Steelcase is a global manufacturing firm with offices or plants in 20 countries in EMEA (Europe, the Middle East, and Asia) from France to Kazakhstan. Each country has its own statutory work rules. That is challenging enough from an HR perspective. However, Steelcase's real challenge was its footprint: there were as many as 200 people in one country while other countries had only one. "That meant we had to have a person in each country follow the rules and keep up with the required knowledge," says Camilla Akers, Steelcase's Payroll and HR Manager for EMEA.
She says that "didn't make sense" on a corporate level, especially for the countries with a handful of employees. "It was just too costly," she observes.
Language was also a challenge. The EMEA headquarters office is in Strasbourg, France. However, the employees at the local payroll providers in some of the countries spoke neither French nor English. "We had to have a translator," Akers reports. The language difficulties translated into "there was little or no communication with the EMEA headquarters. If we asked for all the salaries in a region, we couldn't get it in a timely matter," she continues.
In addition, a few of the countries' payroll systems were "really old," says Akers. So old they couldn't accommodate today's new technology. "We didn't want to continue shouldering this risk," she says.
Finally, the corporation only completed the payroll once a month. "We often didn't have enough other administrative things for that one person to do, so we had different external providers in the smaller countries," she says.
The answer was to outsource part of the EMEA payroll to one service provider.
In 2007 the company discovered "there were only a limited amount of service providers that could handle our constellation of countries," Akers reports. Steelcase started out interviewing 10, then narrowed the list to three. It selected Patersons because of its global reach.
FranÁois Acknin, Global Account Director and French Managing Director for Patersons, says the transition went smoothly because the two parties handled all the tough issues during the negotiations. "Our main difficulties happened before we started. We had to know the level of service they expected. When we started working together, everything went smoothly because we knew exactly what they wanted," Acknin explains.
Steelcase and Patersons ran parallel payroll runs for three months in each country before permanently cutting over. "Here at headquarters we learned how each country does its payroll," Akers reports. This exercise was a valuable lesson, she observes.
Acknin says sometimes the service provider will negotiate the details of an outsourcing engagement at a high level. Then, its staff will go into a country and discover the little details that can make a difference to the plan. "A detailed negotiation makes for an easier transition," he observes.
One of the biggest issues for buyers, he notes, is knowing exactly what they want. "They know they need payroll services. But they don't always know what exactly touches the payroll process," Acknin notes. To be successful at the outset, he says, both parties have to decide "what is the line between outsourced payroll and accounting."
Patersons has online tools that Steelcase found beneficial. It could post jobs and changes. HR managers could easily assemble and print reports. When the service provider turns in a payroll, its system sends Akers an e-mail. "We then check to make sure it's correct," she says.
Thirteen countries are now on one system. "We can get corporate information when we want it," she says, something that was not possible before.
Steelcase is enjoying increased process efficiency. "We added consistency to their HR processes," says Acknin. He says the service provider reengineered every process that touched payroll.
Akers says outsourcing to Patersons did not save on costs. "But it has saved us a lot of time, which equals money," she says. Not doing payroll also frees up the staff to do "more interesting tasks within the department," she adds.
Why this relationship works
"What they really appreciate is they can count on us," says Acknin. "They know they can call us any time and someone will be there to answer a question or fix an issue." Trust, he adds, lets Steelcase know its employees will be paid.
He says the two parties "have no difficulties" discussing any issue. "We just sit together and work it out," he reports. He says issues tend to be small "because we both have a clear definition of what we are both supposed to do."
Lessons from the Outsourcing Center:
- Transitions tend to go more smoothly if both parties have ironed out all the details during the negotiations. Sometimes this doesn't happen when negotiations happen at the highest level.
- A global payroll outsourcing arrangement helps global companies that have both large and small numbers of employees in many companies. Often it's the first time a company gets a unified look at things like salaries across a region. It also solves language issues.
- Patersons also counsels its new buyers to train the end-users so they understand how the new process works. "If you don't do this at the start, it can create noise during the implementation," he says.