25th January 2016
Hindsight “An understanding of a situation or event only after it has happened or developed”
What do you wish you had asked, before you signed on the dotted line with your current payroll outsourcing company? Or perhaps you are thinking about outsourcing your payroll function at the moment and want to be certain you are making the right choice.
If you’re planning to outsource payroll anytime soon just take a moment before you commit, and read this guide. Payroll outsourcing is an incredibly important decision and can have a massive impact on your business. Get it wrong and the finger will inevitably point at you. Worse still it can have a major disruptive influence if you have to switch providers again. Payroll should be one of those sticky decisions for your business, with outsource payroll provider supporting and evolving with your business as it changes and grows.
It takes far more than price comparisons and due diligence to make sure that you have chosen the right payroll outsourcing company.
1. WHO WILL LOOK AFTER ME AFTER I’VE SIGNED?
Some payroll outsourcing companies operate on a production line basis, simply signing up as many customers as possible. Once signed they simply offshore the payroll service delivery to reduce overheads, leaving customers with payroll processed by teams with whom they will have little or no direct contact. So take a moment before signing the contract. Find out and confirm exactly how the service delivery and importantly post launch account management is structured, who your primary points of contact would be, who is actually doing the work and where, and who your escalation points are. Having good communication channels to the right people is critical to a successful, problem free delivery of service.
2. IF MY BUSINESS CHANGES, HOW WILL MY PAYROLL CHANGE WITH IT?
Your business is always changing. That big new deal. Acquisition. Funding issues. Recession. Takeover. A lost deal. Businesses ebb and flow depending on the economic climate. Some businesses reduced their workforce during the recession and are expanding again now, whilst others are still finding it tough in the current climate. Other businesses are growing their headcount fast through acquisition and business growth. Any change in a business will have a knock on effect on the outsourced payroll services provided and this will be different from what has been contracted when you originally signed. The crucial question is whether the contract is flexible enough to accommodate your current needs. A good payroll outsourcing company will be able to flex with your business, and guarantee that from the start. Ask them to provide examples where they have done this with other companies before signing.
3. ARE YOU ACTUALLY GIVING ME AN IMPROVED SERVICE?
Payroll outsourcing relationships can tarnish rapidly if the time theoretically saved by outsourcing is then wasted on checking and amending the outsourcers work. Payroll should not be a business process that has frequent mistakes or be delayed. It is essential that the company adheres to the same, or even higher, standards of accuracy as your own. For example, is the outsourcer aiming to just get the entire payroll through BACS on deadline, or are there further levels of accuracy that they aspire to, and that you need? Indeed, a good payroll outsourcer will proactively identify errors or irregularities in the data provided and take an active part in resolving any issues.
4. HOW DO YOU TARGET YOUR PAYROLL MANAGERS?
One of the most frequent complaints of payroll outsourcing is the lack of urgency in responding to queries. This is often a reflection of how the outsourced payroll teams are targeted – if the team is concerned simply with the volume of payroll being processed, which in itself encourages errors for the sake of speed, then client engagement is rarely focused on. However, a good outsourcing company will instead target its payroll managers on retention and satisfaction of clients, ensuring that all the stops are regularly pulled out. The best companies will often use account managers to support payroll managers to provide a superb customer experience.
5. SO, HOW IMPORTANT IS AN ACCOUNT MANAGER?
Day to day management of your payroll will naturally require frequent two-way communication and you should build, over time, a close working relationship with the payroll manager within your outsourced team. However, because of this close relationship, it may then become difficult to have frank discussions regarding performance or changes to the services as your business changes. What if you grow and want to bring things in house and just need payroll software, or move to a part managed payroll solution? These types of conversation should be agreed with a separate person, responsible for the business side of the relationship, not the day to day payroll operations. This account manager role, often missing in many outsourced companies in order to reduce headcount, is critical in ensuring the payroll outsourcing relationship addresses all the needs of your business.
6. HAVE YOU ANY EXPERIENCE WITH PAYROLLS OF SIMILAR COMPLEXITY TO MY OWN?
Whatever you outsource it’s good to understand if the company you are outsourcing to have experience of running a payroll similar to your own. Construct a list of the variations within your payroll – weekly pay, multiple locations, varying points of contact, part time, zero hours, remote workers, AE requirements, bonus payments etc. – you’d be surprised what variations you have. Seeking out payroll outsourcers who can manage payrolls of varying sizes misses the bigger picture – it is the complexity of the payrolls, and the company’s ability to tackle them, that determines their suitability. References are a key part of choosing any supplier, whether outsourced or not and whatever the business process.
So, before you put pen to paper and sign that outsourced payroll deal, take a moment and ask the questions above. It will pay dividends in the long run.