3Sixty Insights #HRTechChat with David Barak, Chief Marketing Officer of CloudPay

For the latest episode of the 3Sixty Insights #HRTechChat video podcast, my guest was David Barak, chief marketing officer of CloudPay. Through a unified cloud platform, CloudPay provides managed global payroll in more than 130 countries. The company also offers treasury services across this geographic footprint. Here’s a sampling of the ideas we covered:

  • Virtually no employer ever really, truly plans for global payroll in advance. At some point, most organizations that get large enough and global enough get to a place where their company-wide payroll is practically unmanageable. This becomes the official outset of a typically three-stage process that eventually gets them to a straightforward scenario wherein their global payroll is under control and working for, not against, them. The journey there is almost always backward. You’ll have to watch the video to learn what these stages are.
  • Sure, there are vendors of full-suite software for human capital management who offer a substantial ability to deliver in the grand theater of global payroll. What’s intriguing, however, is that global payroll is really a point-solution deployment. The complexity of it just lends itself to this. There is a need for so-called best-of-breed providers because the expertise in it must be deep and ability to deliver, broad.
  • Global payroll is never a technology-only exercise. If the software isn’t up to task, yes, insurmountable problems will scuttle efforts. Deploy highly capable technology that is just right for global payroll, however, and the constantly evolving, highly complex regulatory environment remains. This is why employers ready to get their global payroll in order behoove themselves to partner with a provider that has a cadre of subject matter experts on hand to help the user navigate the span of local, regional, and national laws applicable to processing payroll internationally.

If global payroll is at all interesting to you or important to your work, then you will definitely enjoy this episode of #HRTechChat. I know that I did. Enjoy the video.

Our #HRTechChat Series is also available as a podcast on the following platforms:

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Brent Skinner 00:09
Welcome, everyone to the latest episode of HR tech chat. And with us today, we have David Barak, who is Chief Marketing Officer of CloudPay. Welcome, David.

David Barak 00:22
Hey, nice to see you. Thanks for having me on the show.

Brent Skinner 00:25
Oh, yeah, absolutely, absolutely. You know, we had a, we had a good conversation with one of your colleagues, several weeks ago made, it might have even been over a month ago, but, but it was super interesting around just some of the challenges with global payroll. And, and that’s, that’s just to say, challenges with global payrolls feels like an like an understatement. And, and I know that, you know, we’ve talked, we’ve talked about cloud, you know, delivering payroll through the cloud, on a global scale, what are some of the idiosyncrasies there are some of those challenges? What, you know, what are some of the newest trends in payroll? And can you do them on a global scale, like on demand pay? And, and, and I know, there’s some, there’s some new things as well, they may not be new, because this is this, some of this lays lies resides right at the right at the outer limits of my understanding. So I’m looking forward to learning a little bit today as well. But, you know, ideas around payment factories and things like that. I mean, there’s plenty to talk about, where would you like to start?

David Barak 01:37
Well, I think it’s just, it’s such a misunderstood part of the HCM suite. You know, so just quickly, cloud pay is an organization that does global payroll across 130 countries been doing that for some 25 years. And, and one of the things that you realize when you speak to just a payroll practitioner in the US, right? You just say, Okay, well, what do you do payroll, and they give you a couple of states, maybe they do payroll, and Pennsylvania and New York, Pennsylvania alone as so many municipalities and if you’re doing payroll there, you’ve got to know about local taxes, you’ve got to pay, you’ve got to know about the, you know, the specific earned income taxes you’ve got to pay. So that’s complex enough. Now, add to that, the entire us when we throw in Canada, Mexico, Germany and France. That right, so one of the things that’s really interesting to us is, how do you make something that seems so difficult, a part of the process that organizations can wrap their head around, and, and some of the things you mentioned, Brent, around cloud technology, they certainly enabled standardization, because that’s one of the biggest challenges in global payroll, you’ve got so many processes that are different by region, by municipality by country, that you naturally have fragmentation of process. A lot of smaller companies, you know, they kind of grow organically to new countries, they get talent from new locations, and they create the stopgap measures for how to manage payroll in those locations. But once you get to a certain size, and you know, your board asks you Well, what is my total cost? How many employees do I have in different regions? Yeah, and those are some of the basic questions that we see multinational organizations struggle with. And then if you want to get really, really interesting around, well, what is my employee experience across all of these regions, right, I’m trying to create something that’s culturally aware, that is simple and actually speaks well about the brand, that are tangible and an intangible things about the employee experience, you can measure a rank. So once you start getting into that most organizations are very ill equipped to answer those questions. And, and that’s where we see this idea of global payroll coming in. And, and I remember, when I first started in the space, and we were talking about what, hey, we can deploy a single solution for global payroll. Most people, you know, they squinted their eyes. Like, I don’t know about that. I don’t think it’s a healthy skepticism because it is actually very difficult. And you don’t go from you know, 40 different vendors in 40 countries doing payroll to a single solution. It just doesn’t happen, even if you could do it from a technology standpoint, the cultural change it requires of your organization, the willingness to centralize decision making, instead of, you know, having 40 different managers, bringing that into maybe a shared service center or some kind of central role. That takes time. So we see organizations start to kind of bring regions together, you know, maybe I’ll have a different solution for each region instead of each country. And it’s an interesting and Kind of organic growth towards this global solution. And the pandemics done. People are aware of the fact that hey, there are legacy issues here, should we be addressing it? So it’s it’s a topic, you know, we’d love talking about.

Brent Skinner 05:18
I have so many, so many thoughts in response to what you just said, really interesting stuff. So one, you know, 360 insights. And, and I swear, I’m not plugging through 16 sites right now, this is just for real, we speak with end users all the time. And, and one member of happens to be a member of our global executive Advisory Council on end user, she was describing to us their situation, they are a global company, I need to keep them anonymous. But actually, I don’t think she’s on the council, excuse me. But anyways, they have a global organization. And they This is just a testament to this resistance to, or to, to just fixing global payroll, right? There’s a real resistance there, because you have all of these, you have just sort of this balkanized all these fiefdoms here, and it’s exacerbated by actual regional and, and national law, regulations, regulatory environments, that actually creating these, these, these sort of moats for them. But anyway, there’s there, it expanding so much on labor, just to make payroll happen in leadership is just so resistant to, to just implementing a solution that would greatly decrease that labor expenditure. And I really can’t share more without jeopardizing the anonymity here.

David Barak 06:53
in print, it’s such a common, you know, response we get from organizations where maybe they bring in a modern global payroll practitioner who’s willing to who understands the work required is willing to go through that transformation process, and expend all of that social capital there, they’re going to need to expend to make this change happen. But the organizations are resistant, because part of it is there’s always bigger priorities than payroll for a lot of organizations. Right. And I think it’s, it comes from their definition of payroll, which I think is a little bit of a legacy issue. And then the other one is, they haven’t really seen examples of this done well. And this is where we start to see kind of the tipping point, once we have that resistance, we know, okay, the only way we’re going to overcome this resistance and help this global payroll practitioner where the CHRO, centralized, both their employee, you know, HR experiences with their payroll experience, is when we bring other organizations that have done that successfully, right. So we have over 1500 multinational companies in our platform. And if I showed you their logos, you’d recognize all of those companies, because they’re large, global brands. So putting some of these global brands in front of those skeptics helps. Yeah, you’ve got to see it happen. And it’s one of those things, Purell practitioners and payroll in general, it’s so risk averse, you get one thing wrong. You know, it doesn’t matter that your employees have the best coffee machine, it doesn’t matter that they have a slide in the middle of the office, they didn’t get their pay on time.

Brent Skinner 08:30
That’s master. It’s absolute disaster. You actually right, you know, that that risk aversion in payroll is, is a major obstacle impasse that you need to sort of, circumvent in order to in order to get this change happening. It’s really it’s a, it’s a business transformation issue as well. One of the things that you mentioned earlier is you mentioned Penn, Pennsylvania, by the way, and I had to laugh because Pennsylvania is almost like global payroll in one state.

David Barak 09:03
100 municipalities?

Brent Skinner 09:05
Yeah, it’s absolutely insane. Going back to something that occurred to me is, you know, just looking at this how glip Global payroll becomes a such a challenge for organizations? Well, you look at any organization that’s growing from its from its origins into something big whether, you know, regardless of whether it becomes a global organization, you just look at it as a national organization, something based in the US or something based solely in the in Canada or even solely in I don’t know, you know, even China or, or name a European country, right? When they go from small to large, even within one nation. There’s so the growth happens as it edit at its own pace, right. And a lot of the building around that to make it work happens in reactively. Right, and payroll is one of them. Right, so So, so payroll already is something that can become complex and sort of it’s a reactively built system. You know, just to accommodate the growth of the company right? Now, you add to that the additional exacerbation of it being a global company. And so it makes sense, it makes total sense to me that the organization’s would be faced with this with this monumental task. Okay, here we are, with all these fiefdoms, what are we going to do? Have you ever seen? I mean, I’m gonna guess no, but have you ever seen a company go from relatively small to global? And grow its global payroll capacity sort of proactively intentionally? Or is? Have you ever seen that happen?

David Barak 10:49
I don’t know. I’ve not seen it happen proactively. You know, when we talk about global payroll, we typically talk about three models. And almost everyone starts in model one. And that’s the local vendor model. That’s where your bread, you started a company, you were in the US. Now, maybe you were doing your payroll on one of the HR applications that includes payroll, right Ukg workday success factors, you have that in house, you suddenly hire fire developers in Denmark, you hire, you know, three developers in the UK. So what are you going to do, you’re either going to go with a global PEO model for event, or you might start hiring individual agencies to do your payroll for you in the UK, and in Denmark. And that’s actually not a bad idea to start, right. So you can get free countries, small populations. Now, brand, your company is doing just exceptionally and all of a sudden, you got to hire people in another 20 countries. Now you’ve got a problem. And most organizations are going to continue kind of adding one vendor at a time. And when they step back in a year, and they look back like well, I can’t get aggravated reporting. I don’t have a single set of source of truth with my data. I can’t even get my head around it, how much am I paying all these people? That’s where organizations start to move towards model two and model three. So model two is the aggregator model and model three that we talked about is this unified platform, really is an evolution. A lot of companies today, skip that middle model, because it’s kind of just a stopgap, the aggregator model, but nobody we’ve seen is really kind of have that full picture of I will eventually become a global company. Let me put in the infrastructure for right. Yeah, for the HR space, like organizations are deploying, you know, UK, G, workday, the success factors. And they’ll, and those HR platforms will grow and expand with the organization. But apparel doesn’t often start that way for companies.

David Barak 13:05
Well, the one other thing I was going to say is, I think, I think there are a lot of parallels for payroll in other functions. I mean, think back 1520 years, HR was really largely seen as an admin function, right. And one of the things that HR professionals did very well is they redefine their role. And then technology came in to help them redefine it further. The same thing happened with finance, right? You’ve seen finance move to the cloud, now you’re seeing finance get a lot more involved in other elements of the organization. So it’s expanding its scope, as HR hero hasn’t done itself a service by just talking about the payroll process. Too many times we were just people are talking about the payroll process. It’s not a process. It’s an entire employee experience.

Brent Skinner 13:56
Oh, I love this, actually. This is great, what you’re saying. And, and frankly, we’ve been having some internal conversations that that align perfectly with what you’re, you’re discussing what you’re what you’re painting this picture that payroll processing is just I mean, that’s, that’s the final mile of the marathon. It happens to be the toughest mile, right? Because it’s the last mile of the marathon, but but the pay roll experience with the pay experience, I mean, we there, there are some, some out there calling it that, you know, pay experienced platform or things like that, right. And that whole pay experience. I mean, that’s the entire marathon. And it’s really interesting that it makes and what we’ve been wondering is me, let’s just I’m just going to throw this out there and, and we don’t have to have an answer for it. I’m just throwing it out there. I’m curious what your reaction might be. Do the right people own payroll in your organization, the typical orange organization, do the right people own payroll? Or we should be should we be thinking about maybe transferring ownership of processing of payroll versus the rest of pay?

David Barak 15:12
You know, I think it’s a really good question, right? So just on a very simple level, we see two types of organizations, one where payroll rolls up into the HR function, and another payroll reports up into the finance organization. And I think in both of those instances, you’ve got, I think your question is right, is it the right people managing payroll? And I would say, today, and maybe for the last 1520 years, it is. But as you introduce more technology and automation, you’re going to need less and less people doing the manual Excel work, you’re going to need less and less people data crunching, what happens to the payroll function, all of a sudden, when it’s more automated? Well, you’ll still need people to interpret compliance and regulations, that is kind of a, you know, a higher level activity for a payroll practitioner, I think you’re also going to need people to think about more broadly, what are the various touch points that Pei has in the employee experience? So it’s not so much that whether it’s the right people or not, I think it’s more than are those people willing to take the next step in their evolution and their career? Yeah, I think it’s an exciting opportunity for someone in payroll to become even more dynamic and to be able to come to the table and say, Look, we’re doing some things in payroll that are going to both make the organization, you know, more attractive to work for.


David Barak 16:37
we’re going to do some things in payroll, and you’re seeing this with things like on demand pay coming in, right? We’re organizations are now thinking, what can I do in the way I pay to make myself both more attractive to employees, to reduce financial improve financial well being for employees, right, you’ve got all these stats around absenteeism and financial stress and what that does. So I think there’s a whole new arena coming in, coming up that payroll practitioners can step into. And I think if they don’t, then HR practitioners are gonna to step into it, because they trot already owns employee experience in many organizations, right. And I think there’s opportunity for payroll to start thinking of itself more than just a payroll process. But we’re the experience and impacting the quality of payroll to maybe even the quality of life that people experience because, you know, people’s quality of work impacts their quality of life. So hopefully, your question, but I think there’s, there’s a huge opportunity here, and someone’s going to seize it to become more employee experience oriented and less process oriented

Brent Skinner 17:49
around payroll, no, there’s those are some really great thoughts. And we, you know, we, we don’t have the answers, we just go out there. And we try to kind of learn from from the marketplace. So there’s just those are just a couple of ideas we had, and I think you make some really good points around payroll, whoever’s owning, whoever owns payroll is stepping up to the plate and really kind of expanding their, their, their understanding of what it is they are in fact doing. I think that’s, that’s, that’s a major point, I’d like to go back to something you talked about sort of stage one, stage two, and stage three, stage three being sort of the Halcyon sort of an end game, you know, where it’s all unified, global payroll, if you can get there, that’s great. And what that’s what you folks help with, in this stage one being, you know, hey, we’re just, we’re just building on our payroll as we go reactively just to make sure we can get a ton and, and then looking behind after a few years and saying, well, oh, crap, look at that thing. We got to, we got to fix that. Right. So there’s this stage two area, what are some of the things that happen in you touched on a little bit, you know, peos, and that sort of thing. But what is what are some of the more innovative, newer, more novel ideas around that help make states to happen?

David Barak 19:15
But that get you to stage two before you get to stage three?

Brent Skinner 19:18
Yeah, that gets you into a into a into a stage to state?

David Barak 19:22
Yeah, yeah, I think there’s a couple things, I think one is your organization that’s now willing to ask more of your payroll data. So you start to think, Okay, I need to aggregate a lot of my payroll information, even if I’m going to see the fact that I can’t standardize everything into one technology, maybe I can at least get the data into one place. So I can start to make business decisions around it. So that becomes important and that’s the strategic shift and do organization to say there’s value in payroll data. And I want to, I want to extract that value in some way. So I think that’s one person

Brent Skinner 20:00
Can I stop for a second? And I didn’t mean to interrupt your train of thought, but what is the value in the payroll data? I’m not doubting you at all I can. Just viewers Yeah, like what did some of those nuggets?

David Barak 20:11
So many? There’s so many interesting examples around this, right? So I think we all intuitively understand that it costs more to hire someone in some regions than other agents. But when you are a large, large organization, and you can pick among 50 countries that you’re going to hire from, you’re going to want to get really granular around Well, yeah, I might be paying this much to hire this talent in this country versus but what are some of the other taxes? What are the implications around local and statutory items that all need to pay? Well, if I hire someone in this country, I also have to give them 30 days of vacation, if I hire somebody in this country, I might have to pay additional taxes. So that kind of intelligence, right, there informs hiring decisions, right. And that’s just one example where an organization can say that we want to get smarter about where we fire. And, and if the pandemic really allows organizations to start sourcing labor from anywhere. I think payroll data is going to become even more important. That’s just one example. But there are a lot of other use cases around how you can use payroll data, I think we’ve seen an interesting one recently, where, you know, organizations will often hire someone, and they will have a designated start date. Oftentimes, that start date is dictated by the payroll process. always the case is dictated by the payroll process. So you might have to wait, you know, you found a great candidate, they went through all the interviews, but now you’ve got to wait three weeks for them to start. Well, if you really study the payroll data and understand it, you might understand that there are ways for this person to start earlier. Okay, and think about how if you do this on a global scale, with hundreds and hundreds of employees, how much sooner you can onboard them how much sooner they can start to be meaningful contributors to, you know, whatever your organizational mission is,

Brent Skinner 22:06
Elon and nagrik in aggregate, that’s a major boost to productivity. Right? It translates to the bottom line, absolutely. So, so visibility into the payroll data, a single sort of getting to not a single source of truth, but being able to sort of wrangle or round it all up hurting all the cats have data into one place, or at least you have more than one place. What are some of those some of the other things that getting getting organization to, to a solid state to state?

David Barak 22:39
Yeah, I think another thing that becomes important when you just trying to get away from stage one to stage two is data integration, right? So you’ve got this awesome HR application that you’ve deployed globally, all of your employees go in and complete the information there. But for your employees in Brazil, if they want to see their pay slips, they go to one system for your employees. And, you know, in China, they have to go to another system. So you’ve got this disjointed employee experience around how do I get information about my paycheck. And you’ve also have double entry across the board, right, your payroll practitioners are entering data twice your payroll, your HR practitioners are doing it as well. So at some point, data integrity becomes such a big problem for large organizations that they they almost have no choice, they have to say, look, we’ve got to consolidate vendors, and create some integration points between both our HR applications, but also our finance organization, you know, the general Ledger’s all of the things that are outputs out of the payroll process as well. So that’s the, I think we see that as the second biggest driver for migrating from that local vendor model to an aggregator model. And then from there, you start organizations as soon as they settle and get comfortable in the second model, they immediately go, I need to make the next step. That finger in the second model for too long.

Brent Skinner 24:06
Yeah, well, this, but they probably feel more subtle. They feel like okay, I got this kind of under control. I feel like now I can. Now I can actually think about unified it’s almost as something that’s almost fathomable when you’re at, at the sort of the local model, stage one. I mean, I’m at, you know, from a psychological standpoint.

David Barak 24:28
Yeah. And, Brent, I think you and I talked a little bit about, well, why is payroll one of those best of breed functions and not just especially on a global side, right. And, you know, I think that’s, I mean, how many payroll, HR companies do you know, that do global payroll?

Brent Skinner 24:50
Not many, not many? Yeah, I mean, yeah, we won’t name them but there’s a couple and, and, and it’s only This may be their one last claim to fame to for a couple of them. But it Sorry, but in any event it you did you beat me to it because one of these things that that it was about that I wanted to make sure so thank you that we hit on was touched on was this idea that of global payroll as a I hesitate to say Bolton because we’re not talking about bolting something on but its a best of breed point solution. You know, it just if I may, just for a moment here, it’s really interesting how there’s there. There’s actually a lot of stuff at what I like to call the epicenter of HCM the essentials for employing people, whether it be time and attendance, scheduling, or, or clearly payroll, right payroll prime being the number one essential that you need in order to employ people. Not even, let’s take probably out of that it is. So it’s interesting that at the epicenter of HCM, when I was really w FM and payroll, right, there are there’s so much real specialization and best of breed point solutioning, as we’ll call it, at that level. So let’s talk about that a little bit more. I mean, we did we touched on it earlier. But could we just dive a little bit deeper here? And why is it that payroll global payroll is such a specialized thing?

David Barak 26:33
You know, I think at the heart of it, I think you can, I think you can fix the technology issue, I think you can figure out how to standardize payroll across the globe, and bring it into a single tech stack. And, you know, that’s, that’s part of what we’ve done. So I don’t think it’s so much of a technology issue for why it’s that way. It’s really that knowledge, that specialization and really local requirements, that, that make it it’s not just that it’s a separate best of breed. It’s also that, you know, a lot of organizations that manage HR in house global HR now, don’t manage payroll in house. Because it’s difficult to imagine a company that’s going to have 4050 countries for their workforce, and have a number of payroll experts that understand everything in that country. So the people element here of just having that knowledge, those experts on the ground in a country that can give you the intelligence to know how to interpret a particular tax,

you know, or particular statutory regulation, that I think is one of the things that keeps these

David Barak 27:41
as separate organizations, and for multinational companies, it then becomes an integration issue. If I can connect and seamlessly with today’s API seamlessly connect my HCM, ERP, my finance application to my payroll processing application, then I’m getting the best of everything. Now, there are HCM organizations that I think do a good job doing four or five countries. But often those organizations require you to have those people in house. So you have to have the UK, the France payroll in house that can execute on it. And I think it’s one of those things that organizations like to outsource that really specialized expertise about a country payroll when it’s outside of their HQ country.

Brent Skinner 28:31
That’s really interesting. And it made me think of something. So would it be would it be reasonable to say that to be a global payroll provider? You yourself. So a vendor that wants to be a global payroll provider? Must itself be a global organization? Would you say

David Barak 28:55
at? I think so. Absolutely. We, I think you get there slowly. We are in I think we’re in 12 different countries at this point. Yeah, you can have shared service centers, right, and bring that expertise like we in our Budapest office, we have people that know how to do payroll in 1015 countries. So you are able to consolidate and bring some of those people together into shared services. Yeah, I think both from from your capability standpoint, but also from a support standpoint, right. When you’re offering payroll support or any kind of support to people globally. You want to have cultural awareness, you want to have linguistic capabilities, so to support them in their region, want to have time zone support. So I think those all of those components must necessitate a global nature to that vendor landscape. is one of the things that resonates when people buy global payroll, they want to know you have the technology. They want to be experts, but they also want to know hey, Can I talk to somebody at 2am? In Singapore? who’s able to answer this legislation? Because if I don’t get an answer, I’m going to have an angry employee. Right? It doesn’t get paid. So yeah, I think you have to be global.

Brent Skinner 30:17
Yeah, I think so too. And, you know, to be a global, I mean, global payroll takes more than technology. I mean, it takes people. Honestly, you mentioned a couple minutes ago, you said that you’re sort of, in your estimation, you think that it is possible. In you know, at some point to really solve global payroll from a technological standpoint, you know, that to have one solution, one technology that’s going to handle it on, and you’re probably right about that, but you’ll still need the people,

David Barak 30:52
the Sony, the people, you’ll still need people. And I think, you know, it comes down to process standardization, like the technology’s now good enough, that you can standardize the payroll process across different countries. And maybe you only get to 90% of the standardization. There’s still idiosyncrasies in every country. But 90% allows you to deploy advanced technologies like robotic process automation, like AI, right, all of a sudden, you can take advantage of technology that likes or capabilities that require large data sets. There’s no point deploying it if you don’t consolidate the databases behind your payroll. That

Brent Skinner 31:34
Yeah, sir, that sounds AI that sounds like a great place to start. Next time. We chat. Heavy, to be honest, I just looked at the time and, and we’re actually a little bit over. I mean, this has been fantastic. I’d love to jump into AI now. But I feel like that’ll be another half hour. I mean, let’s, you know, let’s give our our viewers this. Give them this information, bite sized chunks.

David Barak 32:00
That’s right.

Brent Skinner 32:01
Thank you so much, David, for joining us. It’s been a real pleasure,

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