Preparing for your upcoming annual compensation review in Workday

PARIS 

This article in this week's The Economist on the pitfalls of badly designed bonuses is a timely reminder that annual compensation reviews are right around the corner. Having spent half of my 12-years' Workday experience implementing the module dedicated to salary review, bonus and stock awards, here are some useful tips:

•  If it’s your first time implementing Workday Advanced Compensation, it pays not to be overly ambitious: Try not to go big bang with bonus, stock and merit. If your salary review scheme is relatively simple (e.g., few items in your matrix) but bonus has a lot of complex scorecards, then start just with Merit and wait for the following cycle to add Bonus.
  
  
  
• Try to anticipate your Advanced Compensation needs when designing and implementing your Core model. There is nothing worse, after having spending time designing, implementing, deploying and training your workforce on one version of Core HR or Core Compensation, than to have to revisit it at the last moment because, say, the way you defined FTE in Core HR is a big No Go in Advanced Compensation.
  
  
  
• Make sure you plan enough time and resources for a dry run in your Sandbox tenant.
  
  
  
  
  
  
  
• If it’s your second year running the module, then go back to your notes as to what went wrong (despite careful planning, things inevitably go wrong – believe you me, I was there) and make sure you fix those issues for 2025. Check Workday's recent releases: Something that was not possible last year may now have become a standard Workday feature.
  
  
• Clean up your data: A major part of your support during the several months that your review will run will be dedicated to adding employees who were left out of the review when you launched it because they were missing, for instance, a stock plan. Or, conversely, having to remove some employees from your bonus review because you forgot to update their base salary and their bonus payout comes out wrong.
  
  
• Last but certainly not least, test thoroughly your participation rules for parallel events and watch out for those innocent-looking configuration decisions which can translate into major costs for the company. I remember that at one of my clients we were puzzled by the unanimity managers from various latitudes displayed when terminating their employees, until we realized that using that very date and not one earlier, allowed managers to increase their budget (after all, there’s little sense in raising the salary of a departing employee, is there?) Managers from all around the world weren’t necessarily in cahoots but like many other users when they find an opportunity to game the system, they rarely pass up on it.
  
  

 I could go on for thousands of additional pixels, but if you follow the above, chances are that you will mitigate your issues and maximize your chances of success. 

(This is the latest in a long series of blog posts dedicated to Workday and Compensation. Just check the chronological list of posts in the Blog Archive to find articles on these two topics: separately or together.)

Retiring Shared Demo Tenant: Workday's still correctable blunder

PARIS 

As my blog followers have known for quite some time, I am a great admirer of Workday: the company, its people, its products, its culture, its customer service. Many of my posts are testimony to this admiration, as is my decision to spend most of my working time implementing the product for my clients. This being said, my blog followers also know that I am no blind vendor cheerleader: When deemed necessary, I would not shy away from criticizing Workday as I did in my Open Letter to Dave Duffield and Aneel Bhusri about their approach to Europe. 

Now has come the time to point the finger at Workday again. In exactly one month, as per the below notice, Workday will retire its Shared Demonstration Tenants, usually known in the Workday family of users as GMS, and offer a paid version. This is a Very Bad Idea and before I expostulate on it, let me first explain to the layman what GMS is and why it is so important. 

GMS - A unique demo environment
GMS was one of the great innovations that Workday brought. For someone like me whose experience of an HR vendor's demo environment was limited to the dreadful ADS by Oracle, this felt like heaven when I first sampled it. At long last here was a system which you could go to 24x7 to check, demo with minimal preparation, learn any feature you were interested in. And it rarely let you down as it was bug-free. Actually, for one my first global Workday implementations, then a wall-to-wall 20-year SAP shop with more 140,000 employees, I was tasked with traveling the length and breadth of planet Earth to visit the major subsidiaries to convince them to give Workday a try.

Without GMS, I doubt I would have been able to pull it off. I wanted to demo what Workday could provide but since our tenant had not yet been fed with setup and worker data, I couldn't rely on it. So, I decided to enlist the help of GMS, hiring employees in Spain, Romania, Brazil, Korea, Morocco, Argentina - etc. in a way that made sense to those companies. I made it obvious to my stakeholders that this was a shared environment, that it didn't include all their specific data and processes but it could give them a sense of what was possible with Workday. 

LOGAN FOR PRESIDENT!

And it worked! All the subsidiaries agreed to greenlight the project and we started on implementation. The rest, as they say, is history.

Critical for SMEs

If my example is a good one to show how useful GMS is for a large, global multinational able to throw millions at its Workday implementation, think then how vital it is for an SME company struggling with limited resources and a shoestring budget. These companies cannot afford the multiplicity of tenants that Workday would readily charge them for. And I'm not speaking here of the complexity to manage several tenants, which in and of itself is not an issue except when you don't have the resources to do that. In addition, without GMS the learning curve for talent becomes steeper. 

More than a marketing blunder, this is a sales disaster-in-waiting. After targeting the mid-market for a while, it is counter-intuitive for Workday to remove one of its major selling points to this very market segment. I don't know what Carl Eschenbach is up to, but I can't see Dave Duffield, Aneel Bhusri or Chano Fernandez signing off on this. 

Rationale for the paywall
Although some detractors are lambasting Workday for this grab for customer dollars, there are some good reasons for it which have to do with Workday's amazing success. Quarter after quarter the customer base grows, which means that what used to be a few hundred concurrent users of GMS has now evolved into thousands and thousands of users from customers and partners. This in turn has made accessing GMS ever more difficult with the below message one of the greatest sources of frustration of customer administrators and project consultants. 

 Hence Workday's offer to its customers: "Rather than have a free demo tenant which you can rarely use, why not have a paid one which will always be at your disposal?"

Unacceptable policy change
Well, as we all know, there's no such thing as a free lunch - and certainly not a free tenant. The current shared GMS is included in customers' subscription. It is therefore disingenuous, not to say dishonest, from Workday to claim that they're just putting an end to a free goodie. We all know that Workday comes with a premium price tag, which is justified by the second-to-none quality of its products, consultants and resources. So, this "free" GMS is actually NOT free. Customers are paying for it, and expensively so.

If Workday feels that time has come to charge those who want to use GMS, then it should be consistent and reduce the subscription rate by as much. Those who feel they cannot do with GMS will then pay the new tenant price which means that at the end of the day they will be paying basically the same they were paying before for exactly the same service. And those who didn't use GMS (not many companies but they exist) and who resented having to pay for a service they weren't using will actually enjoy the new policy because they'll be paying less for a similar service level. Win-win for all.

Of course, I can hear you say, "Not so fast. Those who pay separately but at the same rate as before are getting a better service because the tenant is theirs and it'll be working without the access issues we've been experiencing of late." Well, that argument is a poor one because Workday always boasted of how scalable its system is. So, why is GMS now having concurrent access issues? And what guarantees do we have that even with a private GMS if our user base grows we won't suddenly be faced with this infamous "maximum number of users reached" message? 

What's next? Charging for the use of EIB? Of Customer Central? 

What Workday should do
Based on the previous, there are only two acceptable options for Workday:

(a) Reconsider its position, admitting it has erred and just scrap this new policy (Workday has backtracked in the past on some controversial decisions as soon as enough noise comes from their customer base);

(b) Stick with it but then revisit its pricing policy along the lines of what I described in the previous paragraphs.

What should customers do
Two situations here:
1. Net new customer considering Workday:  Do NOT sign the purchase order. Put the decision on hold while waiting for Workday's final decision.

2. Current Workday customer considering a scope extension: Do NOT license any new product until Workday does either of the two options I mentioned earlier (and make them know in no uncertain terms what you think that option should be - after all, Workday always claimed it listens to the "Voice of the Customer"), so let them know that without GMS you cannot prove the ROI for a new product. Also, check whether one of your current modules or one you're considering (such as Extend) doesn't come with GMS.

Workday, like all software vendors, will take into account customer demands when they hit the bottom line. When Workday sees that its next quarter isn't as good as what it expected, then it will have second thoughts and will become amenable to its customers' views. But customers should not accept that Workday just turn into another Oracle or SAP fleecing its customers whenever it feels it has an opportunity. 

Workday already took a leaf out of its competitors' book when it started growing its product line via acquisitions and not organically, even though it always said it abhorred such an approach. It is high time the similarities stopped. 

(This is the latest in a Workday series of posts by the blogger. The most popular ones can be found on the right-hand panel. For a full list, scroll down to the list of all posts by year)  

Workday Compensation: What every Comp & Ben person should know

PARIS

Anyone implementing Workday, either its HR offering (Workday HCM) or the Financials suite, will inevitably come across the compensation bit. And that's when challenges start and questions fly. What is involved? How easy is it to implement? How good are the products?

Having implemented Workday for the past 11 years for an exact number of 11 companies (talk of some symmetry!), here are a few tips on how to go about all things Compensation , organized along four pillars.

I. CORE COMPENSATION
It is a safe bet that if you're thinking about implementing Workday, chances are that you will be implementing Workday HCM and starting with the foundation product Core HR. Another safe bet is that as you plan on implementing all data, processes, security and reports involved with hiring, moving, promoting and terminating employees you'll have to implement the basics of Compensation. That is a foregone conclusion since no employee record is complete without at least some compensation components: salary and allowances that are committed to the employee when they are hired and onboarded. 

With this module you can track all types of gross compensation (for net compensation, see Payroll below) usually set up via Compensation Plans. Those plans determine if an employee gets a monthly salary, some 13th- or 14th-month pay, some seniority, housing or transportation allowance or a one-time payment (for instance, a welcome bonus or severance payment.)

To decide how these plans are assigned to an employee Workday provides Eligibility Rules which can be fiendishly complex - if that's what you want. There's beauty in simplicity, so before you start making highly sophisticated rules to decide who gets what (belonging to company X, with a management level of Director but not part of Location Z etc.) do yourself a favor and think about the cost to the maintenance team. One thing I strongly advise against: Do not add employee ID in these eligibility rules. It's akin to making a law for just one citizen. 

How thorough should your compensation be in Workday? It really depends on what your objectives are and how integrated your HRIS is. Some companies only track base salary and leave the rest in local systems. Others decide to have a full-fledged compensation system in Workday as a reflection of their rewards policy: In which case you'll have all types of Compensation Plans (not only Salary but Period plans, Allowances, One-time Payments) including, for the more complex ones, Calculated Plans. This way, especially for global companies, your compensation policies can migrate from local payroll systems (often the only HR system of record for those local subsidiaries) and become part and parcel of you global system. What is then left in Payroll is discussed in the next section.

II. WORKDAY PAYROLL
To help make a decision on what to keep in local payrolls and what is best handled in Workday, I have developed an analysis which I first shared with United Nations agencies when they started implementing Workday (In my distant past I worked 5 years for the UN: 2 in New York and 3 in Madrid.) Below is the framework I developed and then fine-tune for every customer. Since it is my intellectual property and proprietary analytical tool, contact me directly if you are interested.

I developed this multi-criteria analysis based on different combinations of criteria depending on company size, geography, scope, industry and management complexity. Although in its simplest expression payroll deals with gross-to-net calculation, the challenge is to reach agreement on what gross items needs to be part of the global Workday system and which ones can safely be left in local systems. I have spent an inordinate number of workshop hours with various companies trying to reconcile different stakeholders' positions on this topic. Note that some companies for some cases use net data in Workday Compensation (not Payroll) using a feature called Eligible Earnings Override.

Adding to the challenge is that some subsidiaries of multinationals may be willing to move to Workday Payroll while others would rather stick (for the time being, at least) to their current vendor. Even more challenging is the case, which I was recently involved with, where a global company had the US subsidiary already using Workday. It was quite complex to convince them that they had to re-implement the tool but in a different way, because what was acceptable when you only had to deal with North America Comp & Ben policies no longer holds true when you become part of a new global design. And even if none of your subsidiaries are using Workday at the outset, which probably from an implementation makes it easier, half way through implementation you may acquire a major company which is already live on Workday with their own compensation approach and suddenly the painfully reached agreements with the other business lines and countries is thrown up in the air. Although this may affect any implementation of an HR system, when it comes to compensation people tend to be very touchy and jittery about change.

One of the criteria to take into account is whether/to what an extent you want to make use of Workday payroll. Unlike other compensation products (or other modules from other product families), you usually license Workday Payroll for the countries you're interested in...if those countries are available. Unlike its predecessor product, PeopleSoft, where I was Product Manager in the early 2000s and where in a period of 18 months we added payrolls for 10 countries, Workday's payroll approach has been of the drip-feeding variety. For its first decade, the vendor only focused on its North American turf and released US Payroll and Canadian Payroll. Only recently have UK and French Payroll been released with Australia even more recently. Unless you're particularly lucky to be operating in only these countries, you'll have to make do with your current vendors for non-covered countries. But if you can implement Workday Payroll along with your Core Compensation from the same system, then you'll benefit from the advantages of having a single integrated system (same data model, security, reporting etc.)

And just because a country payroll is available doesn't mean it makes sense for you. Again, another differentiator with PeopleSoft (a.k.a. Workday 1.0):  In France, for instance, the first PeopleSoft French Payroll customers were major companies (such as banking giant Société Générale); for Workday, large French companies which have taken to Workday HCM enthusiastically, have been strangely reluctant to test the payroll waters. So far, only mid-size companies like well-known retailer Franprix have adopted Workday Payroll whose implementation in France has been, shall we say, challenging. And I'm being charitable here. 

Finally, if you wonder what Workday Payroll UN agencies use, be apprised that they are the only customers who don't need a country payroll to implement payroll because as an intergovernmental organization they are not subject to local rules and regulations. To put in another way, they make their own labor laws meaning that they can implement Workday Compensation/Payroll/Benefits in a very tight manner to meet their quite complex requirements (UN member states' rule creativity is on a  par with national governments' legislative innovation -  if you get my drift 😊)

III. WORKDAY ADVANCED COMPENSATION
Disclosure: This is my favorite of all 4 Workday compensation products - half of my decade-long Workday experience has been spent implementing it and providing support on it when it goes live. Unlike Talent/Performance, which can be implemented with a limited Core HR (not something recommended by Workday, although one of my first clients infamously did just that as they moved from SAP to Workday); Advanced Compensation not only requires that you already have in place a robust Core Compensation but also Core HR - without them, the exercise is largely pointless.

So, what is Advanced Compensation about? It is about organizing a structured conversation between various stakeholders at the beginning of a new year to make decisions as to who should be rewarded for their work through a salary increase, promotion, stock or bonus awards. Both Core Compensation and Advanced Compensation (henceforward CC & AC) are based on compensation plans (AC plans are Merit, Bonus and Stock plans) but here the similarities end. 

If you see in an employee's file that they have been assigned a Salary plan or an Allowance plan (both CC) it means that the amounts at hand are guaranteed to be collected by the employee; however seeing that an employee was assigned a Stock plan or a Bonus plan (both AC plans) doesn't mean at all that they will receive company shares or a bonus. For that to happen, two more developments need to take place:               

-First, a specific process (called a Compensation Review) needs to be launched. Until and unless such a review cycle has been launched, those Merit, Bonus & Stock plans in the employee's file (Worker Profile in Workdayese) are merely decorative. Just because you have a 5% target in your merit plan doesn't mean that you will be inevitably get a salary increase the following year. After a review cycle has been launched, another development needs to take place.

-Second, through various stakeholders (usually managers, HR, Comp & Ben team) agreeing on it, a decision is made and confirmed that your salary will be increased with, maybe, a few company shares and lump sum thrown in as well if you have been deemed worthy of the attention. 

 

               Where it all happens: The Compensation Review Grid  

 

Please note that I mentioned earlier that AC needs two other modules to  have been implemented: Core HR and CC. A third product, Talent/Performance, is not necessary but an increasing number of companies have found it useful to link AC to Talent & Performance so that a compensation review process follows a performance review cycle and feeds it through an automation of the proposed guidelines. Thus, if an employee has achieved 100% of their objectives they get, say, a 3% salary increase, but if they exceed their objectives then the increase goes up to 4%. Other criteria may also be included such as equity or market position, but as you may suspect I could rant for hours on the AC module and I still won't have enough time and space to do justice to it. I therefore better stop here and move to the last piece in the Workday Compensation puzzle.

IV. WORKDAY BENEFITS
Just as any HRIS implementation will require an analysis and decision of what should stay in local payroll/HR systems and what should migrate to Workday/Compensation, the same thing applies to Compensation vs Benefits. Since practice, culture and regulations vary from region to region or even with a group of countries, any strategy will be different.

For instance, in the United States, Health, Retirement, Life and Disability can be provided to employees on a flexible basis, via an overall package whereby they pick what combination they are interested in. In continental Europe, on the other hand, most of these benefits are mandated by law and/or company/union agreements. This means that for US/UK employees, you may need strong self service benefits features, whereas in Europe these are not needed. 

Below are some criteria of an analysis framework that I developed for my clients when implementing Workday in order to decide what should be implemented for what features. As an example, a Dental Plan may need to be set up as part of the Benefits module in the US since coverage, eligibility and elections need to be tracked from employee to employee where they can differ. In Europe, on the other hand, all a company may want to track is that as part of your overall compensation package (Total Rewards in Workday jargon) employees are provided with a Dental Plan. If which case no need to use the Benefits module for that (which, remember, comes with a separate license): You can use some appropriate compensation plan to track the same type of data. 

 

Since obviously any approach has to be tailored depending on the specific situation of any company, for further information please reach out to me directly.

V. INTERFACE
Since most of what happens within CC and AC is irrelevant if it doesn't find itself paid to the employee, getting the data from Workday CC & AC is therefore key. This can be done in several ways.

-The basic way is to extract data via a report and, after having transformed it in the right format, feed it into the local payroll being used.

-Use the various Cloud Connect/Payroll Interface tools using specific protocols like PECI or PICOF that Workday offers. EIB (mentioned earlier) can be used as well (see below diagram.)

-You may also want to interface Workday Benefits to the various third-party vendors a company uses -> Cloud Connect for Benefits is probably your best friend especially for Cobra integrations int he United States. 

 Since this post is only about the four Compensation pillars within Workday, and Interface/ Integration warrants a separate post, I'll leave it at that for the time being.

(The blogger/consultant, after having spent most of 2023 implementing Advanced Compensation, is now providing operational support on a compensation review cycle launched this month for a global group with a 70,000+ headcount.)

My 10th anniversary as a global Workday expert: Ready for the next 10 years

PARIS

 In that distant summer of 2013 when I spent ten intense days in London going through the highly demanding Workday certification process, I wondered whether that was time well spent. After all, few people in continental Europe could spell Workday then - actually, the only place to go through the certification course and exam was in London, nothing in Paris or Amsterdam. Apart from the UK, there were few customers in Europe, and most were just subsidiaries of US companies. Many of my friends and professional contacts questioned my sanity as it made more sense to continue as a system selection consultant dabbling in several tools like Oracle, SAP, Cornerstone and the myriad other HRIS systems available on the market rather than getting associated with just one. 

 Rewind a couple of years. I was presenting at the HR Technology Conference in Chicago and one late afternoon as I walked back to the hotel, whom did I see walking in the same direction? None other than Dave Duffield, the legendary founder of PeopleSoft and Workday. Many people will remember that his fight to protect PeopleSoft from Oracle's clutches are now the stuff of legend (I recounted that epic fight in my book High-Tech Planets: Secrets of an IT Road Warrior). I went up to him, introduced myself as a former PeopleSoft product manager in Sandy Riser's global team. "Great team," Dave was gracious enough to say, "you guys built an amazing number of payrolls in just a year and a half." I then asked him the burning question that has been on my (and many people's) mind: "After PeopleSoft, why didn't you just retire rather than embark on such a difficult project? After all, you revolutionized the HR technology space with PeopleSoft. Isn't it time to relax and enjoy a job well done?" I still remember his reply as if it were yesterday: "Two reasons. One, at age 60 I am too young to retire. Two, having lost PeopleSoft was a blessing in disguise because unencumbered by a legacy system we can focus on building an entirely modern system that would fix the limitations of the older generation of HR systems and be a native 21st century tool." 

My 12 clients made it happen

 I couldn't agree more as I had reached the same conclusion that our profession and industry needed a true cloud-based system. And since I did not want to be a mere gawker the way many analysts from Garther & Co are (pontificating on systems they have no idea how they are built or implemented), there was no other choice: I had to get my hands dirty and what better way to do that than on a new system with the potential to disrupt the market? So, after joining Wipro, then a Workday partner, I got my certification, started working on the first implementation in France and other countries. A year later, I went solo making a second strategic decision: to give a wider array of customers the benefit of my two decades of HRIS experience and now with the added benefit of being able to implement the most sophisticated HR system on the market. 

 We all make mistakes in life (business and otherwise) and I've had my share of those, but when it comes to investing in Workday and becoming a well-known expert in this system in addition to overall HRIS, that was one of the best decisions I ever made. Fast forwarding to June 2023, the exact month when 10 years earlier I became the first person in France to get certified on Workday, when I look at all that I have accomplished, I need to pinch myself to make sure I am not dreaming. I have been involved in 12 Workday implementations, many starting with Core HR as the foundation module, others on specialized modules, especially my favorite, Compensation: today more than one million employees are managed in Workday thanks to yours truly's modest efforts (in conjunction with others, of course). 

 Having my base in France, my clients have been logically Europe-based, but my international outlook means that most of them are global and in pre-Covid times I visited more countries around the world than many people have had hot dinners, in order to organize workshops, demo the system as we go through various iterations: design - build -test - training and deployment. I have partnered with hundreds of heads of HR, HR managers, Comp & Ben experts, HR Business partners, IT professionals as part of a client's resources along with dozens more of consultants and managers with Workday and the myriad implementation outfits part of such projects. A cast of thousands, literally. Just one round of Workday testing (End to End or User Acceptance) can easily bring me in contact with 100 people between individual testers, test leaders, system consultants and various managers involved in the process. 

The blogger with a Workday partner

 So, what's next? I'll answer with another question: Why change a winning combination? I may dedicate some time to helping a company re-engineer its HR processes, search for  a new system (where I keep a strict neutrality), even implement another system (always good to look at what others do - as I did recently with an Oracle implementation.) But most of my time will be spent on bringing my expertise to companies helping them make the most of their Workday investment, especially in my favorite areas:
-Core HR
-Compensation (both Core and Advanced - but also Payroll with the number of countries covered increasing)
-Security
-EIB (mass loads)
-Reporting.

(The last three running across all modules as I think no Workday expert can afford not to be cognizant of these three features as they are key to any implementation, be it Financials, HR, Recruiting or Learning.)

More modules/products/features around the above but also Extend and AI will appear which will keep me busy in the foreseeable future. Even current features will become more sophisticated to the point that most consultants will have to decide what their areas of expertise are, and these will become more and more limited in numbers as they specialize. 10 years ago, one could have a good command of most of Workday's modules. It is now nigh impossible. The future looks therefore quite bright, especially when no serious alternative to Workday is appearing on the horizon.

When Workday’s “Power of One” fails: An example from Payroll-Compensation integration

LONDON

At the turn of the millennium, PeopleSoft, the then-undisputed HR tech leader, asked me to join them as Product Strategy Manager to help them with their European payrolls. Until 2001, PeopleSoft only had payroll for North America. For other countries the spin was that what really mattered was to have all your employees’ key data in one global system (Core HR) which you would then interface to various downstream systems (Payroll, Finance, Time Tracking, Expenses etc.) depending on needs. The underlying message was that Payroll was just an engine, not a strategic tool and therefore there was little value in having it in the same system. Actually you didn’t even need to have it in-house, just outsource it to ADP and the likes.

That was until PeopleSoft realized there was a lot of money in the Payroll business and that there was a lot of value in a Payroll-Core HR/Compensation integration after all. That’s when they built a global team, of which your humble servant was part of covering France and Spain. In a payroll blitzkrieg unheard of in the industry until then and since, we brought to the market close to a dozen payrolls (France, Spain, UK, Germany, Switzerland, Netherlands, Japan, Australia and a sprinkling of other countries).

Suddenly, in a not-so-subtle move that I found highly entertaining, Payroll/Compensation integration was all the rage. At every meeting with customers, at HR tech conferences, in press and analyst encounters, our message was that an HR system without payroll wasn’t worth the pixels it showed on your PC monitor. You needed the Payroll module as a mandatory accessory to your global Core HR/Compensation.

Fast forward two decades and to today’s indisputable HR Tech leader, Workday. Just like its forerunner, Workday started with a limited number of payrolls (and no finance tool), so it was all about having a global core HR system, the rest was dismissed with a wave of the hand as optional, ancillary and unimportant. Then came finance and the slow drip feed of payroll and, lo and behold, out of the cloud emerges the fundamental, indispensable need to be able to integrate both within the same system with the same data model and UI (which now goes by the fancy term of UX). Workday coined the phrase of the Power of One which as they say in their marketing material does not “require any process or configuration changes on your end”.

Well, as we all know, there’s marketing and there’s the truth. Or, to paraphrase Mark Twain, there are three types of lies: lies, statistics and software marketing (truth be told, Workday is certainly not the most egregious perpetrator here; the Oscar probably goes to Oracle and their fanciful claims about basically every product they throw at their customers.)

But, back to Workday, since this post is about Workday. There are many examples where the Power of One is contradicted by the reality of many. The one that I want to focus on deals with one of my favorite Workday and HR topics: Compensation under its various guises: Core Compensation, Payroll and Compensation Review.

Compensation Review is the process whereby you increase employee salaries and award them bonuses and stocks, usually once a year, based on their performance (and the company’s.) To run this process Workday has a pretty strong module called Advanced Compensation, on which I got certified in 2019. I’m not going to inflict boring technical and business details on you, but suffice it to say that in order for a bonus to be calculated you need a reference compensation if your bonus is going to be a percentage rather than an amount. That reference compensation (which is called Compensation Basis in the Workday lingo) is usually the standard salary (Total Base Pay in Workday-ese ) or it can be created from scratch to include any compensation component such as allowances as long as these compensation components are…available in Workday. If they are not (such as overtime which is often part of another tool, Payroll) then you need to load those amounts back into Workday using some esoterically named Eligible Earnings Override.

 

The villain revealed

So far so good. Everybody understands that Workday cannot retrieve a data not held within Workday. And since a majority of Workday customers use third-part payrolls (especially outside North America), it is perfectly understandable that these amounts need to be extracted from your payroll system, appropriately formatted  and then loaded into Workday for Advanced Compensation’s consumption.

 

Except that, and here’s the rub, there are many customers who use Workday Payroll. In that case you’d assume from Workday Payroll to Workday Core/Advanced Compensation the data should flow as easily as the River Thames under London Bridge.

Wrong!

Rather than being able to point your bonus calculation to the relevant Payroll earnings (or sum thereof) you still have to go through the whole cumbersome task of extracting/preparing the data in payroll, then loading it into Workday, then going and referencing it for your bonus calculation.  Where is the Power of One? Looks more like the madness of many ─ as we all know how messy integrations are. When you’re using separate systems, no queda más remedio as my Spanish friends would say, you have to build that interface. But why would you have to do that when you’re running the SAME system? That’s what you were told and sold: buy one and no integration need, right?

I heard that Workday is planning on fixing this, which is long overdue. But why did you even have the issue in the first place?  Bad product design happens everywhere, even with the best. But then be a little modest when taunting your Power of One which has been found lacking.

And don’t get me started on absence management. With Workday you can track your employee absences in Core HR, in Time Tracking and via Payroll as well. In Core HR you have it more than once: the standard Absence features and the Leave of Absence functionality. Like estranged siblings, neither seems to be aware of the other’s existence. Another product strategy gone mad.

Workforce Planning? Integrated only in name. Another Power of One derailed.

Alright, I thing I’ll stop here. You get my drift. Time for Workday to spend a bit less time on Marketing and more on Product Strategy and Development.

 

(This is the latest in a series of posts on Workday. The most popular feature below. Many more can be found by searching chronologically the list of posts on the right-hand pane.

-Feb. 2021: "10 features Workday should deliver - yesterday!"

-April 2016: "SOW - A Comparison of 3 Global Cloud HR vendors: SAP, Oracle and Workday"

-Feb. 2015: "An open letter to Workday's Bhusri and Duffield: Time to fix Europe"

-May 2011: "PeopleSoft vs Workday - Old vs New" )

 

(The Global HR Technologist is enjoying a 4-day Jubilee Holiday in London, a place he has been visiting relentlessly on business and pleasure for over three decades now, going back to when he was a teenage student in Britain under the Iron Lady’s rule. “When a man is tired of London, he is tired of life; for there is in London everything that life can afford,” said Dr. Johnson a couple of centuries ago. So true now as then.)

Payroll vs Compensation: The sempiternal HRIS conundrum

RIO DE JANEIRO

Recently, a UN agency which is making the transition from an SAP-based HR system to Workday asked me what they should keep in their legacy system and what should be tracked in Workday. I was glad to share my knowledge and experience as this issue is something I witness in every HRIS implementation I work on. (Disclosure: In my distant past, I worked several years for the UN in New York and Madrid.) 

To understand the complexity of the analysis to be undertaken, you have to realize that the situation is radically different based on whether this is the first time you're embarking on an HRIS project versus whether you already had an on-premise HRIS system and are now moving to a cloud-based one.

If the latter, two situations may arise:

(1) Your scope includes Payroll: In that case it's to a large extent a shift-and-lift exercize. Of course, you may struggle with the limited availability of country payrolls in the cloud system you're moving to versus your legacy system (for instance, SAP has scores of country payrolls whereas Workday has only 4, with 2 more in the works.) This will limit your shift-and-lift capabilities as for the countries in your scope missing a cloud payroll you'll find yourself in a situation similar to the next one.

(2) Your scope doesn't include Payroll: either because (a) your cloud vendor doesn't cover your scope fully, or (b) because to minimize risk, you decided to keep Payroll out of scope for the time being. That's when you have to make a determination what to keep in your local Payroll system and what can be moved to your new cloud system's Compensation module. 

This exercize is similar to the one you'll have to run if you've never had a full-fledged HRIS in the first place. Or, which is the same, if your HRIS is basically your payroll system where HR Admin/Compensation and Payroll are subsumed in the same tool. You'll be surprised by how many companies, domestic or global, still fall in this category.

What is Payroll and what is Compensation?

There may be as many answers as there are unique circumstances. However, one can safely adopt the  following rules of thumb:

• Gross versus net: Compensation, and therefore your new HR system, should definitely hold your gross salary and similar items (such as allowances), whereas the net amount will be held by your local payroll. Don't get confused by the word "calculation" and think that all calculations are made in Payroll and simple amounts are held in Compensation. A Seniority allowance will have to be calculated first in Compensation and only when you have the amount due to the employee, will it then feed Payroll which, after performing a gross-to-net calculation, will then disburse the amount to the employee (via direct deposit or check.)
  
  
• Complex calculation: If a given compensation component needs to be calculated based on criteria and data which are not tracked in your new HRIS (let's say, time worked) then the decision is obvious: only track it in Payroll. 
  
  
• Compensation Package/Total Rewards visibility: One of the advantages of a modern HRIS is the ability to have all your employees' full compensation at your fingertips with a few clicks. If a compensation component is considered as meaningful and can be calculated in your HRIS then it should be part of Compensation. This criterion should definitely be taken into account when selecting a system as Workday, SuccessFactors and Oracle HCM Cloud (a.k.a. Fusion) are far from being interchangeable when it comes to their ability to take different data types into account when calculating a compensation item. 
  
  
  
  
  
  
• Document generation: If there is little doubt that producing a Payslip is a task best left with your local Payroll tool(s), you may decide that it makes sense from a business perspective that storing it in your new HRIS as part of Employee Documents (depending, of course, on your vendor's technological prowess.) On the other hand, if you use your HRIS to run your Annual Salary Review process, then generating your employees' Compensation Statements will be a task for Compensation, not Payroll.
  
  
• Many other criteria  and factors could also weigh in, depending on a company's unique circumstances, but remember the cardinal rule: Your new HRIS should NOT be a carbon copy of your Payroll, the two are linked but as explained in the few examples provided above they are quite different beasts and as such should be treated differently. 
  
  
  (The Blogger/Consultant, after having just implemented an Oracle-based HRIS is now taking a two-week vacation in the Wonder City before starting a new HRIS implementation project, this time based on Workday.)