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‘Lean’ Payroll: What Can it Do for Your Organization?

Oct 18, 2016  | Topic: Strategy

To the uninitiated, the concept of ‘lean’ thinking in business may bring to mind bootstrapping – running lean on talent, capital, or other assets. Alternatively, it may be associated with cost cutting – trimming as many resources as possible to run a lean operation.

But lean also has other meanings. Lean startup methodology, for example, encourages entrepreneurs to prioritize “experimentation over elaborate planning,” and “customer feedback over intuition” in their products. The lean startup approach – now widely embraced by early-stage companies and large corporations alike – has roots in the principles of lean manufacturing, which emerged from the automotive industry in the 1940s.

Lean manufacturing led to “lean thinking” which led to just lean: A business movement designed to eliminate wasteful processes in order to drive improved efficiency, effectiveness, and profitability in an organization. Today, lean has evolved to infiltrate business areas far beyond production: there’s lean accounting, lean IT, and now, lean payroll. 

Global Payroll that Works Smarter, Not Harder

The American Payroll Association (APA) has made lean payroll into an industry-wide priority. Following up to the 2015 debut of its six-module Lean Labor course on “Producing the Perfect Paycheck,” the APA incorporated a Lean Payroll track into the agenda for its 2016 Fall Forum. 

The APA’s aim with its educational initiatives is to help payroll professionals at every level to understand that “if the paycheck were a product line, it would rank as one of the largest products at most organizations.” By applying lean thinking to payroll, the role of payroll in an organization can be strengthened and empowered to make a greater impact on the organization’s bottom line. 

Indeed, some of that bottom-line impact is about reducing expenses. But more significantly, it’s about delivering enhanced value – chiefly by optimizing processes, minimizing waste, and seeking improvements in ways that have not been considered before. Broadly, it’s about taking a methodological approach to working “smarter, not harder” (as the expression goes) in payroll.

“Even mature organizations with highly efficient processes can realize significant gains,” writes Kerry Cole in Global Payroll Magazine. “Lean Labor follows a process without respect to the functional organization of a company. It uses the neutral eyes of the customer to identify opportunities for improving a process, eliminating the well-meaning but costly localized improvements that benefit one department at the cost of another.”

According to Cole, there are three pillars of lean thinking. Here’s how each one plays into payroll.

Purpose should go beyond payments delivery.

Large or small, an entity’s purpose is its reason for existence. A traditional outlook would perceive the purpose of global payroll to be payments – specifically, paying an organization’s employees accurately and on time. But lean thinking requires a perspective that’s mindful of more than just function.

The global payroll operation exists not just to pay people, but also to support the organization’s financial stability, satisfy its payroll compliance requirements, and produce useful intelligence on the global workforce. To take a lean approach to payroll, it’s important to consider how efficiently the payroll organization meets all of those responsibilities and how effectively the global payroll solutions in your ecosystem deliver on your larger purpose.

Processes should be potent & proactive.

Lean principles view processes as more than steps toward the completion of a task; rather, they’re the methods an organization uses to “add value to its products and services.” To the APA’s point, paychecks are among a multinational organization’s largest “products” (so to speak). How do your processes add value to the end results of global payroll?

For too many multinational companies, the answer is “they don’t.” With a lean approach and the right investment in modern, cloud-based software, payroll teams can make their processes more standardized and proactive. For example, stronger automation can systematize payroll across geographies (with rules addressing the unique compliance concerns of each geography) while also using intelligent and automated validation tools to spot and correct data errors before they produce erroneous paychecks.

People not only participate, they empower

Your team shouldn’t just take part in the payroll process – they should help improve it. Rather than seeing staff members as expendable resources, lean thinking encourages managers to empower their employees with a respect for (and commitment to) the unique value they provide to the organization.

After all, eliminating waste from payroll requires an efficient workforce. And an efficient workforce is a talented and well-equipped workforce. Going lean requires investing in your people as much as in your global payroll technology. Ultimately, it’s about driving stronger, more empowered connections among your people, processes, and purpose to deliver more value over the long-term.

To learn how a unified global payroll solution can support your lean payroll goals, contact us.

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