Many construction companies have been burned in the past by purchasing HCM solutions that didn’t adequately run their payroll. But technologies are improving, and payroll companies are learning about the unique needs of the construction industry.
Integrating an HCM system with your ERP takes planning, patience, and plenty of due diligence. But it doesn’t have to be a difficult project if you know how to work with your HCM provider. Let’s take a look at some best practices before, during, and after finding the right HCM company to work with.
Related reading: What to Expect When Integrating Multiple HCM/ERP Systems
Before You Begin
Before you start looking for an HCM vendor, you evaluate your payroll and time-and-attendance needs. The better you understand your current situation, the more effectively HCM sales representatives can serve you.
Evaluate your current systems
It’s important to know what isn’t working with your current solution. Start at the system level and identify how your current software is holding you back. What does the landscape look like today? If it needs improvement, where is there room to improve? Where are the process breakdowns, and what are the gaps? Are you looking to have a true hire-to-fire HCM solution?
If you’re happy with your HR system, but payroll or time-and-attendance is lacking, focus on those two systems rather than an all-in-one solution.
Also think about the gaps within each module:
- What specific features and capabilities are missing?
- What tasks are too clunky? What steps are slowing you down?
- What do you have to do manually that you’d like to automate?
- Is there anything that isn’t reliable?
- Is there anything that doesn’t play well with the rest of your system?
Know your overall process improvement goals
Based on your systems evaluation, determine a clear goal in purchasing a new HCM solution. Having goals in mind when you begin the process will make the best use of everyone’s time. This will improve the overall process immeasurably, and it will avoid painful bumps in the road.
Prioritize your must-haves, your great-to-haves, and your not-important-to-haves that you’re looking to solve for. Be prepared to ask HCM vendors specific questions about each of them.
While Vetting HCM Vendors
Once you understand your basic HCM needs and goals, start conversations with payroll vendors. Follow these best practices as you evaluate your options.
Hand-picked related content: Major Considerations for Choosing the Right HCM System
Don’t eliminate HCM vendors too quickly
Don’t go in with prejudices toward a particular vendor, even if you’ve had a previous experience with them. Technologies and service models change, and your experience from a decade ago may not reflect the vendor today. Give an equal opportunity to anyone who fits your profile.
Many construction companies have unique incentive policies, bonuses, job rates, production pay, or other business rules. In the past, payroll systems (and time-and-attendance) focused only on basic rules for calculating different pay or wage rates, and they weren’t equipped to handle the complex rules of a construction business.
Today, many HCM companies have evolved their wage assignment engines. Before you purchase a new system, share your spreadsheets or other methods for determining these important pay policies. Confirm that the vendor can accommodate, or find out how close they can get.
Make sure all of your systems that interact with employee pay can talk with a payroll system. Take inventory of your existing systems that share data with payroll to make sure the vendor can accommodate. For example:
- Exporting payroll data to your Accounting/Financial System (GL)
- Importing financial data (loans, deferrals, stock options) from your 401(k) system
- Importing employee expenses from your expense management system
- Exporting employee new hire and Masterfile changes to other systems
Ask good questions
Not every payroll rep understands the construction industry. Look for those who do. Ask questions specific to the construction industry in general, and your organization in particular:
- How do you handle prevailing wage?
- How do you handle union rules?
- How do you address Certified Payroll requirements?
- How does your time-and-attendance handle labor transfers?
- How do you integrate with ERP for job costing?
Make job costing and certified payroll a central part of your dialogue with vendors. The complexities of these processes are simply beyond payroll systems, and many sales reps who don't specialize in construction don't understand how these processes work.
Complementary solutions, such as Contractor Central, can help bridge the gap. Contractor Central is IDI's comprehensive web-based application for construction companies that want to outsource payroll while keeping their best-of-breed ERP.
If you aren't confident that an HCM vendor understands the breadth of your needs, keep looking.
Be open to recommendations
There may be products that you might not realize you need. Be open to having discussions about additional HCM solutions that might be right for your construction company.
During your internal evaluation, you looked at your systems and should now have a good understanding of your gaps and shortcomings, and the improvements you need to achieve. Share these in conversations with HCM providers.
Ask for the vendor’s opinions and feedback, and keep an open mind toward solutions you haven’t considered before. Just because an HCM salesperson recommends additional spending, that doesn’t mean they don’t have your best interests in mind.
Watch for red flags
Be leery if your HCM rep is quick to say they can do whatever you’re looking for. Construction is one of the most complex industries a payroll company will ever deal with, and many vendors aren’t able to provide the solutions you need. Your payroll rep should ask plenty of questions, and you should be prepared to provide a lot of information about your payroll processes.
After You Purchase
Once you’ve chosen an HCM provider and signed a contract, the implementation project begins. This is a critical time in your work with an HCM company. Follow these best practices to help ensure a smooth collaboration.
Ask about the implementation process
It’s never easy to overhaul your HCM and ERP systems, even when you’re looking forward to improved capabilities. You want assurance that the project will go smoothly and that there won’t be any unpleasant surprises along the way.
Don’t hesitate to ask questions about the integration process. You need to know what your HCM provider expects from you, and what to expect of them.
The implementation team is your partner to ensure your overall integrated solution meets your company's specific needs. Trust them to help you do this successfully.
Know the timeline
During the sales cycle, your payroll provider will take a 10,000-foot view of the implementation. Once the project is underway, they’ll go in and get a much more granular understanding of the project. Ask for an updated timeline that includes design, setup, and testing.
Also use this time to coordinate your team’s calendars and set up meetings with your payroll provider.
As you’ll see from the updated timeline, the HCM implementation will be a process and it will be an investment of time. Whatever solutions you're integrating, expect the overall process to take months, not days. If your company has several complexities to manage — such as union rules, incentive pay, job costing, or unique salary pay rules — the implementation project will require more time.
At the same time, you can keep the timeline as short as possible by being responsive and available to your vendor's implementation team. Be willing and open to have conversations and provide the information your partners need. The more quickly you can respond, the quicker the project will go.
Once the systems have been implemented, you'll need to run some dummy payrolls, job costing, and GL reports to check for errors. It's important to test thoroughly before going live to ensure that you get the results you're expecting.
Use your vendor’s implementation team as a resource to know how to set up a good test plan, then ensure that the test plan is accurate. Although it can be tempting to rush through this phase, take the necessary time to test thoroughly and rely on your vendor for feedback and troubleshooting.
Payroll Answers You Can Count On
Implementing a fully integrated HCM/ERP system is a major step, and it’s important to find the right partner for your construction company. But the process doesn’t need to be overwhelming, if you follow best practices for working with your HCM provider.
You can trust IDI to help ensure your HCM integration goes as smoothly as possible. We’ve been active in the construction industry for more than three decades, and we have the expertise to help you get the answers you need.