The “People” Approach to Payroll Software Implementation
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By Dave Foxall
Managing the People Factors in Payroll Software Implementation
After a rigorous and successful payroll software selection process, an organization may well have sourced out its ideal payroll solution. However, now the work really begins, as the company looks to implement that chosen payroll application. From hardware requirements to system compatibility and integration issues, and data cleansing to migration, there are a host of challenging technical issues when implementing new payroll software. Still, these technical issues can be tested and fixed; and pale in comparison to other implementation concerns. Indeed, the less straightforward side to payroll software implementation involves the organization’s people; including such elements as stakeholder analysis, change management, training strategies, and even the use of external consultants. And, as a recent Bearing Point report illustrates, “The technical challenges of implementation are a simple matter compared with the human challenges.”
Leaving aside the usual project management minutiae of Gantt charts, schedules and workflows, the purpose of this special report is to focus on the less predictable (but no less tangible and influential) people factors involved in implementing payroll software. These are the factors that, if handled skillfully, will do the most to keep your payroll software implementation project on track, on time, and on budget
The Benefits of Stakeholder Analysis for Payroll Software Implementation
The first step in planning any implementation project is to identify the groups of people with an interest or stake in the outcome and establish a strategy for engagement and communication with those groups. Given the function of payroll software, the project will invariably impact every single paid employee; however, it’s important to note that the specific interest that individuals take in the project will differ depending on their role or level within the organization. As SNP Consulting research (Payroll Software Implementation) found, insufficient consideration of stakeholder concerns will result in “assumptions [being] made about the capabilities of the product, which will most surely be exposed during implementation.” Such assumptions can lead to misunderstandings, user disappointment, and a low adoption rate if left unchecked. However, by leveraging a stakeholder analysis tool such as the interest/power matrix (in which stakeholder groups are mapped according to interest in the payroll software project and the degree of influence the group is able to bring to bear on the project) an appropriately-detailed stakeholder engagement strategy can be created. The ideal result is that stakeholders have a better understanding of the project and that there is genuine involvement at all levels of the organization-factors that can lead to an increase in early adoption rates and rapid identification (and fixing) of payroll system problems.
Each organization’s stakeholder map will be unique—dependent on the nature of its business, its scale, and the functionality of the software to be implemented. That said, common groups and interests may include:
C-suite - Crucial sponsors for payroll software implementation, their interest in strategic
concerns, organization-wide business improvements and bottom line profitability is the basis for
project interactions with this group.
Employees – A near opposite view as compared to the C-suite, this group has more transactional
interests—including accuracy of payments and access to personal information.
Managers – Though similar to employees’ interests, this group will also want to know what
the reporting capabilities can tell them about their teams in relation to reward, performance and
HR – This group’s interests stem from the responsibilities for accurate record-keeping, statutory
compliance, and also the training needs of employees in the use of the new payroll software.
Accounting & Payroll – For payroll solutions left in-house, these personnel will feel the most
fundamental impact on their working lives as a shift to integrated payroll software both frees
them from many manual administrative tasks but also places greater expectations on them.
IT – Depending on the deployment option (e.g. on-premises or SaaS), this group will likely
raise various technical advisory issues, including hardware/software conflicts, data security, and
Procurement – This groups interests will most likely stem back to the purchasing process and
will be primarily procedural and budgetary (i.e. seeking value for money).
State and federal governments – While indirectly related at best, the various regulations and
reporting mandates on payroll matters will place some non-negotiable parameters on the project.
With a clear picture of the key stakeholder groups and their individual concerns, it is possible to
develop an engagement strategy that not only addresses their needs but also presents the project
in the best possible light for each particular group. Such a strategy is a fundamental element of
managing the change process inherent in the introduction and implementation of a new payroll
Understanding and Managing Change for Payroll Software Implementation
The process of stakeholder analysis provides a picture of the varying interests across the
organization in the payroll software. However, while group interest will determine reaction and
engagement to some extent, many responses to organizational change are more personal. Sadly, as
Claire Schooley of Forrester Research noted in 2011, “Helping people who will implement the new
processes accept and even embrace change is usually an afterthought.”
Useful models to adopt when managing organizational change include the Kübler-Ross change
curve (as applied to the workplace through the research of Lewis and Parker) and the ADKAR
methodology (developed by Colorado-based change consultants, Prosci). Still, a simpler method
of categorizing attitudes and behaviors to change is to use the energy investment model; based on
the work of Dr. Donald Tosti and C.S. Lineberry. The following diagram highlights this model by
showing its four types of corresponding attitudes/behaviors. It is important to note though that this
exercise is not about labeling people per se; but rather the focus is on identifying types of responses
to a new payroll software solution in order to properly focus stakeholder engagement activity.
Walking Dead: Also referred to as ‘Old Dogs’ (because they allegedly cannot be taught
new tricks), the behavior of this group is nostalgic, harkening back to previous procedures
and “better” ways of working—actions that can severely reduce project momentum. To
combat this tendency, their interest can be engaged by highlighting the specific and relevant
system benefits that pertain to them. For example, employees that fall into this group can
be alerted to the fact that the automated integration of the new payroll system with existing
time and attendance software will reduce pay-slip and salary errors.
Spectators: Also known as ‘Settlers’ because of their lack of movement, this group is
cautiously positive but reluctant to take any initiative. The latent positive attitude can be
encouraged early through consultation on issues such system design and consultation.
Cynics: Sometimes called ‘Well Poisoners’, this group may actively look for ways to
undermine the implementation. This negative energy can be harnessed and transformed by
engaging their help in addressing system concerns, ideally turning them into powerful allies.
Players: Referred to as ‘Pioneers’, the Player is the opposite of the Cynic and likely to be an
enthusiastic early adopter of new payroll functionality. This positivity is best channeled by
engaging them as change agents and representatives with their colleagues.
Tosti’s research found the broad percentage distribution within organizations to be: Spectators 38%,
Walking dead 9%, Cynics 39% and Players 14%. The payroll software implementation challenge is
to increase the Players to a critical mass—supported by enough Spectators to create a tipping point
within the organization at which the support outweighs the opposition.
Payroll Software Implementation Training
Any new system requires training in order to use it—especially when that system is as mission-critical as payroll. In fact, often the successful adoption of the incoming technology pivots on the quality of the training and support given to use it. However, it is crucial that organizations understand that different stakeholder groups will have different training needs when it comes to the new payroll software system. For example, if an in-house payroll system is being deployed, then the payroll team will need focused training for ongoing administration. Likewise, the C-suite will be interested in payroll-related analytics and reporting, while possibly every employee in the organization will be utilizing self-service options if available. As a 2011 erp.com article states, “…adequate training is an essential component in any successful… software system deployment.” Consequently, a robust training strategy should be a prominent feature of the payroll software implementation project. The five core elements of such a strategy are as follows:
Business Goal Alignment: The original business case for the payroll software should clearly state what overarching business goals the software is intended to achieve, support or otherwise link to. By aligning the objectives (and therefore content) of the training to those same goals, the relevance of the training program is all but assured and user learning will directly contribute to business improvement.
Skills Requirements: Each stakeholder group not only has a different contribution towards the business goals. But also a varied set of day-to-day skill needs in relation to the payroll software. As such, the training strategy should clearly identify the requirements for each group.
Skills Gaps: By conducting a gap analysis for each stakeholder group (and even down to the individual level), a comparison can be made between the requirements of the new system and the current levels of relevant knowledge and skills. This gap (and how to subsequently close it) should dictate the focus of what the training program should entail.
The Training Program: The content of the payroll software implementation training program should be designed to help users meet the requirements of the new payroll solution. Ideally, the method of conveying this content (which may differ according to stakeholder groups and individuals) will contain a degree of flexibility; including instructor-led facilitated sessions, mobile e-learning, online just-in-time modules, and the establishment of collaborative learning communities and forums.
Evaluation: While proper evaluation of the training provided should be in line with the organization’s evaluation policy and procedures, a review of the training’s effectiveness prior to go-live is also useful in providing a picture of the users’ (i.e. the organization’s) readiness to adopt the new system.
In addition to the above five core elements, the training strategy should also look ahead to what will be required post-implementation as new users are on-boarded and new features are made available.
External Expertise in the Payroll Software Implementation Process
As previously stated, implementing payroll software can be a significant challenge thanks to the countless organizational and technical issues that must be addressed. However, given that payroll software implementation is a relatively rare event for any organization; external help can be sourced in the form of payroll software consultants—providing aid on everything from requirement definitions to data migration to full-scale payroll project management.
There are a number of reasons to consider engaging a consultant and the first is that they will bring with them an understanding and experience of the payroll software implementation landscape. It is this experience which is the consultant’s most valuable qualification. In fact, as Phenix Management International states, "There are many consultants… who have been through the… selection and implementation process literally dozens of times. They understand the process. They are familiar with the vendors and the ever-changing inventory of products available in the market." Indeed, an experienced payroll consultant is familiar with the functions and features available; the business benefits those capabilities can bring; the terminology and jargon currently in use; and the people issues likely to arise as implementation progresses. Further, the right consultant can provide added credibility with stakeholders thanks to their expertise and separation from any and all internal biases.
If the organization lacks that experience and expertise in-house (or cannot free up the resource from other duties) then consultancy may be a viable alternative. However, it should be noted that if an organization decides to partner with a specialist consultant for the implementation (and possibly selection) of its new payroll software, then managing the consultancy relationship will become a critical success factor. The payroll implementation consultant must have enough freedom to bring their expertise to bear without the client organization losing control of the process; a tricky endeavor to be sure. Still, at least in a sense, from the organization’s point of view, the consultant simply becomes another stakeholder; which, as with any stakeholder group, must be managed effectively. The following four tips can ensure that engaging a payroll software consultant is beneficial to the project:
Be Hands-On: Like any other employee, consultants need clarity on the deliverables of their role as well as the management support necessary to achieve them. Mike Myatt of N2growth offers the opinion: “You need to manage the [consultant] and the process to the best possible outcome and this cannot be accomplished with a passive management style...You can either manage the engagement process or let it manage you.” What’s more, as with any project role, the consultancy contribution should be guided by a project plan with clear and measurable milestones, benchmarks, and deadlines that effectively force interaction and dialogue.
Monitor and Review: Regular meetings between the consultant and relevant stakeholders (such as the internal project manager) allow for process reviews, priority-focused briefings, scope and responsibility checking, budget analyses, off-the-record discussions, and resource monitoring. Further, as The Clarity Consultants report, How to Successfully Onboard a Consultant, adds, “Another benefit to conducting regular meetings is that they allow the project to change as it develops. Team members are able to review project goals and schedules, revisit or revise the project scope, and amend the action plan.” This monitoring approach leads to genuine agility within the payroll project management process—allowing for quick, course-corrective action as needed.
Written Reports: Compared to regular meetings, the requirement to produce a written update of progress or issues creates a different and complementary type of accountability. As management consultant Tim Bryce suggests, "The two most obvious ways to manage consultants is by having them prepare routine status reports and project time reports".
Keep On Track: One of the benefits that a consultant brings is a wider knowledge of the possibilities afforded by the latest payroll software. However, it is important to keep a focus on the agreed-upon end goals and business benefits that the software is intended to support. Unless the organization’s payroll requirements have significantly changed, too many additional functionalities can foster a real risk of scope creep—pulling the direction of the payroll software project away from its primary agreed objectives.
Managing the People Element of Payroll Software Implementation - Final Thoughts
People can be the most unpredictable factor in any project—especially in technology endeavors where there is a temptation to focus only on addressing the complicated technical challenges. Unfortunately, despite their complexity, technical issues can be precisely defined (and therefore solved). However, as evidenced above, the implementation of a payroll software solution is more than just specifications, platform integrations, systems testing, parallel processing, and data migration. If stakeholders do not engage with the new payroll system then the benefits which made it the best option at the selection stage will fail to be realized during implementation. A new payroll software solution is a large-scale organizational change with direct impact on every employee. As such, employee response to that change must be analyzed and managed in order to ensure the long-lasting success of the payroll system purchase.
Often the successful adoption of the incoming technology pivots on the quality of the training and support given to use it. However, it is crucial that organizations understand that different stakeholder groups will have different training needs when it comes to the new payroll software system.”