Outsourced Payroll: Debunking the Myths
Payroll, as a function, is one that can never “win.” Either the function goes unnoticed (in which case, it is doing well), or it’s reviled (in which case, it is failing). The following are some common myths which address why going into an outsourcing agreement with an external provider is a long-term commitment that should never be taken lightly, nor taken for granted.
Myth 1: I will save money.
Actually, you might not. Outsourcing payroll can provide an accuracy rate of over 99.9%, and there are some who achieve that for corporations with over 170,000 employees — month after month — despite dealing with a host of flexible work patterns.
However, how can you know if you’re saving money if you haven’t audited the performance of your payroll provision or department? How can you know if you’re saving money if you aren’t auditing the data sent to the provider?
Efficiencies through outsourcing payroll exist, but the onus is on you, as the business owner, to find those efficiencies and take advantage of them. A simple change from 99% to 99.9% will have a tremendous impact on your bottom line – but it’s your responsibility to find them.
Myth 2: I will lose control.
Many businesses claim that by outsourcing their payroll provision, they’ll lose control of it, but the opposite is true. You’ll actually notice an increase in control as you set service level agreements and KPIs that guarantee a high provision level. With a supplier, KPIs are easier to measure, where there’s enhanced payroll data transparency.
Still, gaining control is entirely your domain. Without robust supplier management, the relationship becomes one-sided, and expectations have to be managed. Outsourcing is a relationship, not a one-way service.
Myth 3: I’m better off in-house.
Leading up to 2008 – 2009, far too many businesses grew ‘fat’ with employees that they could barely afford to keep. Redundancies were inevitable as departments were stuffed with more people than necessary. Outsourcing, as a solution, allowed businesses to flex provisions up and down.
But payroll is one provision that can’t be flexed up and down – not unless the overall workforce is flexed down. It’s a monthly service that absolutely has to happen, and without it, your business won’t function and your people won’t work. In-house teams can find themselves over-worked by the payroll cut-off date, and under-worked afterwards. Through payroll outsourcing, however, you don’t have to worry about workload, and you don’t have to worry about potential down time caused by absence.
Payroll outsourcing is an area where myths need debunking. Received wisdom often tells you one thing, but the reality is that how it works is up to you. Find the right supplier for your business – one that you can trust and that has a track record in your industry or with similar businesses – and work with them on a relationship basis. Do that, and you’ll ensure nobody ever notices your payroll (because it’s working!).
 |
About the Author: This post was written by Joyce Steven on behalf of Ceridian, a leading provider of HR and Payroll services. Joyce works with large and small businesses helping them find efficiencies through outsourcing. |
