NEW YORK STATE-WIDE PAYROLL CONFERENCE. Presented to:
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1 NEW YORK STATE-WIDE PAYROLL CONFERENCE Presented to: Felicia Cheek, Practice Leader Global Time to Pay Advisory 15 September 2014
2 Statement of Confidentiality and Usage Restrictions This document contains trade secrets and other information that is company sensitive, proprietary, and confidential, the disclosure of which would provide a competitive advantage to others. As a result, the reproduction, copying, or redistribution of this document or the contents contained herein, in whole or in part, for any purpose is strictly prohibited without the prior written consent of The Hackett Group. Copyright 2014 The Hackett Group, Inc. All rights reserved. World-class Defined and Enabled.
3 Today s Agenda 1 Who is The Hackett Group? 2 3 Payroll Delivery Model Open Discussion 4 Summary & Closing New York State-wide payroll Conference 3
4 The Hackett Group Introduction Intellectual capital and implementation expertise that accelerates the time to sustainable benefit realization We are the global leader in operations improvement strategies, implementation knowhow, and G&A agility We address both efficiency and effectiveness improvements to enable strategic business objectives Our insights are fact based, from over 7,500 performance improvement consulting engagements Our Best Practices Intelligence Center is a significant differentiator and enabler. It contains: 20,000+ performance metrics updated annually 1,500+ best practices across 95 business processes 1,000+ best practice-based process maps, requirements and configuration guides 1,000+ case studies, implementation examples and research We deliver results through a global team of senior practitioners using a consistent methodology and best practice-based toolset Hackett Value Grid We help companies establish and implement business performance improvements. New York State-wide payroll Conference 4
5 Enabling World-Class: Hackett s Solution Portfolio Lifecycle transformation capabilities for Finance, GBS, Procurement, HR, and IT Benchmarking Assess World-Class Performance Deliverables Peer & world-class comparison performance metrics Detailed analysis Stakeholder survey Global Time to Pay presentation Benefits Objective comparison to peer group and world-class performers Quantify performance gaps Uncover hidden costs Prioritization of improvement initiatives Membership Advisory Insight into World-Class Performance Deliverables Best practice research Dedicated senior Advisor Best Practice Intelligence Center Peer interaction World-Class Progress Report Benefits Identify the strategies and practices employed by Leaders Validation of current initiatives Determining what s possible (World- Class Performance Metrics) implementation support Continuous best practice adoption Business Transformation Consulting Transforms Performance Deliverables Strategic direction Detailed business case Initiative plans & detailed designs Implementation of best practices Benefits Reduced cost Working capital optimization Enhanced service delivery Business insight Sustainable benefits Speed of solution delivery Merger integration Risk mitigation New York State-wide payroll Conference 5
6 The Hackett Group Our Clients We Know How the Best Do It, Where They Do It, and The Benefit of Doing It 97% of the Dow Jones Industrials 80% of the Fortune % of the Dow Jones Global Titans 80% of the DAX 30 49% of the FTSE % of the CAC 40 New York State-wide payroll Conference 6
7 What is a Delivery Model? Determines alignment and type of governance Determines common data standards and what type of KPIs will be used to measure success Information Governance & Organization Placement Defines who owns payroll services and sub processes Defines how and what type of technology will be used to enable the payroll process Enabling Technology Skills & Talent Delivery Components Design Sourcing Defines what the sourcing solution will be for payroll processes and sub processes Determines what skills are needed for payroll resources to meet the needs of the process Defines how business processes will be designed New York State-wide payroll Conference 7
8 Best practices enabling a more effective governance and organizational alignment for the payroll process Governance & Organization Payroll is consistently aligned across the enterprise to achieve optimal performance. Globally, some companies (>40%) have payroll aligned under both HR and Finance. Delivery Components An enterprise wide process owner with overall responsibility for payroll is in place. Most important in a global environment (<40% of company s have payroll owners) The process owner represents payroll by being a part of a formal governing body in order to represent the voice of payroll where appropriate and escalate issues when necessary. Regardless of payrolls alignment, it should be part of a governing body with HR (>70% of payroll process owners participate) New York State-wide payroll Conference 8
9 Best practices enabling more effective service placement of the payroll process and sub processes Governance & Organization Delivery Components Placement Management of the payroll process is in a leveraged environment in order to standardize across the enterprise and reduce operating costs More than 50% of top performers operate in a Shared s environment Ownership of sub processes is in the most effective place Payroll Accounting is owned by Finance more than 60% of the time Payroll inquiries are managed in a contact center that handles all employee inquiries, regardless of corporate alignment Determination of what activities should occur on the global or regional level vs the local level is important and critical to a company s ability to control operation costs New York State-wide payroll Conference 9
10 Best practices enabling more effective sourcing solutions throughout the payroll process Governance & Organization Delivery Components Placement Sourcing Even when payroll is processed in-house, strategic outsourcing should be used in order to focus payroll resources on those core competencies that are important to the success of the organization Tax filing and payments is outsourced more than 60% of the time in the United States but not necessarily in The Netherlands A comprehensive survey should be done to determine the best sourcing solution. It will vary by country for multinational companies Payroll resources are in place to manage the relationship between the vendor and the company Regular meetings occur to discuss performance for both global and local Periodic vendor reviews should be conducted to ensure best services & pricing New York State-wide payroll Conference 10
11 Best practices enabling more effective payroll process and sub process design Governance & Organization Delivery Components Design Placement Sourcing es are harmonized across the enterprise In a global environment, whenever possible, the only differences are due to local legislative requirements Routine processes are automated es are designed from end to end Cross functional and cross border considerations should be documented and understood across the process New York State-wide payroll Conference 11
12 Best practices enabling more emphasis on training, retaining and attaining top talent in payroll Skills & Talent Governance & Organization Delivery Components Design Placement Sourcing Payroll resources focus on more analytical activities Self service, automation and movement to shared services has reduced the focus on transactional activities An appropriate amount of training is allocated to payroll resources on an annual basis Most important in a global environment, training should be mixed between local and global focus Succession plans are in place for key resources in the payroll organization Payroll resources have a high level of seniority, key positions should have adequate back up and succession plans New York State-wide payroll Conference 12
13 Best practices allowing technology to enable the people and process as it relates to payroll Governance & Organization Placement Technology serves as an enabler for people and process in payroll Only 25% of companies express a high level of satisfaction with their current payroll technology Enabling Technology Skills & Talent Delivery Components Design Sourcing A repository is used to consolidate data from various in country payroll systems Payroll Accounting is owned by Finance more than 60% of the time Payroll inquiries are managed in a contact center that handles all employee inquiries, regardless of corporate alignment A minimum number of vendors and payroll solutions are in place across the enterprise Analysis based on criteria to include employee population, future plans, etc. New York State-wide payroll Conference 13
14 Total Cost/Employee for Top Performers- Breakdown Total Cost - $60.36 $5.16 Cost Other Technology Outsourcing Labor $22.04 $4.02 $29.15 Payroll Accounting Payroll Tax Filing & Payments Payment Distribution Payment Calculation Payroll Inquiries Payroll Data Maintenance New York State-wide payroll Conference 14
15 Total Cost/Payslip for Top Performers- Breakdown Total Cost - $2.37 $0.24 Cost $0.72 Other Technology Outsourcing Labor $0.16 $1.25 Payroll Accounting Payroll Tax Filing & Payments Payment Distribution Payment Calculation Payroll Inquiries Payroll Data Maintenance New York State-wide payroll Conference 15
16 Best practices enabling more effective information throughout the payroll process Information Enabling Technology Skills & Talent Governance & Organization Delivery Components Design Placement Sourcing Common data standards exist in order to ensure comprehensive and accurate reporting across the enterprise Common categories for earnings & deductions Country specific data Comprehensive benchmarking is done on a regular basis to ensure high performance levels regardless of whether payroll is processed in-house or outsourced Companies must know where they are going and how they plan to get there in order to make benchmarking meaningful Some primary measurements are around cost, accuracy, timeliness and productivity New York State-wide payroll Conference 16
17 Summary Information Enabling Technology Skills & Talent Governance & Organization Delivery Components Design Placement Sourcing 1. Executive support is necessary to effectively influence corporate culture. 2. Equip payroll resources to work effectively across functional lines in order to ensure optimal performance. 3. Shared s adds value! Perform a feasibility analysis to determine if it fits in your environment. 4. Simplify, automate and standardize to ensure optimal performance. 5. Leverage ESS and MSS throughout the payroll administration process. 6. Control the scope of payroll administration. 7. Ensure payroll resources possess the right skills to move the payroll administration process to the next level. 8. Remember, PAYROLL is the reason people work! Pay them right!! New York State-wide payroll Conference 17
18 Questions New York State-wide payroll Conference 18
19 Every so often we all get to say.. New York State-wide payroll Conference 19
20 Contact Information Felicia Cheek Practice Leader Global Time to Pay o m fcheek@thehackettgroup.com Amsterdam Atlanta Chicago Frankfurt Hyderabad London Miami New York Paris Philadelphia San Francisco Sydney New York State-wide payroll Conference 20
21 Statement of Confidentiality and Usage Restrictions This document contains trade secrets and other information that is company sensitive, proprietary, and confidential, the disclosure of which would provide a competitive advantage to others. As a result, the reproduction, copying, or redistribution of this document or the contents contained herein, in whole or in part, for any purpose is strictly prohibited without the prior written consent of The Hackett Group. New York State-wide payroll Conference 21
22 Appendix
23 Trend: There has been an increase in movement from HR and Finance to a Global Business s environment New York State-wide payroll Conference 23
24 Trend: Top Performing payroll organizations have increased movement to shared services in last 3 years New York State-wide payroll Conference 24
25 Trend: Payroll Accounting has moved from the payroll process to Finance over the last 3 years New York State-wide payroll Conference 25
26 Trend: Standardization across the payroll process is harmonized to reduce operational complexity and costs New York State-wide payroll Conference 26
27 Trend: Payroll resources are focusing less on transactional activities, more on analytical and process improvement New York State-wide payroll Conference 27
28 Overall Payroll Technology Satisfaction Highly Dissatisfied Highly Satisfied Somewhat Dissatisfied Somewhat Satisfied New York State-wide payroll Conference 28
29 Example of a Typical Governance Model Governance Structure Focus Governance Board Operational Strategic Operational Strategic Customer Council Client Council SSC Strategic Leadership Client Council Payroll Owners 1 Talent HR Payroll Team HR Team Customer Other Teams Other 1 May be members of SSC Strategic Leadership group New York State-wide payroll Conference 29
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