My recent post on how payroll matters again both for vendors and practitioners got a lot of uptake and even discussion - which was much more than I expected on this supposedly boring subject of enterprise automation.
The Disconnect of HR
Many posts and articles have been written on how the HR function is somehow at a disconnect with the rest of the business. A perennial leitmotiv has been the question on how HR affects the business in a positive way - versus just trying to avoid that managers or the company do not get sued. So it all comes back to creating more value out of the HR function for the rest of the enterprise.
Value & Connect
So what is a good vehicle for the HR function to connect with the rest of the enterprise and demonstrate value? The classic path has been to implement yet another talent management function. And the thinking seems plausible at first - as employees are an enterprises key asset and managing their talent can move the needle in the right direction significantly.
But I don't want to bore you again with attrition, flight risk etc. Enough written and said about that. The problem with the talent management implementations is, that they require the enterprise (like with any other enterprise wide automation roll out) to adopt a certain way of doing things around talent management. And that's what professionals often do not like, so significant change management is involved in a successful talent management roll out. And the enterprises who get this right - do well - the rest - well never mind, another HR technology project with a questionable return of investment.
The other aspect - is the connect factor. It's impossible to connect, if you do not have any chances to interact. And the problem with talent management and the connect aspect is, that the talent management functions are sporadic and not of enough frequency to create the connection.
Recruitment happens seldom for the single manager, and though sometimes in larger amounts, not on a regular level. Compensation gets usually manged yearly and with the current economic downturn, unfortunately even less frequently for many enterprises. Performance management should be an ongoing discipline, but if you are honest 99% of enterprises keep this to the performance review intervals. And e-learning is great, but again sporadic, and mostly compliance triggered - so no frequency and the business questions the value. Last but not least succession management - which is soo strategic for most companies, that they ... totally neglect it. To be fair - while practicing good performance management is hard, say like running a 25 minute 5k, practicing succession management is more like a 4 hour marathon achievement. For the whole enterprise. So a lot of discipline, no couch potatoe to 5k tricks - but a lot of commitment - and professionals are too often too busy to even start practicing.
The paycheck has frequency
If you think about it - the most frequent thing that reaches the enterprises coming from the HR department is... the paycheck. Ironically business automation has made it disappear, and in my opinion thus aiding the disconnect and value perception deficit of HR. Most employees today only look for their paycheck when something is wrong or they need it for a credit event in their private lives. The culprit is the existing payroll system -- which is so efficient - it doesn't even bother to present its output to the receiving end, the payee. How many enterprises today push employees to see their paycheck once they have been generated - or even notify them? From my experience very few.
The main reason is - there is little value in the paycheck today. It just does what its support to do and since the gold standard of payroll is to just run, the paycheck needs to be accurate in its boringness. Only if something is missing or wrong it becomes interesting...
So if HR departments want to connect again - they need to think of ways to make the paycheck more... interesting.
Interesting paychecks - from payroll perspective
In the previous post on the subject I provided some suggestions on how the paycheck and payroll should be re-thought - just with the means of a payroll perspective. To spare you the click - here is the list of suggestions again:
As you can see - plenty of ideas to innovate around the paycheck from a pure payroll perspective - but what about beyond....
- A Payroll 2.0 product should put away with the traditional pay-run While a sacrosanct ceremony for most payroll managers, there is no reason to keep this practice. Why not let business managers start, run and simulate a payroll? Or push it further and let the employee initiate it and see what his next paycheck will look like.
- A next generation payroll system should also allow micro payments and payouts. Why not allow an employee to be paid weekly vs bi-weekly vs monthly - or even more employee oriented -on demand? It will certainly make the compliance side more complex - but the architecture of a next generation payroll system should not be the limitation.
- And while there has been made a lot of noise around Total Compensation Management, it has only happened on a very high level for employee benefits - both monetary and non monetary. We are far away for an employee to e.g. determine when his take home pay will achieve a certain amount.
- Equally next generation payroll systems should support managers in process of scheduling workers. It will certainly help a shift manager to call in employees for extra weekend work if he can tell them how that extra work will affect the take home pay at the end of the month. Likewise payroll data is seldom used in shift planning and workforce planning applications, it usually stops with basic pay and over time pay
- And when moving payroll to the cloud, the whole electronic banking process should be enabled. The employees should be able to determine bank transfers, split paychecks if needed (think of legal reasons like alimony) and pool paychecks from multiple employers. Or just be able to send or produce the latest payslip for a credit event.
- Finally we should see 21st century compliance integration, why move data to paper if you can communicate with a government cloud, e-file returns etc. Features like this will reduce compliance costs and with that make the new products more attractive to enterprises.
Interesting paychecks - from a talent management perspective
... what could the paycheck do - when presented on regular and consistent level - could it even help to create value beyond the payroll function, all the way to talent management? I think so - let's take a look:- Recruitment
Why not present open headcount and requisitions on the paycheck - for the department or division of the employee. Yes - we know, employees could check the internal job boards - but seriously - how many employees do that on a regular level.
The paycheck is a perfect vehicle to tap into the employee's network for open positions, as the glance form the payroll information to open jobs is ... sub second. And you are thinking money, so any rewards for referrals - the mind does not have to wander far.. Needless to say, an employee may also, maybe motivated by the current salary, look for a better internal job (vs an external one). Any analytically inclined brain will now go into overdrive...
- eLearning
We all know that people are driven by rewards, so why not congratulate them again for their successful conclusion of a training course on a paycheck? It won't hurt. Likewise - use the paycheck to remind them of upcoming, related, relevant training opportunities.
Lastly - why not add some gamification to the whole process and reward employees for keeping certification and compliance up... or being in the top 20% to pass or the top 10% to take the course, here is your infamous 10$ Starbucks card code.
- Performance Management
Let's be conservative - let's only announce how many weeks are left till the next performance review. Just a friendly heads up. Or go beyond and remind a manager how many employees have done their self evaluation already, how did they rate the manager etc. And again - gamification options a plenty - shown directly in the employee's paycheck.
- Compensation Management
This one is more tricky, but closer to home for payroll. As mentioned in the above section - why not offer the calculation model for the savings of the next big purchase of the employee? Why not show how the healthcare plan fares value wise for the employee. Or what the other benefits are in terms of value for the employee.
And the paycheck is a treasure chest when it comes to pay for performance - if you want to see how you are doing in regards of achieving your bonus, a paycheck with the usually (for the US) bi monthly cycle - is a good practice to remind employees how they are doing and equally to get their attention on the subject of performance driven pay.
- Succession ManagementWell this one is the hardest. Not sure if you need to be reminded of not having done your succession planning. But you could reverse it - and if part of any performance plan, the paycheck could project what the manager will miss if he doesn't handle this delicate subject.
Equally it will be good to see for executives, how recent promotions and exits have affected the succession chart. There will always be work - and again the fortnightly (in the US) nature of a paycheck - is a good practice for an executive to see how his team is doing in succession management - not just a level down, but throughout the executives whole management responsibility.
Architecture matters - always
If you want to achieve some of the interactive paycheck scenarios above - you need a different payroll engine than the ones that powered enterprises in the 20th century. Take for instance the scenario, where an employees sees that he can take an eLearning course now - and get a rewarded for being in the first 10% of employees completing it. The employee expectation would be that the paycheck would be immediately re-calculated once he has taken the course.And why not allow for that? This raises of courses some compliance and statutory concerns, but also some architecture implications - a paycheck needs to be available all the time. It leaves the shackles of a report only past and becomes a interactive tool to show money in your pocket to employees. And how good HCM practices help the very individual bottom line.
Communication matters
The attentive and critical reader may now be (rightfully) saying - this is the construction of a portal, this has been done before. And I would agree, this has been done before - but why has there been no success of getting employees to use these portals? At the end of the day it comes back to value and frequency, as mentioned above - and here is where the paycheck comes in. In the worst case it has a monthly frequency, in the best case a weekly one - the best practice to deal with talent management issues lies somewhere in between. And given that the paychecks transports information of high interest to the employee - we all want to get paid - there is a natural interest to visit the information, and with that to spring to action. Even more when the action will affect the bottom line on the paycheck.Smart implementations of a paycheck 2.0 will of course step beyond the pure presentation of information - but allow the paycheck recipient to action on any talent management (and paycheck need) right from its electronic presentation. And instantly allow to see how the talent management action affect the net on the pay check.
MyPOV
A smart implementation of the next generation paycheck should be a good strategy to take an enterprise to the next level of HCM practices, thus reconnecting the HR department with the line of business and notching the value creation conversation in a favorable direction for HR.Before that can happen, it requires vendors to re-invent payroll and create a 21st century payroll system, that no longer is an output generator - but a interactive engine that is capable of integrating all relevant HCM data and actions, down to the single paycheck, the single employee.
So next time you look at your (hopefully correctly calculated) paycheck, close your eyes for a moment and dream of what it could do...