31 August 2021 - Reading time: 5 Minutes
If you’re outsourcing crucial business matters to external specialists, you need to keep an eye on your KPIs – for payroll outsourcing, this can be particularly important in order to ensure that you’re realising the efficiencies you were promised.
KPIs - or key performance indicators - are nothing new to most businesses, and are used to track and measure efficiencies across a range of processes. Managers need to know that their investments are paying off, and that service and success levels are as they should be.
If you’ve undergone a big business change such as outsourcing your payroll, KPIs are the most effective way to demonstrate that your decision is paying off – and to identify any issues before they escalate. You need to set out your performance indicators from the outset, and track them consistently for a rolling, up-to-date view. It’s especially helpful if you already have KPIs from your previous provider or in-house team too, in order to compare efficiencies.
KPIs for payroll are centred on resource allocation/relative cost and accuracy levels. Accurate calculations and reporting are crucial to payroll, because mistakes can lead to:
Calculating payroll adjustments and ensuring compliance can be complex, so trusting an external specialist can really pay off – as long as they’re doing their job properly.
Here’s a quick look at the main KPIs you should be measuring to ensure your outsourced payroll provider is delivering an effective and efficient service.
This KPI underpins everything because the devil is in the detail when it comes to payroll, and reliable, accurate data is essential for all other aspects to run smoothly. Even the smallest of undetected errors can lead to big issues down the line, so it’s important to track accuracy and rectify mistakes as soon as possible.
The larger your workforce, the larger the margin for error, due to the myriad variables that need to be considered, such as:
This core KPI for payroll should be measured and assessed regularly – at approximately the same time every pay period. The focus here is on errors, so total them up every month and chart them on a spreadsheet (or your preferred method) so you can add to it and compare figures on a rolling basis.
Once you’ve collated enough data, you can use the information to calculate your payroll accuracy as a percentage figure:
Number of payroll runs with errors ÷ total number of payroll runs.
If you want to delve even more deeply, perhaps to ascertain if there’s a specific ‘weak spot’ in the service, you can even allocate errors to separate columns by type e.g. the part of the process where the error occurred. This can help you provide valuable feedback to your provider so they can deal with any issues within their own team or processes.
Measuring KPIs for payroll specifics isn’t just about ensuring efficiency from your provider – it can also add weight to your internal business management too.
Your people are your most important resource and need remunerating for their hard work, but overtime costs can add up and actually end up a false economy if you’re not savvy. By measuring your overtime stats, you can build up a picture of your internal resources in relation to workflows and any subsequent inefficiencies in your staffing.
You can measure your overtime KPI by totalling the cost of all the overtime you’ve paid out (again, do this monthly for a consistent data trail) and then separating these costs by department, and again by each team within those departments.
If you notice that a particular team is consistently submitting overtime hours, it’s time to look at the reasons why. Payroll outsourcing providers will often be able to use their software to draw out these details for you, taking care of the maths while you take care of managing your business – freeing up more time to investigate the reasons for inflated overtime. It may be that your customer base has recently grown, leading to a production boom that your current workforce can no longer manage on their own – in which case it may be time for a new hire, diverting funds towards a more cost-effective solution than perhaps paying time-and-a-half for overtime.
You can also look at the operational processes within the team. Are there gaps in communication or poor software functionalities that are slowing workflow down, thus necessitating your staff to stay later to get the job done?
If it’s a seasonal glitch, you may want to build in a contingency for hiring casual workers to help pick up the slack at the same time every year, in anticipation of the additional hours needed to fulfil client requirements.
One of the reasons why payroll outsourcing can prove to be more efficient is the quality of the software tools that your provider will have in place. However, that’s only half the battle won, so by measuring productivity and time to complete each run, you can not only map your provider’s performance, but also identify any potential efficiency gains.
With so many processes to complete in each payroll run, it’s worth breaking this data down into the real ‘nitty gritty’, so you can get a whole-process view.
By breaking down the details of time taken and the process overall, you’ll be able to see any areas that are lacking. For example, if a lot of time is taken in collating and assessing hours worked for salary/overtime calculations, it may be worth investing in a more sophisticated software that can be integrated with your provider’s platform, such as a workforce management solution that allows workers to submit their hours via a mobile device.
Other ways to measure time taken to complete and productivity levels can include gathering metrics such as the volume of:
As you gather more and more data over the months, you’ll start to build up a picture of problems within the workflow that are affecting productivity, along with possible reasons for them. Seasonal industry fluctuations or even colder months that tend to inflate illness absences can all be assessed, allowing you and your outsourced payroll partner to improve and streamline processes in order to accommodate for them.
You can also use this data to compare against the performance of your previous internal team, giving you a clear view of the time saved by outsourcing to a specialist partner – or to raise a flag if this doesn’t appear to be the case. Is your outsourced payroll provider really saving you time, and subsequently money?
The beauty of measuring your payroll outsourcing KPIs is that combined, some of the data you collate can be used in broader terms too, giving you the opportunity to assess the cost of your payroll services in clear context.
Taking all the metrics you’ve amassed, you can calculate performance on a cost of payroll/cost of payment performance basis. You can compare the cost of your payroll outsourcing against the size of your organisation/workforce, using the totals of:
If you had performance tracking in place when you managed your own payroll processes in-house, you’ll be able to compare your new provider against previous performance to ensure that outsourcing is a genuine efficiency for your business. Is outsourcing payroll saving you money overall? Or was it cheaper to run in-house? It’s generally the former, but you need to know for sure so you can assess its true value and your provider’s performance.
As with any business relationship, good communication is vital to make the most of your outsourced payroll service. Set a process in place for regular feedback reviews, where you can discuss anything you feel could be improved, or additional cost-efficiencies that could be realised. If there’s anything at all you’re not happy with, tell them – they should be able to find a solution in order to improve their service and your satisfaction levels.
Another valuable KPI for payroll efficiency measuring is how your outsourcing services impact in-house efficiencies. Your internal staff dealing with your outsourcing partner should keep a tally of time spent chasing them to resolve issues generating from your provider’s service.
Are there specific issues that keep cropping up that divert your own team’s attention away from their direct workload? Does this represent a false economy for your investment when compared to the time your own internal team took to process your payroll? If your team keep picking up the slack then the overall value of the service is compromised, so you need to be sure you’re getting the outcomes agreed from your partner.
Measuring efficiencies through the use of tracking and analysing KPIs allows you to break down a variety of different details and uncover the intricacies that lie in investment/benefit calculations, giving you a clear picture of what you’re getting for your expenditure.
Essentially, it’s all about balance: you can calculate the cost of your internal workforce and outsourced provider fees and try to keep them as low as possible, but you also need to consider the efficiencies you’re gaining by investing in any improvements that your provider’s service represents.
You may have had to make a larger initial outlay to bring your tech up-to-speed, but when compared to the ongoing benefits and efficiencies they lead to, you should see that your return on investment is a solid one, when it comes to the speed and accuracy of the payroll service you receive.
If you’re thinking of outsourcing your payroll to a specialist, you can expect to experience a range of efficiencies which ultimately translate into a positive revenue decision – but only if you get the right provider. Service quality differs between providers in any sector or specialist field, so you need to do your homework and speak to several potential partners before you go ahead.
During the vetting process, ask each provider what metrics they measure and how they can facilitate your own KPI assessments – transparency is key, so if they seem reluctant to support your endeavours in this respect, it may be worth reconsidering them as an option. It’s also important to check independent reviews and any case studies, so you can see for yourself the results of their work before you trust them with your own payroll.
A good quality outsourced service will free up time for you and your team to focus on other essential business matters, while providing financial value and processing efficiencies, to ensure a reliable return on investment.
By using these KPIs for payroll outsourcing, you can continually measure the value of the service you’re receiving – if you’d like to understand how efficient your payroll is, try our free Payroll Efficiency Review.
If you’re tempted to move this complex business matter into the hands of an external provider, it’s important to remember that there are both pros and cons of outsourcing payroll.1 September 2021
Here are our simple steps to ensuring a successful payroll implementation process when transitioning to a payroll outsourcing partner.2 July 2021
If you’re wondering whether outsourcing payroll costs less than using an in-house team, take a look at all the ways outsourcing can be more cost effective.29 June 2021
During May, we hosted a series of virtual roundtables with a range of Heads of HR and Payroll. Whilst the conversations were wide ranging, in this article we will summarise a few of the key topics discussed and the conclusions reached.
In this practical guide, we’ll break down the process of writing a business case for moving to outsourced payroll into bite-sized chunks and provide you with practical tips when it comes to managing the process and presenting your case. We’ve also included a handy template for you to follow.19 May 2021
This guide will walk you through the process of outsourcing your payroll and show you how unexpectedly simple moving to managed payroll can be.17 May 2021
Even if your payroll provider seems to be doing a good job, is it good enough? Are they primed to look after and optimise your payroll in 2021 and beyond? This helpful guide walks you through why it’s important to review payroll providers as we head into the ‘never normal’.12 May 2021
Misconceptions around payroll outsourcing could be holding back your business. Our customers find that moving to a managed payroll service pays them back dividends, driving productivity, increasing ROI and giving payroll teams the opportunity to focus on strategic rather than tactical initiatives.
We understand that managed payroll can be a daunting topic, so we’ve put together some useful information to help you make an informed choice about your payroll strategy.
Don’t let perceptions about switching payroll provider stop you from improving your payroll. In this article, we debunk the five most common myths of changing payroll providers.2 March 2021
Follow our tips to make moving payroll suppliers as smooth as possible.2 March 2021
The prospect of handing over responsibility for your payroll to an outsourced partner can be daunting enough, without having to worry about something going wrong during the implementation phase. In this blog, we explore 5 key steps to make sure the transition runs smoothly.8 February 2021
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. When you take a closer look at how outsourcing works, however, you could make the case that the opposite is true.8 February 2021
Payroll faces constant challenges caused by limited budgets, changing personnel, evolving technology, new legislation and more. Here’s why outsourced payroll remove the risk.8 February 2021
While cost reduction is the one thing everyone will take into consideration, there are other supplementary reasons why organisations believe it’s best to outsource their payroll function.8 February 2021
Integration has to be a priority consideration whenever an organisation is looking to choose an outsourced payroll partner. Our blog explores the key considerations.8 February 2021
When it comes to outsourcing payroll, people often feel nervous. Relinquishing control to a third party is a big step. But are you really losing control when you outsource payroll? Our blog explores why this isn’t the case5 February 2021
Debunking outsourcing myths, this blog explains how you can confidently move to fully managed payroll whilst retaining and even improving control.7 December 2020
Digital transformation has led to an overhaul of the current workforce, with the Covid-19 pandemic compounding the need for change. But a skills gap in key areas could leave some businesses trailing behind.12 October 2020
As a leader in payroll and/or finance, you know that payroll is subject to HMRC rules that are complex and changeable. This blog explains the importance of benchmarking your payroll processes to ensure they are always ‘audit-friendly’ and efficiently adding value to your organisation.
Revealing the hidden costs of in-house payroll vs. outsourcing, this blog presents a perspective that could save you money in the long-term, improve your payroll and help you stay competitive.11 October 2020
Over the years, Fiona McKee, HR Director at SD Worx UK and Ireland, has heard many inaccurate, and often amusing, assumptions of what working in HR is like. She shares the most common misconceptions in her blog.22 July 2020
HR leaders play a pivotal role in the future success of the workplace. Cathy Geerts, Chief HR Officer at SD Worx, explains more in her blog.22 July 2020
It’s fair to say that HR and Payroll teams have been tested as the Covid-19 pandemic unfolded. But after several months of firefighting, many organisations recognise that they need to make significant changes to their payroll and HR operations.2 July 2020
How to build resilience into your new normal strategy
Misconceptions around payroll outsourcing could be holding back your business. Our clients find that taking the step to outsource pays them back dividends, driving productivity and giving payroll teams the opportunity to focus on strategic rather than tactical initiatives. We understand that payroll outsourcing can be a daunting topic, so we have debunked some of the most common myths to help you make informed choices about your payroll strategy.26 June 2020
HM Revenue and Customs (HMRC) has updated guidance in readiness for the commencement of the second part of the Coronavirus Job Retention Scheme (CJRS). Simon Parsons, Director of Payments, Benefits & Compliance Strategies at SD Worx UK, shares his interpretation of the changes and what this could mean for employers.P. Simon Parsons - 15 June 2020
Are you prepared for the rise of the long-term home worker? Help your employees thrive while they are working from home with these top tips.20 May 2020
As the pressure of payroll continues to amplify, here are some best practice tips to improve payroll continuity.13 May 2020
The way we work is never going to be the same again. Find out which big changes will affect HR.11 May 2020
Our resident payroll and legislation guru answers your questions about furlough and SSP.29 April 2020
In our second #KeepItHuman interview, Oliver Mead, SD Worx Sales Director, discusses how he’s helping his team to adapt to remote working.1 April 2020
Discover how Coronavirus is affecting employee pensions and get to grips with The Pension Regulators advice.31 March 2020
Discover the latest customer information update from SD Worx regarding the Covid-19 virus.30 March 2020
Paul Thickett, SD Worx Payroll Services Director, shares how he’s keeping the UK paid and motivating his team during this challenging time.24 March 2020
We’ll help you make sense of the government’s advice on Statutory Sick Pay and taking care of your employees during COVID-19.24 March 2020
Has your business temporarily closed? Find out how the Coronavirus Job Retention Scheme could support your business.24 March 2020
There have been many publications about the Good Work Plan over the past 18 months and it can be confusing to work through complex, legislative documentation to understand how you stay compliant. While the good work plan covers many topics, this blog aims to take you through one aspect of this, Holiday Pay, and asks the simple question – are you ready for the changes?29 October 2019
A recent ‘Workplace of the Future’ survey of 250 industry professionals revealed that 88% of CFOs and CHROs expect an increase in payroll technology investment by 2025. Why? The world of work is changing rapidly and to prepare for the workforce of the future, businesses must start adapting, quickly.3 May 2019
Businesses are failing to recognise the importance of data managed by HR teams. Equally HR professionals are not yet skilled enough in data to harness its power and help secure their future strategic function within an organisation. Something has to change.1 May 2019
Everyone remembers the technology from their youth, in my case the 80’s and 90’s. I grew up with mobile phones becoming a must have commodity, with the accompanying generation of speed texters. I also grew up with the emergence of the first affordable home PC, allowing me and my friends the opportunity to explore that new ‘thing’ called the internet.13 February 2019
More than anything, this year’s data highlights the need for a new and more agile approach to HR. Conservative strategies simply aren’t going to cut it going forwards, because by the time the ink is dry, things will have moved on. Increasing business agility is now the #2 business driver for 86% of HR professionals, second only to increasing performance and profitability.28 November 2018
This article covers all aspects of T&A functionality ranging from how to create effective workload plans, building rosters, collecting and validating variable time information, implementing business and legislative validation, and finally ensuring correct payments to employees by integrating with an industry-leading payroll solution.
‘Disruptive’ technology is technology that replaces old ways of doing things. For example, the smartphone has revolutionised the way we interact with friends,
family, institutions & media. When SD Worx launched online payslips in 1999 this was met with concern around security & access. Fast-forward
to 2018, and no credible provider is without a mobile payslip. In short the smartphone has disrupted the market and most people have moved on from
8 November 2018
How do UK businesses tend to approach reward currently? Is there a shift in approach and if so, what is causing this?16 August 2018
How do UK businesses tend to approach reward currently? Is there a shift in approach and if so, what is causing this?14 August 2018
Financial wellness is a hot topic across all worker types and generations. Employees are demanding more control, greater flexibility and better access to their finances. How can employers better support their employees in this regard?10 July 2018
Autonomous Vehicles And Smart Warehouses Are So Last Year – 2018 Is All About Digitising Your HR Function.
Hear from our CEO Steven Van Hoorebeke during an interview with The Business Debate.18 April 2018
Millennials: entitled, lazy job hoppers. Gen X: cynical and poor team players. Baby Boomers: out of touch, independent, money-driven workaholics. And what about the iGen: those house-bound, tech-obsessed kids who were born with a smartphone in their hand? These stereotypes are bandied around regularly, but is there really any truth in them? And do different generations expect to be treated differently by their employers?5 March 2018
Adam Burgess, Business Development Manager at SD Worx UK & Ireland reflects on his first experience of an SD Worx conference. SD Worx hosted its 22nd Annual European Conference at the Park Lane Hilton in London in February 2018, with "The Future of Collaboration" as its 2018 theme.2 March 2018
At the SD Worx European Conference, held at the Park Lane Hilton on Tuesday 6 February, a panel of six individuals from different generations gave their thoughts on age-based stereotypes, their personal values, career aspirations, the challenges they’ve encountered and what, if anything, can be done to address the differences between the age brackets within the workplace.20 February 2018
With the aim to build a model employee experience, HR departments are compelled to rewrite the rules by revolutionising talent practices. Human resource management is designed to maximise staff performance, and the HR department should be a key component in an organisation’s digital transformation.10 January 2018
Technology is the wheel that never stops turning. If Moore’s Law is to be believed, the sheer power of processing units will have doubled within two years – and that means plenty of new pieces of tech that could shake up HR and payroll processes. With that in mind, here are three technological trends that could significantly alter your industry.10 January 2018
This article is intended to give a balanced view of payroll software versus payroll services. In the UK, the markets for payroll software and service co-exist and will continue to do so for the foreseeable future.8 January 2018
The terms artificial intelligence and robotics are often used synonymously but are quite different, albeit complementary, in their application. Robotics, in simple terms, means process automation - using technology to remove human intervention in some of the lower value add activities such as information keying, data analysis and performing complex calculations. Artificial intelligence is a somewhat different concept13 November 2017
Two thousand and seventeen; another major year of technological advancements. Technology evolution has been at its fastest pace and for ‘Millennials’, technology has become an important part of their daily routine. For the purpose of this blog, we specifically refer to mobile technologies and pair ‘mobile’ with ‘cloud’ as we can hardly talk about mobile unless we associate it with its equally important partner, the cloud.16 October 2017
Welcome to the fourth industrial revolution, hailed by many as an era of change in which industries and organisations adapt to rapidly developing smart technology that automate working processes which would previously have been undertaken by humans. But is this something to celebrate when we consider the potential upheaval or individuals and businesses?
1 August 2017
The 14th and 15th June marked the Human Resources Software Show (HRSS) hosted by CIPD. Whilst some of us were making our way to the beaches and ice cream parlours, HR professionals were flocking to Olympia in Kensington for updates in HR technology and ice-cold slush puppies!19 June 2017
Provided you’ve done the right research, implementing a new payroll solution will streamline your business and help you save the long run. But put the wrong payroll solution in place, or implement it in the wrong way, and you could end up having a bumpy road as you learn new systems which seem to delay your payroll rather than make it more efficient.18 April 2017
In this blog, our Head of Solutions, Rick Norgate, looks at the pros and cons of the cloud to really understand its impact in the future of business and GDPR.10 April 2017
Nobody is safe, according to many scientists and technology gurus. Artificial Intelligence (AI) and robots will soon to be able to do almost everything better than humans and will take over most jobs, including that of a doctor, lawyer and other professionals. Our Managing Director, Doug Sawers, shares his thoughts...3 April 2017
HR Tech World Congress, the UK’s biggest annual HR technology show, took place at the ExCel in London last week with the theme of "The Future of Work". It was a fantastic two-day event attended by more than 3,500 exhibitors and delegates, with plenty of interesting speakers! Read our highlights from the event...30 March 2017
The global cloud-based payroll market is growing and will post an impressive compound annual growth rate (CAGR) of almost 7% by 2020, according to analyst, Technavio, which finds that the benefit of “cloud over on-premises solutions is a key factor leading to the moderate growth of this market over the next four years.”13 March 2017
Technology in the workplace is not a new phenomenon but a continuous drive towards automation which has been taking place to varying degrees since the rise of Manchester Capitalism and the Industrial Revolution. As such, there is much we can learn from history regarding the nature of work...16 February 2017
As we have seen in the news this week robotics and AI are quickly becoming a real thing in both business and the home. In the next few years we will see more and more of this type of technology taking on more and more of the administrative type roles in businesses around the world. In this blog, I share my thoughts on this trend and some of my very own personal experiences...19 December 2016
We were delighted to exhibit at HR Tech World 2016 in Paris. Check out our short video here to get a flavour of this successful event.1 December 2016
Step back in time five years and you would struggle to move for articles and white papers on big data and analytics. These were the hottest topics in technology and the excitement surrounding them was at its peak. Last year, analyst Gartner dropped its hype cycle for Big Data, confirming in an article, entitled: The Demise of Big Data, Its Lessons and the State of Things to Come” that “we did it to move the big data discussion past hype and into practice”. Certainly when it comes to the HR arena, big data and the analytics tools that can be built on top of it are now in a maturing phase.14 November 2016
For the world of business and more specifically HR, the Brexit vote has brought on a time of uncertainty. The momentous decision taken by the public on June 23 has left employers across the UK having to wrestle with a vast range of workforce-related issues.26 September 2016
I recently attended a seminar in London with over 100 Talent Managers from some of the biggest brands in the UK. During this excellent seminar we looked at Talent Management processes and explored whether we need to rethink our approach for the modern world. This session provoked me to reflect on all the performance and talent systems I have seen, designed and implemented over the years. After reflecting on this I think the answer is a resounding YES! We do need to change, but not in the way you might think. So please allow me a few minutes to explain...18 July 2016
On 23rd June 2016, UK voters decided in favour of leaving the European Union (EU) in a landmark referendum. Since then it’s fair to say that UK politics has seen a fair amount of turmoil. One thing we can be sure of is that, whenever it does happen, the UK’s withdrawal from the EU will have implications for workers and employers. In this blog I want to focus on what this could mean...11 July 2016
With the upcoming referendum later this month, which will decide whether Britain should leave or remain in the European Union, UK businesses – employing EU workers – will need to contemplate how “Bexit” might potentially influence their future hiring, talent management and overall workforce management best practices. Currently, millions of highly skilled EU immigrants work in the UK. The following article examines a few possible scenarios and outcomes of Brexit and its potential impact to the UK – and increasingly global workforce. I will also review how human capital management technology can help businesses comply with the current and future new world of work.20 June 2016
In today's world, "human capital management" seems to be the hot topic of choice. A complete HCM solution covers all the people related processes and data in an organisation, and by its very nature can get pretty full on and complicated to implement, with greater upheaval and cost involved. For that reason, it is not always appropriate for an organisation to consider changing all aspects of their HCM in one fell swoop.6 June 2016
I’ve been working in a software implementation environment for nearly 20 years ,and in that time I’ve seen many successful projects. Sadly I’ve also seen a number of less successful projects and if I were to pick a main cause for each of them the two recurring themes would undoubtedly be...25 April 2016
In my last two blogs I described how important a transparent labour model and flexible workforce are to the successful implementation of a WFM system. Today I want to focus on how such a system can help re-engage your workforce, improving morale and colleague retention.4 April 2016
In my last blog I described how keeping the labour model as simple and transparent as possible increases the chances of user buy-in whilst still generating an accurate labour forecast. Today I want to talk about how critical the flexibility of your workforce is to the successful implementation of a WFM system...14 March 2016
Our WFM System experts, describe how keeping the labour model simple and transparent could increases chances of user buy-in, whilst still generating an accurate labour forecast.15 February 2016
Welcome to the future! I am back with a new blog, this time I look at 6 technology predictions over the next 5 years that will impact the world of HR & Payroll. Who knows where we’ll be in 2020? My predictions are based on detailed research, analysis of past and current technology trends, and consumer purchasing behaviour.11 January 2016
Technology is moving at such a pace, I wonder if Usain Bolt could even keep up with the advancements?! The truth though is that if you don't embrace the changes, you are impacting the success of your organisation. Customers want it and employees want it and the last thing you want is for them to be ahead of you.30 June 2015
Social media presents great opportunities for businesses of all sizes, and it has created a step change in the way we communicate with employees and customers. Read about our own experiences with rolling out social media in the workplace...1 June 2015