Strategies for Success: Insights from the ELN Roundtable on Outsourced Payroll
In the realm of HR and payroll, the landscape is continuously evolving. Our roundtable in conjunction with Executive Leaders Network (ELN), held in November 2023, offered a platform for experts to discuss the intricacies and strategic importance of outsourced payroll.
Let's explore the key themes, concerns, and expert insights from this enlightening session.
Introduction: The Changing Face of Payroll
The roundtable opened with a clear message: payroll is no longer a back-office function but a strategic component of HR. Fiona Campbell-Downes from AG Barr and Thomas Hagerman from SD Worx, along with other industry leaders, shared their perspectives on the need for more efficient, integrated, and compliant payroll systems.
And it couldn’t be better timed either. As Hagerman set the scene: “We are at a time right now when a lot of payroll providers are sunsetting. We are moving from on-premise to cloud and that’s forcing people to change payroll. Those who have been through payroll transformation know that if it isn’t broken don’t fix it!”
And that risk is tangible: “What's the one piece of technology that every employee will make sure that they have a go at you for if you get it wrong? Their pay!”
What are the areas that those considering outsourcing payroll need to consider?
Optimizing Payroll Efficiency
Reducing Administrative Burden
The discussion highlighted that a significant advantage of outsourced payroll is the reduction in administrative tasks. As Campbell-Downes noted, “With payroll, no noise is good noise.” Outsourcing helps create a quieter, more efficient payroll operation, where the focus shifts from routine tasks to strategic activities.
Flexibility and Agility
Hagerman emphasized, “It’s a balance between agility and risk,” suggesting that organizations need to be nimble yet cautious in their payroll operations. The right technology and partnership can help businesses overcome challenges with flexibility and agility.
Creating a One-Stop-Shop
A recurring theme was the need for a centralized payroll process, especially for businesses operating in multiple locations. This approach not only simplifies operations but also ensures consistency in payroll management across different geographies.
Seamless Integration with HR Systems
Integration was another critical topic. Hagerman pointed out, “Payroll is part of a broader HR transformational change,” highlighting the need for payroll systems to communicate seamlessly with other HR functions.
Consolidation and Transition
Choosing Between In-House Software and Outsourcing
One of the significant decisions for many businesses is whether to keep payroll in-house or outsource. Peter Dorrington from ELN underlined, “It pays to engage a partner early,” suggesting that early collaboration with a payroll provider can smooth the transition.
Hagerman concurred: “The main reason projects are delayed or derailed is because the organisation wasn’t ready” and indeed this could be a time to prep for success but you can’t go it alone: “A lot of the best work you’ll do is in the planning stage. Don’t be afraid to seek expert advice”
Financial Viability and Risk Management
The financial aspect of outsourcing versus in-house payroll was a hot topic. Hagerman noted, “There’s lots of moving parts. It’s not just about implementing software,” indicating that financial implications extend beyond mere cost comparisons.
Data and International Payroll
Demand for Data and Integration
With the increasing demand for data, the roundtable acknowledged the challenge when systems do not communicate effectively, leading to more administrative work.
Best Practices for Data
Campbell-Downes' experience at AG Barr illustrated the importance of keeping staff and business updated with best practices and legislative compliance. She mentioned, “We are in a better place of measuring less and doing more with it,” referring to the effective use of data and analytics in payroll.
Payroll in a Global Environment
Hagerman’s statement, “There is no such thing as global payroll,” resonated with the group, highlighting the complexities of managing payroll across international boundaries. To succeed, it requires a lot of cross-border and cross-department planning and consultation. Thomas clarified: “People. Process. Data. Infrastructure. These are the cornerstones of a successful project or transformation”
Insights from the Attendees:
Reflecting on the Realities of Payroll
The roundtable attendees, comprising various business leaders and HR professionals, shared their perspectives, resonating with the themes discussed. Their anonymity was preserved, yet their insights proved invaluable.
The Human Aspect and Administrative Challenges
One participant poignantly stated, “People need to be paid, but people are coming to me as a tax advisor. I'm not that.” This comment underscores the often-blurred lines in payroll responsibilities and the need for clear demarcation. Another added, “For me, it's all about people being paid on time, month in month out,” highlighting the fundamental necessity of timely payroll processing.
Seeking Efficiency and Simplification
A recurring sentiment was the desire for streamlined processes. “I’m trying to reduce my admin workload. I want a one-stop-shop for all our employees and align that for EMEA wide outsourced payroll. I want to reduce the amount of external business providers,” expressed one leader, echoing a common goal among many attendees.
Global Payroll Solutions
The need for a cohesive global solution was a key discussion point. “We are looking for a global payroll solution so that we can report and administer all from one place rather than all the sporadic places,” shared an attendee, underlining the challenges faced in managing payroll across diverse geographic locations.
Technical Debt and Process Optimization
The concept of "remediating our technical debt as our IT teams put it which is a wonderful phrase!" was mentioned, pointing to the technological challenges organizations face in updating legacy systems. Another attendee observed, “Payroll is a process, and the nice thing about payroll is it follows a cycle-based process,” emphasizing the systematic nature of payroll.
Impact of Management Decisions
The roundtable also touched on how managerial actions affect payroll, with one participant noting, “Everything a line manager does impacts payroll.” This highlights the interconnectedness of organizational decisions and payroll outcomes.
The compatibility of technology with payroll providers was a concern for many. “You need to look at the technology. Have you got technology your provider can work with?” was a question posed, illustrating the need for technological alignment between companies and their payroll providers.