Posts tagged ‘HRIS’

February 17, 2014

Why an In-house Payroll Service Needs to Differentiate Itself from the Competition


No in-house payroll team is safe anymore.  The ever present reality is that if your organisation hasn’t already looked into the viability of outsourcing payroll production, in an attempt to realise significant cost and efficiency benefits, it is only a matter of time until it does.

Payroll BPO is a Global Competitive Market

At the local level you compete against small business operators claiming to be the most experienced outsourced provider in the market and there are bookkeeping and accounting firms, payroll associations and HRIS software providers all supplying payroll BPO services.  Then there are those businesses whose core business is Payroll Business Process Outsourcing (BPO), who vary in size and capacity enormously.  The global market has added extra dimension to the BPO market, creating massive competition in cost competitiveness.

All BPO’s are Flogging the Same Horse

Find me a Payroll BPO who is not selling the promises of:

  • The realisation of efficiencies and time savings
  • Reduced production costs and overheads
  • Continuity, Risk Management and Total Compliance
  • Superior Speed, Technical Expertise
  • Greater operational control for the business
  • Technological Superiority
  • Reduced Recruitment Costs and Staffing Flexibility
  • The ability for your business to concentrate on it’s your core business

Can BPO’s Really Achieve the Miraculous?

The ability of any BPO in the marketplace to achieve this remarkable list of business improvements relies on many interconnected factors… many of which aren’t fully understood by those in the deciding seat.  It is important to understand what real differences exist between in-house and outsourced payroll functions and whether outsourcing is really the miracle it’s sold as.

Here are just a few areas that require thorough analysis in the decision making process, rather than blind belief:

HRIS System Capabilities

The quality and capabilities of a BPO’s HRIS system will depend on the size of the BPO business.  The corporate payroller who decided to start a payroll outsourcing business will be utilising an off the shelf accounting package or a lower cost cloud based system.  National and global BPO’s will be building robust, client tested systems and will have more experience in implementations, which should guarantee a smoother transition… unless that system needs to be customised heavily to achieve your requirements, which can lead to untested and unparalleled disaster.

A true understanding of the capabilities and the shortcomings of the systems used by BPO’s will enable you to make a real comparison between your in-house system and the BPO offerings.

Business Processes

BPO’s would not survive without solid business processes and strict deadlines.  When working with a BPO you will be afforded windows of time for processing and queries and your own business systems must be advanced enough to succeed in your business relationship and to get your payroll delivered on time, every time.

If your in-house system is in chaos due to data integrity issues, receipt of late inputs and misconfiguration of your current payroll system, you will not realise some magical transformation by simply outsourcing this mess to a BPO.  Garbage in will always equate to garbage out.

Economies of Scale

The whole basis of achieving economies of scale is to define the one process that fits all, allowing for only slight deviations for individual business requirements.  If your business can fit itself into the BPO’s processes, all is well, but if your business requires deviations to the BPO’s standard business processes and has a list of required value added services, the cost of the service rises proportionately.

Cost Savings

I’ve managed two outsourcing services and it has always bewildered me why people buy in to this.  Cost savings are achieved by any payroll service, in-house or outsourced, by minimizing the time it takes to produce a payroll and the ancillary costs associated with payroll production.

If an in-house service wants to ensure their longevity, then my advice would be to get your costs down to bare minimum by implementing automations, reducing paper and payslip costs, maximizing your HRIS system and establishing if the current wages cost of the payroll team can realistically be reduced.  The people in your organisation who will be, or who currently are, looking at outsourced options, will see cost as a major incentive.

All BPO’s have a stock standard service that basically includes accepting an upload file or your business entering the data into their system; performing the payroll calculations and producing the stock standard reports.  If this is all you want from payroll, then by all means jump in and realise those cost savings.  If however, you want a little extra here and there, grab your wallet and watch those cost savings begin to diminish.

Let You Get On With Managing Your Business

This selling point is touted by every BPO provider globally, but I believe it’s a myth as the business only outsources a portion of the total end to end process.  Someone at the business still needs to create and manage the inputs; check and authorise the payroll reports; attend to the employee, management and third party enquiries; reconcile the payroll; perform the management and statutory reporting functions; and above all else ensure the compliance of the data and the process.

Additional Charges for Out of Scope Functions

Want a report that’s not in scope? Want to change the pay rates due to an award change or salary increase?  Want to retrieve historical data from two years ago? It can be quite alarming, once the contract is signed by a business owner or manager, who may have little to no concept of the requirements of payroll, just how much additional information needs to be retrieved from the HRIS system.  Much of this will be out of scope and will cost the business, either in the charges for the reporting or for the time it takes in-house to devise a workaround.

Superior Technical Expertise

This one always gets me… how can this sweeping statement be made by some BPO’s when your organisation may already employ a perfectly competent payroll person, or even a whole team of them.

Some larger BPO’s may in fact employ specialists in employment law, or IT and so on, but that may not necessarily translate well into the product or service the BPO customer buys.  Before a business buys in to the guru status, it should understand exactly how much specialist knowledge exists in its own business via its payroll team members and establish how the gurus will provide an actual realisable benefit to their payroll production, if they were to outsource the payroll.

Total Compliance

The way the compliance dream is sold to businesses concerns me, as it appears to the buyer that simply by outsourcing your payroll, you are guaranteed that every facet of your payroll all of a sudden becomes compliant, and you needn’t worry your little head about it ever again.  This is the farthest thing from the truth.

When you hand over the control of your organisations greatest expense and probably most organisations greatest compliance nightmare, you don’t cease to be liable… you don’t cease to monitor and examine… and more importantly, you should never cease to control.

The simplest configuration error, or the insufficiently tested customisation can wreak havoc on pay rates, tax, superannuation, salary packaging…everything.  Compliance in every facet and down to the tiniest detail, remains at all times the business’s responsibility, not the BPO’s.  Put simply, don’t buy in to the total compliance sales pitch.

Offering of an End to End Payroll Service

Hmmm… by whose definition?  I’ve always understood end to end payroll to be all of the processes from the receipt of new employee documentation and employee timesheets, through to the completion of all associated company and statutory reporting, and including all employee, management and third party enquiries and requests in between.

I’ve not seen a BPO yet that encompasses what my definition of end to end payroll is.  Nor have I witnessed a BPO yet that doesn’t require a designated person on the ground in the business to compile all of the data and be responsible for employee queries.

Risk Management

There are so many aspects to the risk management and mitigation of payroll that would be hard to fit into a paragraph, but a few of the main concerns to be addressed for those contemplating outsourcing are:

  • Disaster Recovery Plans and IT Risk Management
  • Risks to confidential employee and business data and bank accounts
  • Risk of BPO business failure/collapse
  • Fraud and Corruption Risks
  • Payroll Controls (including authorisations and error prevention and capture)
  • Compliance Risk
  • Quality Control Frameworks
  • Country Specific Risks

One More Reason Stakeholders Seek Alternative Solutions

Noise.  If your payroll service rings so loud in the ears of the stakeholders, consider yourself a branded target for outsourcing.  If you have a high error rate and there are constant complaints making their way to the leaders of the business, get your error rates sorted very quickly and eliminate the noise.

Understand Your Competition

The point has already been made… every in-house payroll service is in competition with the sizeable BPO market.  In any business, you must understand… truly understand… who and what your competition is and what your competitors are offering, in order to continue to compete against them.

In-house Payroll Managers who are blind or oblivious to this, need to wake up.  BPO’s are knocking incessantly on the doors of the decision makers in your business, trying to get their foot in the door.

Now that you understand more about the BPO Market and how the business you work for is on the prospect list of a gazillion BPO providers, you have two choices… start looking for a job in a BPO or start ensuring your in-house payroll service remains a viable business option for your organisation.

Differentiation is One of the Keys to In-House Survival

For any business to outshine its competition, it needs to identify or create differentiation between them and all the other operators in the market.  Their customers must be able to clearly see the points of difference and those points of difference had better be ones that draw customers in, rather than turn them away.  Your in-house payroll service is no different.

Outsourced service providers all over the world are professing how amazingly more cost effective your organisation’s payroll process will be.  They are claiming that their world standard business processes will not only enable outstanding efficiencies, but reap the rewards of economies of scale and all but ensure the organisation’s payroll compliance.

Do yourself and your payroll team a favour and start raising the bar on your service, analysing and minimising your costs, elevating your team’s capabilities and eliminating any “noise”… and start today!

If you have any questions you would like to raise personally, please email Louise Vidler at The Professional Payroll Manager.

© 2014 Louise Vidler T/As The Professional Payroll Manager.  All rights reserved.

All materials contained on this web site not otherwise subject to copyright of other parties are subject to the ownership rights of Louise Vidler T/As The Professional Payroll Manager. Louise Vidler T/As The Professional Payroll Manager authorises you to make a single copy of the content herein for your own personal, non-commercial, use while visiting the site. You agree that any copy made must include the Louise Vidler T/As The Professional Payroll Manager copyright notice in full. No other permission is granted to you to print, copy, reproduce, distribute, transmit, upload, download, store, display in public, alter, or modify the content contained on this web site.

January 2, 2014

Are Employers Missing The Mark When They Demand Particular HRIS System Experience of Candidate Payroll Managers?


This question was raised with me by an experienced and respected Australian Payroll Professional and my immediate response to the question was “Yep!  I’ve been there!”…

Why do so many employers base the position criteria around particular HRIS systems, thus eliminating many otherwise perfectly qualified payroll professionals from applying?

I would love to learn the views of both payroll managers and those responsible for recruiting them, as to whether there are valid reasons to decree specific HRIS systems experience of payroll management candidates.

Although my own resume clearly shows that I have vast experience with a diverse range of HRIS systems and I’ve achieved significant improvement outcomes with each of them, I too have been rejected from the candidate pool from the outset because I can’t tick the particular HRIS system experience box demanded by certain job advertisements.

My view is that there are certainly roles and circumstances where this demand is warranted, such as stand-alone payrolls where there is no handover time and experience is required to hit the ground running, or for some HRIS system implementations that require exemplary knowledge of a particular HRIS system to achieve the outcomes for the business (with a big HOWEVER here, because successful HRIS system implementation requires a great deal more than just expertise in a HRIS system).

The greatest considerations of employers/recruiters, in my mind, before a job advertisement stipulates that experience in a certain HRIS system is a pre-requisite, should be:

  1. What are the outcomes required of the Payroll Manager in relation to the HRIS system?
  2. Which HRIS systems are comparable to the one in place at this employer?
  3. How can candidates demonstrate their cross functional capabilities from comparable HRIS systems?
  4. How do I as a recruiter, not exclude the best candidates from applying for this position?

The experience that should be sought from Payroll Management candidates should be based purely on their ability to achieve the outcomes of the particular role they are applying for and if a candidate can demonstrate they have similar or multiple HRIS system experience, they may actually be a far better candidate than twenty others with ten years user experience of the HRIS system used within the employing business.

What are the outcomes required of the Payroll Manager in relation to the HRIS system?

The following questions should be raised in order to determine the HRIS system specific position requirements and outcomes:

  • What exactly do we require the candidate to know about the HRIS system in question?
  • Why is the candidate required to possess certain HRIS systems knowledge?
  • Will they be processing the payroll?
  • Will they be documenting business processes?
  • Will they be required to maximise the functionality and efficiency of the HRIS system?
  • Will the candidate have a handover period or will they be thrown into the fire?
  • Does the candidate need to understand HRIS system configuration?
  • Will the candidate be required to create/write reports within the HRIS system?
  • What level of skill and experience is required in HRIS Data Analysis?
  • Will the candidate be required to maximise the efficiency of the HRIS system and build automations?
  • Do we have other Subject Matter Experts in the business with the required HRIS systems knowledge?

The outcomes required of the candidate in relation to the HRIS system will determine whether the candidate really needs to have experience in a particular system; whether proven experience in a similar operating system will be suitable; or whether it is even a requirement worth asking for.

Which HRIS systems are comparable to the one in place at this employer?

Payroll Software, SaaS providers and HRIS systems around the globe offer a multitude of points of difference but essentially, payroll is payroll and if you understand payroll, accounting and HRIS systems administration, there shouldn’t be a payroll/HRIS system that can’t be learned on the run by a professional payroll manager.

For those who can’t imagine how this may be possible, here are just some of the ways that professionals manage to learn new systems on the fly:

  • There’s always a Help button and usually a fairly decent user manual
  • More often than not there is a hefty support contract that can be utilised to seek additional information
  • Utilising Subject Matter Experts within the business
  • User groups, networking groups, forums and colleagues within the industry
  • Trusty old Google provides a world of answers
  • Payrollers are hoarders and there’s always someone who has the report writing training manual, configuration documentation or other precise information you are seeking
  • Most HRIS systems have a functional test database where professionals can model and test the outcomes they are attempting to implement

How can candidates demonstrate their cross functional capabilities?

Just because a group of candidates may have worked with a single system for the last 10 years, this does not automatically validate their ability to maximise HRIS system efficiencies, create reports or undertake data integrity validation.  It is important to understand exactly what their user experience is and whether they are actually super users, if that is a requirement of the position.

Again, the outcomes required of the position are an important pre-cursor to enable the recruiter to seriously examine each candidates HRIS systems experience.  Your candidate pool may be filled with people proficient only in producing payrolls and creating a handful of adhoc reports and may never even have heard of the concept of maximising the ROI of a HRIS system.

If I was employing a person who had 5-10 years’ experience in a payroll system and in payroll supervisory or management position, then I would be expecting they should be able to demonstrate a long list of improvements they’ve implemented along the way to that system.

I believe recruiters should be asking candidates to demonstrate their experience and previous outcomes in:

  • Improving data quality within HRIS systems to ensure data integrity and compliance
  • Creating cost and production efficiencies by implementing processes, creating automations and removing duplication of effort
  • Advanced report writing experience (or excel capabilities with extracted data) to increase analysis and reporting capabilities
  • Understanding the concept of and delivering  ROI on a HRIS system

How do I as an employer or recruiter, not exclude the best candidates from applying for this position?

In simple terms, employers and recruiters must truly understand the role… especially the required outcomes, as already discussed.  Where the employer stipulates particular HRIS system experience as a pre-requisite, an honest and open discussion by the recruiter will reveal whether this is a real or perceived position requirement.

Simply raise the questions voiced in this article with the employer:

  • What are the particular HRIS System outcomes required of this position?
  • Can this only be provided by a candidate experienced in one HRIS system, or are there comparable systems or transferrable skills?
  • Is there an existing Subject Matter Expert in the business that can be utilised by a Payroll Manager candidate with superior HRIS systems improvement experience, but lacking experience in the required HRIS system?
  • How can recruiters be sure that dedicated experience in a single HRIS system isn’t more than simple payroll processing knowledge? Does the candidate know how to manipulate data, write reports, analyse system efficiencies?  How will candidates demonstrate their experience in achieving the HRIS system outcomes required?

So, it’s over to the employers, recruiters and payroll manager candidates now… what is your experience?  Do you have a view point on whether HRIS systems experience is a transferrable skill?

If you have any questions you would like to raise personally, please email Louise Vidler at The Professional Payroll Manager.

© 2014 Louise Vidler T/As The Professional Payroll Manager.  All rights reserved.

All materials contained on this web site not otherwise subject to copyright of other parties are subject to the ownership rights of Louise Vidler T/As The Professional Payroll Manager. Louise Vidler T/As The Professional Payroll Manager authorises you to make a single copy of the content herein for your own personal, non-commercial, use while visiting the site. You agree that any copy made must include the Louise Vidler T/As The Professional Payroll Manager copyright notice in full. No other permission is granted to you to print, copy, reproduce, distribute, transmit, upload, download, store, display in public, alter, or modify the content contained on this web site.

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