Payroll Perspectives - Karl McKenna

Speaker A: Foreign.

Speaker B: Hi, Carl. Thanks for, uh, joining me for an episode of the Peril Perspective. So, yeah, let's just start off with if you can introduce yourself and give us an overview of your, your career and life at NLC.

Speaker A: Yeah, cool. My name's Carl. I'm Karl McKenna. My role at the moment is as a consulting manager. So I'm managing a team of nine or ten consultants and three developers. And I took the, uh. Well, I'll take a step back. You probably don't meet many people that, you know, dreamed of becoming a payroll person. That's not, you know, it's not something that you, uh, set your eyes on when you're in high school or college or whatever. But, uh, I was over in Japan teaching English and my, my in laws were approached by myob, or MYOB as Trans Hasmin might, might call it, to purchase the outsourced payroll for Pay Global, one of their payroll systems. And we ended up doing it and I moved from, um, moved from Japan where I was teaching English, back to, uh, Wellington in New Zealand and the rest is history. So we had an outsourced payroll team. There's a few of us that's grown substantially in size and I've moved over into payroll consulting and leading that team.

Speaker B: Yeah, I noticed that you'd been there for nine years, obviously since its conception. So how's your role changed in that time?

Speaker A: Yeah, so as a, as a family business, it's pretty easy to. It's uh, kind of like tumbleweed. Um, you just sort of pick up roles as you go and sometimes you end up keeping some of them. And I've had a brief stint of working in the outsource payroll team, actually processing the pays, managing it for a short period of time, doing account management and sales for the whole business. You know, sort of picked up a little bit of the marketing side of the business and haven't really dropped that as, or maybe in the last couple of years. I have through to doing actual consulting work and implementations to now managing that team. I still do a lot of the sales work. We don't have a, a salesperson. We have a lot of, a lot of leads that come our way that we did sort of manage and deal with that way. Um, so I think that the family business side of it is meaning that you basically end up with a few different roles. They all come into one. You don't have the right job title, so to speak. But my first and foremost role at the moment is managing the consulting team and all of the projects that we're doing in that space.

Speaker B: Yeah, I can definitely see that over the years you haven't really lost much, you've just kind of gained more.

Speaker A: That's right.

Speaker B: Which does definitely happen.

Speaker A: That's the case. That's the case for all of us in the family as well.

Speaker B: Perfect. So I suppose obviously it's a family run business, so that definitely is a key factor in your, your love and passion for it. But what has kept you around for, for the nine years and what is it specifically about payroll that you love?

Speaker A: Yeah, I think that's changed. I could say maybe matured. Matured with me. But what uh, what I, what I really love now is, is the complex problems like helping a business fit their requirements and their business processes into, you know, what's compliant, that, you know, a lot of businesses don't want to change what they're doing, but obviously they want to be compliant. So how do you make that work? What tools do they need? Is it, you know, is it the fact that the system that they're using isn't going to be the right system moving forward? Is there something that can supplement it rather than a full, you know, a full change and having those really long winded conversations around the parts of compliance that might be a little bit more gray or up to uh, you know, open to interpretation and trying to work out exactly, you know, where that line is, you know, sprinkled with a bit of, you know, legal assistance or sign off and you know, those conversations I really like. And then after that, probably implementations and big scale implementations where you can sort of see the magnitude of that change and how much, you know, business process and you know, how much adoption there needs to be at a business through change management and whatnot. Especially if there's, you know, HRAs on top of payroll going in?

Speaker B: Yeah, definitely. Those projects elements, always something that, you know, people have passion for. Sort of when they get to that sort of mid to late career, I say, you know, they've been in payroll for, for a big chunk of time. And so you mentioned the, the different clients that you work with. Is there a specific type of industry that you seem to work with more or that the system sort of suits more?

Speaker A: Not necessarily, no. We've got, you know, so we've got two different distinct parts to the business. We've got our, uh, general consulting and then we've got our outsourced payroll. And in the outsourced payroll, it's really industry agnostic. We don't really work with one over another. It's, you know, potentially Some industries might favor outsourcing their payroll more than others. I haven't really noticed that. You know, we've got retail, we've got hospitality, we've got manufacturing, things like that. So we're covering, you know, a decent, a decent range of industries. I'd say more it's a business by business. You know, the concept of outsourcing, uh, your payroll can be quite scary. You've always had someone you can walk up to or you know, your staff can walk up to. I find probably more in that waged, weekly paid, you know, complicated payrolls. They like having someone there in person. And so some, sometimes we've worked in those industries and with those businesses and we, we're doing all of the work in the background and then, you know, they've got someone who, you know, knows the business and knows the people and they're the smiley face, you know, on the, on the ground, so to speak.

Speaker B: Yeah, honestly, I've worked with many different businesses and recruited for many different businesses in outsourced and obviously in house as well. And plenty of conversations with different leaders about what's better or what suits their business and, and sometimes they go through cycles of outsourcing and bringing in in house. Um, so it is very interesting to hear your thoughts on it as well. That it's a little bit of that scary element, not having someone on the ground for people. But finding a good partner definitely benefits an organization as well.

Speaker A: Yeah, we had a client recently where they literally have a window that you can walk up to and slide open and the payroll team are behind it. And so we're doing payroll for them, but they still have, you know, some of their administrative team sitting in that office where someone can walk up to and sort of slide open the payroll window and you know, ask a question about their pay slip. You know, I love that.

Speaker B: It's like a little drive through for payroll.

Speaker A: That's where all the wizards hang out.

Speaker B: Yeah, exactly, the payroll wizards. So again, speaking more about the outsourced side thing, what's the biggest challenge that you find working an outsourced provider, um, versus, you know, an in house?

Speaker A: Yeah, I think there's a few. I'll stick to a couple of them. I think from a, from a contract and you know, like a management perspective, it's trying. It was difficult initially for us to keep a really clear handle on the scope of services that we were providing. Clear line in the sand, so to speak. And that really became for us what is now called our virtual payroll, where we sort of open that up into a, uh, you know, you've got an expectation of an outsourced payroll provider being the same as if you had someone sitting there and they could do, you know, this random report or go and you know, run this thing for you. And our previous service models were, you know, a lot more we're going to do this, you're going to do that, we're going to do this, you're going to do that. So we've made a lot of change in the last couple of years towards that virtual model being a, uh, you know, we are essentially your in house payroll team but we're just not there. And we've seen, we've seen that work quite well and we've got funny stories from companies where because we're managing the payroll From a company name.com email address, people will walk up to the finance team or the people in culture team, HR team and be, oh, I'm looking for Carl. Uh, I've been emailing Carl and a payroll and everyone's sitting there like we don't have a Carl on the team. Um, and then they work back and realize that they're talking about us at nlc. So from their perspective that works really well. The employee is feeling like they're still talking internally. They're not disconnected from the culture of the business or anything like that. So that was a bit big one for us.

Speaker B: It sounds like you have approached that challenge with a very smart mind to, not that you're tricking people into thinking that you're there, but you're making it seamless so that it does feel like they're getting the same support or same help as if you were uh, there on site as well.

Speaker A: Yeah, that's right. And I think that's one of the, one of the expectations of the client when they're, when they're looking to engage with us is what that employee experiences. You know, people have, you know, rightly or wrongly negative perceptions of outsourcing that it's, you know, really there's a lack of personality and disconnect from the business and you know, we've tried to challenge that and make it a bit more, you know, a bit more connected. And I'd say probably the last, the last thing that I was going to raise around the challenges is from a hiring perspective. Uh, you know, we've got, we've got very clear ways around how we like to do things and how we operate and how we train and how we onboard. So hiring is a, always been a challenge in the sense of trying to find the right person. It's always been a person fit first, but then trying to bring in someone with the right level experience but not too much experience so you don't have to unteach um, them things before teaching them how we do things. That's probably the other challenge.

Speaker B: Do you find that you have more success with people that have experience in other outsourced providers or just with any sort of type of initial payroll experience?

Speaker A: Yeah, we've, we've hired well across from some other outsourced payroll providers and they've integrated into the team. Well, um, I think that there's a big difference between running, running, you know, sole charge person. You know, they've just sat there and run their, you know, their 300 employee pay or whatever it is week in, week out. They've got their set routine to then turning up and having, you know, 10 or 15 different companies that you run pays for, but you're doing it with other people in the team and you've got to share this role and that role. So yeah, that's where people fit, I guess, comes into it.

Speaker B: Yeah, it's definitely more collaborative and I suppose the higher level of multitasking because you do have multiple different stakeholders all needing the same kind of level of service, possibly all needing something urgent last minute.

Speaker A: Yes, that's right. Yeah, everything's, everything's always urgent and you've always got a couple of minutes, a couple of minutes to get it done. So keeping, um, people that have been with us for a while are super used to it. I think there's a shock to the difference in how outsourced payroll works to being a sole charge payroll person or in a small team. But not that it's a, uh, bad challenge, it's just a different way to work.

Speaker B: Perfect. Cool. So the next question is actually a little bit around AI. I know it's a hot topic in payroll and just across the, the market in general. What impacts have you seen from the introduction of AI and payroll?

Speaker A: Yeah, I think, uh, it's scary, right? Like, I think that there's going to be a long time. There's going to be a long time for people to gain, you know, the right level of trust for AI and payroll to be, you know, intertwined. But I think we will see good impact of AI in parts that impact payroll. Just probably not in terms of decision making, I'm assuming. I think the things that I've seen and things that I've gotten excited about, you know, AI helping with workforce management and you know, getting, getting really good rostering patterns sorted or finding the right people for roles. You know, working out good analytics around, you know, peaks, peaks and troughs for, uh, you know, businesses that, you know, you're over hired here or you've got too many people on the books. So you know, we're going to predict that next time around it's going to be a bit, you know, a bit less requirement for resources. You only need three people at that time of the day. Great for analytics. You know, that's one of the, one of the best things that AI can do is pattern recognition and working things out for you. So you know, you can see in both New Zealand and Australia great reporting opportunities and have seen that with regards to payroll trends, variance reporting and other such things within the pay, I think that we're some time away from it being involved in the pay run where dollars are being calculated and actions are being done. But you know, who knows, someone might do it and you know, and show us that as possible and people will, you know, start to gain that trust. And I think people are always worried about where their data might go. Rightly so, obviously rightly so, but worried about where the data is and what's happening and you know, for as long as you can ask Google if it's a good idea to add glue to pizza to make it a bit more stringy and it agrees with you, then I think that they're probably not going to, they're not going to want to get payroll involved with AI at that decision or that financial level.

Speaker B: Yeah, I think it has a lot of implications when it comes to just keeping uh, information confidential, which is a very key part of payroll. But I have seen, and I think I'm really hopeful for the future of payroll just because more of the mundane or analytical stuff can be taken over or at least you've got a second set of brains almost where you can sort of bounce ideas off. And as long as you're sort of keeping that confidential nature or you have your own system that you use with different firewalls or whatever else built in, it can definitely add a lot of value. And I think there has been people that I've discussed this with that little bit hesitant and scared about the future of payroll and what it means for their jobs or what it means for the, for the industry. But I can't see it changing anything drastically in the sense of what resources we would need. It's just slightly changing the scope to hopefully be more interesting work.

Speaker A: Oh yeah, I completely agree. I think that the work that we do, um, it will just be enhanced by AI rather than replace. In that sense, you know, you're going to have way better view, uh, of your data or, you know, um, you know, you're spending less time adding employees. Like you're saying, you know, if someone's got this role, then they always have this cost center and this thing and this thing and this thing. You know, starting in defaulted information, um, sorted payroll is also pretty repetitive. You know, it's pretty easy to predict what you're going to be doing next Tuesday or next Wednesday or next Thursday. Um, ah, so, you know, having repeatable tasks managed, um, it's totally doable.

Speaker B: Yeah. And I think you're always going to need the human element there. You know, even if I talk about the supermarkets, you know that they've got cameras that are identifying the goods that you're putting through and saying, hey, this isn't, you know, an orange, this is a nectarine. And you know, it's, it can be often wrong. So, you know, you still need that human element to be able to override what, you know, AI has decided to come up with or to at least do sense checks on it or whatnot as well. Cool. And then the last one, I think we sort of spoke a little bit about sort of, you know, hiring for your team and the different skills attributes that you look for and how it's different to an internal payroll person. But I suppose, is there anything else that you can expand on that in the sense of if you're looking for people that don't have the outsourced payroll experience or you, you can't find anyone in that space, what else is it that you're looking for?

Speaker A: Yeah, uh, we're always looking. And this is across the business, I think a little bit to do with the small business. You know, we're at about 35 people at the moment, I think, you know, so people fit and getting the right person for the team is huge for us. That's, that's really one of the first things that we're looking at because anyone without payroll experience can be taught it. So the first and foremost is how this person's going to sit within our team. And then after that it's, can they, can they multitask it? Can they, um, you know, can they handle the peak and trough of high demand to nothing? You know, like you, you know, five customers sending an email at the same time. You don't have to do all five emails at the same time, but you've got that on the back of Your mind, you know, like, you know, that that's there. Uh, how are you going to handle that multitasking? You know, can you work really, really, really well as a team? Because that's, that's essentially, that's essentially where we're at in terms of the, the, the main parts that lead to our success of being able to run, you know, whatever it is, 60, 70, 80 pays in a day for some companies across, you know, the different companies that we do pays for. It's not achievable without that.

Speaker B: Definitely. And you know, in some ways I actually find hiring for payroll similar. Like if I was to hire someone in recruitment or for my team, I find the key factor to success, which isn't always easy to work out in an interview or initially is actually the resilience and persistence to keep going through challenges or through those busy times and the flux. Because it's a little bit the same in recruitment. Sometimes you're flat out and you just need to give, give, give, and then it sort of drops to the other end where you're sort of having to find things to do and way to impact the job and things can go well and things cannot go well. So it's, it does that up and down. So I think that's why, that's another reason why I love recruiting in that payroll space is just. It has a lot of similarities in the, the key attributes that ah, you're looking for.

Speaker A: Yeah, no, I completely agree, completely agree. There's, yeah. A certain makes of people. Right,

Speaker B: exactly.

Speaker A: Earlier, I don't think, I don't think anyone ever set out to be a payroll person, but. And it finds you and then you're like, wait, this is actually quite fun. You know, I like this. Uh, I like the.

Speaker B: Well, you were a teacher in Japan or teacher and when you got approached to, to come help a family business. So.

Speaker A: Hold on, hold on, hold on. Spending my time in the bustling metropolis of Tokyo or let's go and run some pays. Let's go. I made my choice.

Speaker B: Yeah. Most people that I speak to do say that they didn't choose to be in payroll and they fell into it. And it's interesting to hear everyone's different stories about how that happened. But to be honest, I do think that's also changed in the market. You know, there's a lot more people doing payroll courses or whether they know someone who's been in payroll or just because it's been in the news and media a lot that, you know. Yeah, peril's not gone right. Here or, or whatever.

Speaker A: No, that's a really, that's a really good point. That's a really good point. I think that's, um, that has, that has genuinely changed. All jokes aside. Um, that is, it's, it is more of a professional, um, role now. It's, I think long gone are the job. The uh, the time where it was a job that was looked after by a receptionist or it was a part time. Like you're doing this, but you're also a little bit of a bookkeeper and you're doing that. And it's actually a genuine role with a lot of responsibility and a lot of, you know, a lot of education and training. And I think that's probably why a business that outsourced, with outsourced payroll works so well nowadays, is that people are realizing there's a massive risk there and they want someone with, you know, that ongoing understanding of legislation. You know, they're up to the, you know, up to date with regards to what's happening and what's changing rather than it being one quarter of someone's job and they're worried about something else and then something else.

Speaker B: Exactly. And the fact that you've got an outsourced provider, if, if someone did leave in your team, you've got the rest of the team there that know this business and can support risk there for their own internal talent, isn't there?

Speaker A: Yeah, absolutely right.

Speaker B: It's. Well, look, that pretty much wraps up all the questions, so I really want to thank you a lot for joining me for the, uh, podcast and for answering all those questions. You know, definitely the first person that we've had come talk about, you know, outsource in such detail and it's, it's been really exciting to hear a different perspective or insight as into peril.

Speaker A: No, it's been awesome. It's been really fun for me. So thanks, thanks for inviting me and having me.