Feature topic – Payroll: in-house v as a service
employees where the payroll was previously done by HR (human resources) due to limited knowledge on payroll legislation, and it ended up saving finance three days a month as well due to an improvement in the post-payroll reports that were produced. Christina Holloway: The obvious benefit to keeping payroll in-house is that you keep the function under your control. Of course, the major drawbacks include the requirement for payroll expertise in-house, whether that’s a team of people or one person – and if it’s one person you’ve got a single point of failure which is incredibly risky. The main benefits of outsourcing include reduced costs and increased payroll expertise. Jackline Ogara: One of the pros of outsourcing is it reduces the need to train in-house payroll staff. Outsourcing can also give you access to capabilities and facilities otherwise not accessible or affordable to the company. What’s more, it can bring in fresh perspectives as new people bring new ideas on how to do certain things. However, there are cons when payroll is outsourced, such as no instant access to payroll – you cannot check in when you want to or add anything that is missing. Also, the contract might be too rigid to accommodate change. Companies need to be confident in their chosen provider because they will be handing over confidential and sensitive information to a third party. They have to make sure the outsourcing company is
stable because of the potential disruption of a provider going out of business. There’s also the moral dilemma of denying your own team the opportunity of any growth as they are reduced to mere administrators. ...an internal payroll manager is empowered to run the payroll process and develop their own strategy... What are the professional considerations of pursuing a career in either client payroll or in-house payroll? Are different skills needed? AH: As someone who has moved from working in a large payroll bureau at the start of my payroll career and then spending eight years in the corporate world before setting up my own bureau, I would say the most important part is to get a good grounding early on in terms of training. I completed my CIPP diploma relatively early in my payroll career and have continued with training and knowledge updates since. There are so many changes in this industry that it is not possible to learn once and then know how payroll is done.
The main difference between the two are when working on in-house payroll you also become an expert on your own company, but when working on client payroll you often need to have a different hat on each day and must have detailed knowledge on a broad range of payroll as you never know what the next question will be. The skills needed are similar, but it is a constantly evolving career choice. Having worked in both bureau and been a customer on an outsourced payroll, I am aware of the benefits of both. CH: For a payroll professional, there are lots of benefits to pursuing client payroll. Payroll providers have got to invest heavily into staff training – so there’s plenty of funded development opportunities. Plus, they will have access to more support and more resources. Further, they are exposed to more opportunities to diversify their skillset – like working in implementation, sales, support and management. Working in-house, it can be harder to get the ongoing investment into learning and development. However, an internal payroll manager is empowered to run the payroll process and develop their own strategy, as opposed to being constrained by a client payroll’s processes. What’s more, they have more visibility of the end- to-end payroll and reward function. Payroll managers in a bureau will gain experience on processing thousands of clients with varying requirements, whereas an in-house manager will be limited to the organisation they serve. JO: The skills needed for running both in-house and outsourced payroll are the same and the only consideration that needs to be taken into account is our target audience. For in-house payroll, our target audience will be the employees and the stakeholders. An additional knowledge of the system (on the tech side) used and adding on any compliance knowledge is a must. Outsourced payroll employees tend to specialise in certain areas – for example, in administration, systems only, marketing (where negotiating skills are needed) or compliance. The target audience for outsourced payroll is represented by clients who need to be maintained at all cost, therefore the approach will be different.
What are the key considerations for businesses looking to
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| Professional in Payroll, Pensions and Reward |
Issue 72 | July / August 2021
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