TECHNOLOGY
outsource their payroll? AH: For the companies that I work with, the key consideration is often cost – not just in terms of money but time that the payroll takes when in-house. The benefit of having an organisation that knows all the rules and regulations and continually updates its knowledge of both the payroll and software is essential. CH: A starting point is for an organisation to think about the nature of their operation – do they outsource other functions or do they keep full control of them? Another top consideration for most businesses is often going to be: is it more expensive to outsource? To figure this out, it’s critical to evaluate the true cost of the in-house function. It’s not just the price of the software or the wages of the payroll team; it’s also the time spent processing payroll, the time spent fixing mistakes, the cost of bad employee experience, the risk posed by a single point of failure. For many organisations, outsourcing will be more cost-effective. Something else to consider is where the organisation’s responsibilities stop and where the client payroll takes over – this may seem obvious but it’s not always clear! It’s vital to understand how it would work and who would do what. JO: Productivity – look for where the business might fluctuate and not match the productivity of the internal staff. ● Organisational readiness – assess the organisation’s internal systems and processes. ● Costs – assess if it’s cheaper to outsource considering all hidden costs. ● Return on investment – is the RoI worth outsourcing? ● Compliance – most businesses assume
that outsourcing will always resolve any compliance issues.
does it have all of the functionality you would expect, don’t get oversold to, and don’t assume that just because something was possible in a previous software that the new one has the functionality. Make sure everything is in your specification document. CH: One thing to consider is risk. For many organisations, the pandemic has highlighted just how vulnerable their payroll operations are – with many struggling to keep people paid accurately and on time last year. How will the organisation fare if the payroll manager is absent or resigns? Is there someone else with the expertise to process the payroll? And what about changing legislation – will the organisation have the funds to invest in training to keep their team up to speed and working compliantly? Of course, if you bring payroll in-house your payroll manager and team will need onboarding and you’ll also need to migrate all your data back in-house too. JO: Lower cost – in the long run is it cheaper to have payroll specialists on site to answer questions and support employees and be beneficial to the company? The fee for running the payroll can also fluctuate with the complexities involved in the payroll runs. The payroll team can also work closely with the HR and finance teams and produce detailed analysis reports. ● Reporting – with each organisation being different, the payroll department can have full control of the reports generated and customised precisely to what the business needs. ● Last minute changes – having the payroll in-house gives maximum flexibility over any last minute changes while still ensuring that employees are paid on time to suit the business schedule. ● Accuracy – payroll that is processed within and with an integrated system that works well will ensure few or no inaccuracies in pay. This is where an outsourced payroll provider is only as good as the information they have at hand or provided to them to process. ● Control – an in-house team can effectively manage the payroll process from start to finish in an accurate and timely manner. Most in-house teams are usually focused on the payroll process in its entirety rather than the many payrolls the outsourced provider will be managing on a daily basis. n
What are the key considerations for businesses looking to take payroll in-house from an outsourced service? AH: The most important aspect for me if I bring a payroll in-house is do we have the skillset and, if not, can existing staff be trained up or is additional resource required. There is unfortunately still an assumption in some organisations, mostly mid-sized, that payroll is data processing, which to a certain degree it is but having the knowledge of why something should be done in a certain way is as important as how it should be processed. If you are looking to bring your payroll in-house, make sure your team has a full understanding of all payroll rules and regulations plus the software that you will be using. It is also essential that the software you choose to use when bringing the payroll in-house is fit for the needs of your business. Speak to current users, not just those that the software house has for their referrals. How easy is it to run reports, ...an in-house team can effectively manage the payroll process from start to finish in an accurate and timely manner.
| Professional in Payroll, Pensions and Reward | July / August 2021 | Issue 72 42
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