Successful Payroll Outsourcing

Many managers are concerned about risks associated with outsourcing payroll. These risks include hidden costs, vendor non-performance, limited access to information and the potential loss of control. To fully address these, we recommend your objectives and expectations, are clarified and documented before you begin.

The first question to ask is, why are you looking to outsource? Start by identifying & quantifying the benefits you want to capitalise on. One thing to remember is, payroll outsourcing is not for everyone. There are a few businesess where payroll is strategic & should remain a fully inhouse process.

The next step is to get a complete picture of your current payroll costs. Consider staff, software licensing, support, IT upgrade costs, annual leave, staff illness, recruitment and training costs, employee benefits, printing, stationery, office costs etc. Identify the costs that will disappear and the costs that will remain. When evaluating Return On Investment, remember to factor in the opportunity cost of re-assigning resources to more productive tasks.

When it comes to vendor assessment, here are some points that need to be addressed to ensure a successful partnership. And that is the key. You are not buying a product off a company, you are building a relationship with an organisation that will play an intimate role in your payroll processing.

1. Meet you payroll professional. How knowledgeable are they? Do they understand your business? Do they understand your objectives? Is there a close cultural fit? Do you feel comfortable with this person, processing your biggest asset?

2. Evaluate service levels Is their service level agreement clear & defined? Do they have a clearly defined implementation strategy? Will you be a client number on a help desk?

3. Talk to their clients How quckly do they respond to call? Is there a dedicated account manager? Is the leave accrual accurate? Have they had any service or accuracy issues with former clients?

4. Evaluate their technology What system to they use? What version? Can they demonstrate it's functionality? Is it a commercially viable system tested for commercial applications? Is is a scaleable system? Is it parameter & date driven?

5. Do they have an exit strategy? Can you bring the payroll back inhouse on their system without further implementation cost?

6. Do they offer an end to end service? Will they add value with additional services? Will they disburse deductions? Interpret awards? Offer Employee Self Service?

7. Do they have a Business Continuity strategy? What are their disaster avoidance & recovery procedures? Do they rely on third parties for operational redundancy?

8. Will your data & process be transparent? Will you have access to your historical data when you want it? Is it life to date? Can they provide an audit of who accessed what fields?

9. Can they grow with you? Will todays solution fit at 50, 100, 500 employees? Will they be a strategic partner or just a bureau?

10. What are their credentials? A vendors sales strategy will focus on their stregths .You usually determine a lot more by what they omit. Do they focus on, we are the biggest, we are the best, we have the most clients and leave out how you will be able to access reports whenever you want.