Mastering Change Management in Global Payroll: An Expert View

Change is an inevitable constant in organizations across the world. In order to remain both competitive and compliant, businesses need to adapt their systems, processes, and workflows to align with regulatory changes and the rapid emergence of new technologies. This need for adaptability extends across all business functions.

In critical business functions like payroll, the stakes are particularly high when introducing changes, since even small adjustments, such as altering the layout of a payslip, can have a direct impact on employees, erode trust, and even go as far as disrupt operations. This is where change management becomes essential.

But how can businesses successfully leverage change management in global payroll? What are the key success factors for effectively managing payroll changes? What’s the role of leadership in driving change across the organization’s global payroll infrastructure? What are the most common pitfalls that businesses should avoid at all costs?

To answer this question, we have talked to Russell Webb, Payroll Influencer and Business Development Manager for Phase 3 Consulting. In this feature article, Russell shares his insights from eight years of experience in the global payroll industry and gives tips on how to effectively manage payroll changes.

Running a multi-country payroll is incredibly complex. With dynamic workforces and a changing regulatory landscape in every jurisdiction, there are many aspects that can trigger changes or make it necessary for organizations to adapt their systems.

What’s more, the complexity of global payroll, which is the result of a multitude of different systems, processes, and infrastructures, means that even the smallest changes can have an impact on multiple levels. In order to avoid disruptions, businesses need an effective change management strategy.

“Change management in global payroll is the process of identifying, isolating, and mitigating risks and hazards when making large-scale changes,” Russell says. “It’s key to ensuring business continuity, employee engagement, and continued business success.”

Looking at the geographic footprint of multinational payroll operations, it becomes evident that legislation is one of the key factors that make change management a crucial component in any large-scale payroll transformation project.

“Legislation is rapidly changing in every single country in the world. In countries like the USA, legislation is even changing at different times in different states. This creates a complex set-up businesses need to keep in mind when planning major payroll changes, such as bringing in a new payroll system that will be used globally.”

The essence of change management hence consists in identifying how the planned changes are affecting and impacting different regions and divisions within the organization. “What you need to do is to understand what each country had before and how the changes will impact employees going forward,” Russell continues. “Payroll is fundamental to every single business in the world. If your employees don't get paid, they will stop working and your business will cease to exist.”

Given the critical role of payroll in organizations of all sizes, the importance of change management is not just limited to major changes like the introduction of a new payroll software. Instead, even smaller changes need to be managed carefully to avoid negative repercussions.

“In payroll, even the smallest change will impact employees; be it a change in how their payslip looks or a change in how they access their payslips. If changes are not managed properly, it could negatively impact your team's performance and their willingness to stay with the company.”

"Change management in global payroll is the process of identifying, isolating, and mitigating risks and hazards when making large-scale changes. It’s key to ensuring business continuity, employee engagement, and continued business success."

Russell Webb

Payroll Influencer and Business Development Manager for Phase 3 Consulting

While even the smallest payroll changes can impact the business, its processes, and its people, the repercussions grow increasingly severe as the scale of the changes expands. Russell illustrates this with the example of the introduction of a new payroll system interface which was rolled out while some features within the new interface weren't ready for release yet.

“This is where change management comes into play. One of the most important things is to have an impact analysis chart where you track what the possible changes are, what's happening when, what the impact of each change will be, and how to mitigate the associated risks. Without change management, a lot of people would have lost access to their system or not been able to perform their payroll as they needed to.”

Another potential challenge in managing payroll changes arises when the desired project outcomes conflict with the existing legislative framework. “A good example here would be the case of an organization that decided to go green and switch from paper payslips to digital ones without considering the legal requirements of the different countries surrounding the form in which payslips need to be provided to employees. If the legislation says that employees have to receive paper payslips, then change management needs to account for this.”

Major payroll changes require effective change management. But what does the change management process look like? What are the steps organizations need to follow when managing changes that will affect their global payroll operations?

Once the decision has been made, the first step consists in putting together a change management team. “Let’s take the introduction of a new payroll system as an example. If it’s a global change that involves working with an external provider, then there should be a lead project manager from the organization and a lead from the vendor or software provider. These project managers then need to identify the key stakeholders on both sides, determine a governance model for each of the countries that will be impacted, and evaluate the full scope of the project,” Russell explains.

In addition to the project management itself, which covers the roll-out of the project and the implementation of the new system, businesses should also cover the change management side. “Ideally, you would have a separate change management specialist involved as a stakeholder, because if the main project manager is handling change management as well, this might lead to bias due to their strong KPI focus and their mission to get the project completed successfully.”

The change manager should know about what's going on throughout every step of the project implementation. For this, they need an impact analysis chart that lists all of the changes that will happen.

“For a payslip layout alteration, the impact analysis chart will show information regarding what the impact of the changes will be, what the potential risks are, and what requirements are needed to mitigate those risks. So you go through all the different changes that will happen and assess their potential impact.”

Another aspect businesses should keep in mind is to assess the need for change-related communication in a timely manner. “Even if it's only a small change like the layout of the payslip, sending out communication a few months in advance to all your employees to inform them about the changes and the expected benefits can help reduce the number of incoming calls going forward.”

"Your employees will be less affected by the changes if they are aware of what’s happening and understand why it’s happening. And that’s achieved through communication."

Russell Webb

Payroll Influencer and Business Development Manager for Phase 3 Consulting

“Your employees will be less affected by the changes if they are aware of what’s happening and understand why it’s happening. And that’s achieved through communication,” Russell says, pinpointing a crucial element in change management that’s often overlooked in a global payroll context where the focus is often on the technical side of the project implementation.

Given the direct impact payroll has on people’s lives, it’s important to also consider the ‘human’ aspect when managing change in global payroll. “There definitely is a human element that must also be anticipated in the impact analysis chart alongside the technical impact of the change implementation,” Russell agrees.

“Let’s say you want to introduce a new global system for payroll which will bring a change in requirements for your local teams. For example, your team in Poland might run payroll in-house, using a system which they have always used. If you’re introducing a new system, you'll have to retrain all of the team over there, and some people won’t want to retrain.”

The Role of Change Management in Overcoming Resistance to Change

Resistance to change is a hurdle many organizations need to overcome whenever they are introducing changes that impact employees in any possible way. Effective change management is key to overcoming resistance and promoting change within the organization.

“Organizations need to be clear about what the roadmap is and what they are trying to achieve with it. Having an open dialogue with employees is absolutely important, especially because resistance to change is often due to fear. People should know what’s coming and how it might impact their roles, so it gives them a chance to prepare and be ready.”

Consistent Communication as Key Success Factor for Effective Change Management in Global Payroll

“For me, the most critical success factor is clear and consistent communication throughout all the ranks and throughout the entire process. And I don't just mean telling your employees what their payslip will look like in three months' time, but to communicate continuously,” Russell says.

“What you want to avoid is having rumours that turn into a chain of miscommunication, which is something that still happens in many businesses every single day. But if you've got a central location where you can store all the project updates, document what’s going on in every single project step and who's doing what, and make sure that all the stakeholders are identified and informed, that’s how you set yourself up for success.”

"For me, the most critical success factor is clear and consistent communication throughout all the ranks and throughout the entire process."

Russell Webb

Payroll Influencer and Business Development Manager for Phase 3 Consulting

Clear communication is crucial for overcoming employees’ reluctance to adapt to new processes and changes. The key ingredient organizations need to succeed here is leadership involvement and support.

“It all comes down to leadership and having a clear strategy,” Russell emphasizes. “Of course, it’s difficult, with payroll sometimes being under Finance and sometimes under HR, but someone needs to take ownership of the organization's strategy of what they want to do with payroll in the long run.”

“I think organizations should have a clear roadmap of what will happen and what they want to achieve, and employees should be aware of this roadmap. When employees know what's coming in the next few years, they can make the necessary adjustments to facilitate this change,” Russell concludes.

"Organizations should have a clear roadmap of what will happen and what they want to achieve, and employees should be aware of this roadmap."

Russell Webb

Payroll Influencer and Business Development Manager for Phase 3 Consulting

Based on his experience in managing payroll projects, Russell identifies one major pitfall businesses need to avoid when introducing drastic changes to their global payroll. “I often find that people who work in leadership positions in one specific country tend to get siloed, meaning that they don't fully appreciate or understand things that are happening in the rest of the world.”

“A lot of the companies I've worked with before had their headquarters in the USA, and they've brought in a global change that impacted the rest of the world differently from the way that it impacted America—and impacted the rest of the world negatively.”

“So, not understanding the geographical footprint and how changes will affect people in different geographic locations is a very common mistake that I see,” Russell continues. “And I do understand it. If you're working at a global company, but only dealing with your local market, you won’t have a lot of knowledge of what's going on in Paraguay or South Africa.”

Hence the importance of breaking down the siloes and collaborating with stakeholders who have boots on the ground. “It’s crucial to engage local stakeholders, people who work there, people who have experience there, and ask them how this big change that’s being made globally will impact them.”

"Not understanding the geographical footprint and how changes will affect people in different geographic locations is a very common mistake."

Russell Webb

Payroll Influencer and Business Development Manager for Phase 3 Consulting

Russell Webb is a Payroll Influencer and Business Development Manager for Phase 3 Consulting, specializing in Managed Service Payroll. He leverages eight years of experience in the global payroll industry, having worked in various roles, from payroll team management to account management and sales.

Russell is an active payroll influencer who regularly shares his thoughts and insights on LinkedIn—either through quality payroll memes or his weekly Payroll & Pastries Newsletter, a regular round-up of payroll, HR and finance news.