A merger! What to do with your HR and payroll system?

The decision to merge your company has been made: soon, you’ll be moving forward together. Luckily, you’ve got some time before it happens, which you can use to figure out what to do with your HR and payroll system. It’s a bigger deal than you might initially think. You’ve got three options. The first is to start from scratch with a brand-new HR and payroll system. The second is to keep one of the existing systems and migrate all the data from the other. The third is to combine both HR and payroll systems if you’re already using the same software. So, what’s the best scenario for you?

Consider the impact on your IT environment

Before you decide, it’s important to understand the impact of changing your HR and payroll system. After all, the system is part of a bigger setup: your IT environment. What other IT systems are in place? What connections exist with the HR and payroll system? And how do these information flows work? This is usually mapped out in your organization’s architecture diagram. By reviewing it, you’ll see which other systems your HR and payroll system touches; like scheduling systems, time tracking, or software that gives employees access to your IT environment, such as Azure ID.

How do you want your HR department to work?

The next step is to figure out how your new HR department will operate. What processes do you want in place? Are you planning to use Employee Self-Service (ESS) or Manager Self-Service (MSS)? These are your process starting points. You also need to decide how payroll will be handled. Will you manage everything in-house, or outsource the payroll administration? These choices affect not only the system you’ll need to support your HR and payroll processes but also the expertise you’ll need on your team. Make these decisions with a project team that includes representatives from HR, payroll, IT, and department management.

Time to choose a scenario

With your starting points clear, your project team can explore the different scenarios. A key question is whether the existing HR and payroll systems align with your new ambitions and meet today’s standards. Do they support the new way of working you have in mind? Is the technology still up to date, or is there still a lot of manual work involved? If both systems fall short, the first scenario might be appealing: you start looking for a new HR and payroll system. The advantage of a new system is a clean slate, but the downside can be high costs. Of course, you’ll need to create a business case for each scenario you explore.

Test with use cases

Let’s say one of the existing HR and payroll systems looks promising. The functionality meets your needs, and the impact on other systems is manageable. That’s scenario two: you move forward with one of the two systems. But what if both systems meet your requirements and the costs are similar? In that case, use cases are a smart move. Provide a few examples of your desired way of working and ask both vendors to demonstrate how their software supports it. Have a multidisciplinary team evaluate the demos, including people who use specific functionalities in practice, even if they’re not part of the project team. This way, you’ll make a choice everyone can support. If the results disappoint, you might end up choosing a completely new HR and payroll system after all.

Integration challenges

If both companies use the same HR and payroll system, merging them seems like the obvious choice: scenario three. But even here, preparation is key. For example, do you stick with one of the existing databases or start fresh with a new one? One of the biggest challenges in this scenario is integration. Your HR and payroll system might only connect to one database for scheduling or one identification system, but you may have multiple. How do you solve that? This is where the architecture diagram comes in handy: it gives you insight into potential integration issues.

Take your time choosing your HR system

No matter which scenario you pick, keep in mind that this is a serious project that takes time. The groundwork and decision-making process alone can take two to three months. After that, there’s still plenty to do with setup, testing, and going live. For example, if you do the prep work in the first half of the year, you can use the second half for the rest of the project and go live on January 1: a critical date for payroll. This way, you make the transition without stress.

Don’t forget the human side

A new organization, a new HR and payroll system, a new way of working: a merger is a big change for everyone and can stir up emotions and challenges. Make sure to involve your HR and payroll staff in all the changes. And ensure you have enough expertise on hand to get the job done. After all, daily operations continue alongside all the merger activities, and the same experts are often called upon repeatedly.

Need help with a major change? Looking for extra (temporary) expertise? We’re happy to think along with you. That way, you can always make your HR transformation a success, within your resources and budget.