Your HR & Payroll business case is flawed

by Michel Vereeken

I am often involved in evaluating business cases that support the HR transformation journey a company has elected to take.

As a vendor and supplier of HR outsourcing services to global companies, one should always treat the information provided to you by a customer with the necessary reserve, but I cannot help but conclude that many business cases are flawed. We run into examples where business cases are set up in such a way that they support the outcome preferred by HR or the payroll department. Business cases regularly overstate the potential benefits of HR transformation and/or outsourcing and understate the current costs related to transactional HR and payroll.

An overstatement of the potential business case for HR transformation could be considered advantageous to a provider of HR outsourcing services, but in the end that is not what we want. When engaging with outsourcing clients, we enter into a long-term partnership. This means that both parties agree on the potential benefits of the outsourcing decision upfront and work hard to achieve them. This partnership would be based on a shaky foundation, should a customer discover that their outsourcing decision does not bring the benefits they had anticipated. The relationship will be strained and the vendor stands to lose the customer; usually forever and at a time when the deal is coming into stabilization and the vendor starts to earn back initial investments. Not a good outcome for the parties involved.

That is why both parties, our client as well as NGA HR, should have a vested interest in making the business case work before engaging in the actual outsourcing project. It is important that the decisions are made based on facts, and that everyone agrees on the outcomes. However, getting the right data and making sure the business case is factual, is not always easy. This is understandable, because a client does this occasionally, maybe once every 5 years, where vendors like NGA HR do this for each client and have established a model that allows them to get to the basics very quickly.

Since I started working for NGA HR in 2001, I have been involved in many business cases for global payroll, helping clients understand costs and benefits. As a result, I have written a white paper that lists the elements of the business case and suggests way to reliably collect data, so you can create a business case that is grounded on facts. I hope you enjoy reading my white paper, and that it prevents you from creating a flawed business case!