Payroll. Does One Size Fit All? Part 1
Payroll is the same for everyone. Payroll is payroll is payroll. Is that really true?
Every organisation’s needs vary. If they have white, blue or pink collar (or a combination of) ... depending on the country, state or industry the complexity and compliance around payroll varies … and we haven’t even spoken about cultural expectations!
So for a minute let’s talk cars. With 353(ish) manufacturers in the world all cars aren’t alike ... are they? Everyone’s needs are different (from two seaters through to people movers and 4x4) and with 60mil vehicles sold each year (and growing) in an ever growing array of configurations it’s obvious all vehicles are not created equal.
It’s the same with Payroll (and HR!).
Let’s give it some context. There are over 200 payroll providers in Australia alone!
Let’s further simplify the conversation to something we can all more easily relate to and afford … let’s look at water.
At a recent conference we discussed why it was possible to buy water between $0.25 and $25+. We didn’t even get into the conversation about how many brands there were locally or globally. Without reciting the whole one hour conversation the conclusion was that the water was of little consequence ... what was important was the use of that water i.e. do you want to drink it, boil it … wash with it?
So how does this all relate to payroll? Most organisation see payroll as just another part of their operational function. Because it is core functionality (everyone needs to get paid!) it is a primary requirement to get it right.
Payroll can be a very time consuming task that requires more than just general management. Some companies do payroll weekly, fortnightly … some monthly. Some split their pay runs due to workforce size, award type, based on role or business unit and or employee schedules (roster). Complexity such as award type (already mentioned) or visa restrictions all come into play and introduce advanced payroll knowledge and system requirements.
Keeping up with legislative compliance of payroll management can make for an exhausting process.
So what’s the solution?
While many organisations insource their payroll many are also opting to outsource either part or all aspects of their payroll. Outsourcing is not for everyone … and certainly outsourcing a failing internal process will not fix it. Outsourcing should be looked as a means to essentially offload any administrative overheads (including legislative burden) and freeing up payroll and HR management to be more strategic around people management and activities related to building organisational growth.
Some have likened payroll to housework. While absolutely essential and core to an organisations success, it is considered a thankless job that only gains the spotlight if something goes wrong, and a lot can go wrong if done incorrectly. Missing (or miscalculating) overtime or holiday pay will certainly draw the wrath and dissatisfaction of employees.
Dissatisfaction is very quick to propagate through a workforce and affect employee outputs.
Of course payroll is cyclical. So by the time you are through with one payroll period it’s time to start the next and if previous errors are not fixed they can be compounded. Opting to outsource saves time, man power, money and headaches.
Taking Care When Outsourcing Payroll
Due to the delicate, yet potentially complex nature of payroll, organisations must exercise due diligence when selecting the partner that will manage their payroll. Processing payroll and ensuring your taxes are paid is just a tip of the iceberg. Small details such as accurate time tracking can escalate into full-size problems later down the road. Non-compliance and other associated legal issues can damage a company’s reputation and severely affect employee and investor satisfaction.
Organisations also need to ensure they are not outsourcing a problem. If your processes are broken you shouldn’t think you can lift and shift that problem to someone else.
If your workforce is used to a “white glove” service, then outsourcing to a supplier who treats them as a number probably isn’t the simplest option. Also outsourcing shouldn’t exclusively mean offshoring. NGA Human Resources and has both onshore and offshore facilities (dependent on region) that can be offered stand alone or mixed dependent on the client’s needs.
Let’s face it outsourcing isn’t necessarily meant for everyone and a true payroll partner will advise you what the best option(s) is for your needs.