services center could have such a team. That would give them a unified view of vendor relationships, the financial impacts of each of those relationships, and their contributions to big-picture business objectives.
With finance, payroll and HR (plus IT) all working in harmony and delivering reliable data on vendor performance, the executive team can make more informed decisions about how to grow and scale specific operations.
Agility in how (and where) you shape your workforce
Shared digital transformations also help these three connected departments develop a shared vision of how the company’s workforce can grow and take shape.
This became especially apparent during the first years of the pandemic, when millions of workers had to adopt hybrid or fully remote work environments. That became a test case for proving the agility and resilience of workforce models that don’t rely on everyone being on-site all the time.
Gartner’s Jackie Wiles makes the case that hybrid workforces give companies an agile quality that can spur growth. “Hybrid models enable organizations to focus on acquiring the critical skills they need to drive competitive advantage, not on filling key roles,” Wiles writes.
“Those skills, directly deployed to drive innovation and growth, can potentially be located remotely or in lower-cost locations — reducing talent acquisition and facilities costs. HR and business leaders can simultaneously work directly with the CFO to drive alignment around the investments and costs needed to fund competitive differentiation.”
An example of this taking place in real time is at Siemens Energy, which spun off from Siemens in 2020 and has since embarked on an ambitious HR transformation plan. At the time of writing, Siemens Energy was hiring someone to lead the harmonization and standardization of payroll and employment conditions.
This person would help standardize and automate processes, build a global knowledge base for business practices across many regions, and lay a foundation for HR and payroll so the company will have the flexibility to hire and onboard talent as and where needed.
Cleared-out pathways for company growth
Growth is a driver for most businesses, and as the paper from Geller and Mazor at Deloitte points out, growth today is complex. Growth for global businesses might mean acquiring other companies, deploying new workforce models, and tapping into talent pools from countries they’d previously not explored.
The keys to this kind of growth include “improved global mobility programs that make it possible to move employees between countries efficiently and easily; standardized and repeatable HR processes and systems for entering new markets; and new staffing models that use outsourcing, contingent workers, and strategic partnerships to improve scalability and flexibility.” This looks a lot like what Siemens Energy above outlines in its own job descriptions.
In 2021, our team helped a client going through its own rapid phase of growth. That company, the African fintech Wave, needed to create scalable and transparent payroll processes to keep pace with its hiring. Wave needed global payroll implemented in seven countries, and quickly.
This kind of rapid implementation isn’t possible without the coordination of the finance and HR teams. All three — finance, HR, payroll — need to have a shared understanding of the company’s goals during such a growth phase.
That coordination doesn’t necessarily require the three departments to have undergone a unified digital transformation, but the coordination is much more efficient when they have.