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Why Payroll knowledge is retained within the business when outsourcing


When senior HR or Finance leaders consider outsourcing payroll, one concern often raised is that they will lose knowledge, in the form of internal expertise or skilled personnel.

What happens if they want to take the responsibility for payroll back in-house at some point – will they have lost the ability to do that? When you take a closer look at how outsourcing works, however, you could make the case that the opposite is true.

Maintaining a level of internal knowledge is far from straightforward either. Payroll requirements are constantly changing, and this requires ongoing upskilling. Over the last year alone, payroll teams have had to come to terms with managing the complexity of furlough schemes, a requirement most will have never encountered before in their careers.

    Maintaining expertise

    Payroll teams are constantly being pushed to keep up to speed with the latest legislation covering taxation, employee benefits, pensions, gender-based pay and bonuses, employee privacy and more, in order to stay compliant. That’s difficult enough, before you consider the changing structure of the workforce, and how that impacts how people are paid. This includes multiple types of contract, from fixed-term to zero hours.

    With digital transformation rapidly changing the platforms we rely on to execute and analyse payroll, teams are also having to keep pace with evolving technology. As HR and Finance departments seek greater access to data and insight in real time, expect even more change and more systems integration to occur.

    The only way to keep the level of knowledge required within a payroll department is through significant investment to cover the hiring, onboarding, training and ongoing upskilling of staff. This is a taxing requirement in terms of time and cost – and can often be viewed as an expensive burden when a more cost-effective alternative exists in the form of an outsourced service provider.

    An alternative source of knowledge

    It’s often when organisations are set to lose a significant source of knowledge, in the form of a long-standing or CIPP qualified team leader from their payroll team, for example, that they start to question the validity of maintaining those levels of expertise internally. Rather than trying to fill the void with an appointment, they will consider working with a payroll partner, who can offer a vast amount of expertise and experience on tap.

    Whether it’s managing digital transformation or handling new working regulations, dedicated payroll providers can advise on the best course of action.

      For instance, a payroll partner is also likely to be a technology provider, therefore they will have a fundamental grasp of how to roll out and maximise the potential of new tech platforms. With this advice will come guidance on how best to standardise processes to ensure that the data generated through payroll systems is of the highest quality. This ensures greater accuracy, alongside enhanced insights.

      A dedicated payroll provider is also likely to be at the forefront of HR and payroll compliance requirements – they may even be involved in advising government boards on upcoming legislation. Where government guidance is open to interpretation, this detailed understanding of the intentions behind a regulation can be invaluable. 

      An expert partner

      Having expertise on tap, in the form of a dedicated payroll provider, doesn’t mean knowledge has somehow evaporated and no longer exists within the organisation, however. Where companies have an expert partner, there will always be an internal person managing the relationship and overseeing this function. They are given full access to and an understanding of the inner workings of a business’s payroll, and will be fully aware of the processes, performance standards and service levels involved.

      It is important to note though that an expert partner should offer more than the typical buyer-supplier relationship – such as what you might expect from a software-as-a-service provider. This should be an open and honest partnership, where there is an expectation of full transparency. Whoever is responsible for overseeing the function should be able to access all the information, answers and advice they require.

      When HR and Finance departments can rely on this level of support, it doesn’t just provide reassurance that their employees’ pay will be managed in the right way, it also allows them to concentrate on other elements of their business. They never lose sight of what is happening with the company payroll, however – that knowledge is never lost.

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