Constructing a payroll system

A three-year plan, the vanilla approach and Canadian software are helping to restructure the HR and payroll practices of a world leader in building supplies.

When construction materials supplier Lafarge Corporation started managing its payroll with software in the mid-1980s, the company had approximately 5,000 employees. Since that time, Lafarge has grown through acquisitions with the number of employees skyrocketing to more than 15,000. With expansion plans still in the works, that number is expected to move up to 18,000 employees across North America.

As a new location was acquired, the established processes and corporate culture of that location were kept the same. The way payroll was done locally did not need to change, provided the new locations used Cyborg software. Processing payroll locally made sense because Lafarge had a number of cement plants, each with different collective agreements.

It made sense, that is, until the company grew to the size it has.

Cyborg started at Lafarge as a payroll system that eventually became integrated into a complete human resources management system (HRMS) in some divisions. Its flexibility allowed for individual divisions to use it in a decentralized way.

Lafarge Corporation is headquartered in Herndon, Va., and has grown to include 22 divisions with 900 locations across North American. A majority of the Lafarge IT group and infrastructure is located at the company’s Montreal offices.

CUSTOMIZED PROBLEM

The major problem with each division running its own customized version of Cyborg was the lack of standardized reporting across the company. Information collected at one location may not have meant the same thing at another division collecting the same type of information.

Lafarge’s growth demanded improved access to company information by managers and by HR. Consolidating all divisional systems into one centralized version of Cyborg would improve reporting in North America. HR resources could be diverted from non-value-adding administrative activities and focused on other tasks such as recruiting and developing the right people.

“Cyborg is the single platform that will allow us to achieve our vision of having standard data for employees and allowing access to the data through the reporting solution to run our business, make decisions, and support our people strategies at Lafarge,” said Jim Black, director of human resources information technology. “The system itself has a lot of capabilities that we have tapped and can address a lot of our business needs that we have now that we have a bigger company.”

The first step in the HRMS centralization project was to have all HR and payroll information standardized across all divisions. Since there are numerous ways of collecting data, the challenge for Lafarge has been setting a standardized methodology.

The challenge has been “to get everyone to do things the best practice way,” continued Black. “The Cyborg people have been helping us understand the capabilities of the system and how to make it work better.”

Throughout this centralization project, there has been one thing in particular that Lafarge has tried to maintain – staying close to the original program design. Through previous installations, Black found that “best practices in the marketplace for HR and payroll are designed into the system. There’s a reason why they made it that way.

THE VANILLA RULE

“We used the quote ‘vanilla or jail.’ If it wasn’t a legal requirement that would force us to go to jail, we wanted to use the system as it was designed and to use its capabilities,” said Black. “Every time you make a change to the system you find that that causes other problems down the road. You have to maintain those customizations.”

According to Jeff Koven, vice-president of Toronto-based Cyborg Systems Canada, “I’m finding that some of our customers are reviewing their own business processes and the products that support those processes with the idea of moving away from systems that are heavily customized using programming and requiring IT-supported environments.

“What Lafarge is really looking for is to leverage the product in terms of mapping it to their business requirements,” continued Koven. “This is no longer something that needs to be done in a programming fashion. Using built-in wizard templates, the department can truly own the product.”

Once the “Lafarge model” is in place, it will be easier to integrate future acquisitions, add people and get access to data as the company continues to grow. By putting information into a standard solution, Lafarge will be able to take advantage of Cyborg’s automation tools and move to more high-tech solutions such as employee self-service, or manager self-service tools.
For example, the standardized HR payroll systems would be enabled through an HR portal as a preferred way to get access to information, thereby providing ownership of that information to the employees.

“We looked at best practices and the vision of where we want to go with this information,” said Black. “In addition to the HRIS system, we’re putting in an HR portal that will allow people to access HR info and access their information benefit plans, and so on through an Intranet.”

All information has to be standardized in one system for employees to start managing their own data. This will improve the work/life balance of employees by allowing them access to information when they need it.

“Lafarge has a great opportunity to look at what they did from a programmer’s standpoint, eliminate some of those things and use more of a vanilla product,” said Koven. “Then they can use the wizard tools that are part of the vanilla product. This will allow them to leverage the value in the product and extend it into their enterprise.”

THE GOAL

The HRMS centralization is a three-year plan of which Lafarge has completed six months. The first level of testing has been completed, and they are preparing for the second level of testing with the first payroll implementation units.
The plan also extends to the creation of an HR service centre, which would remove administrative activities at corporate and regional offices, thereby allowing those HR practitioners to focus more on recruiting and other core issues.

SOME ADVICE

Black has three pieces of advice for a company considering a massive HR and payroll overhaul.

First, make sure you have the resources available that are dedicated to the project. It cannot be done “when there is time.” The people involved need to work on it 100 per cent of the time.

Second, have an identified business owner that is championing the project. This is imperative to the project success because this person sells it to the senior management group to ensure management commitment.

Third, use the system where you can out of the box – the vanilla version – and keep that as a rule. “Like any new system’s implementation, there is a resistance to change. People have been doing things the same way for a long time,” said Black. “Really look at what the system can do and what you can do to change what they do to follow that information flow. Some systems are pretty flexible but you can make a lot of changes that pretty quickly cause you a lot of problems down the road.”

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