Payroll Outsourcing Dos and Don’ts

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If you want to reap the benefits of payroll outsourcing, you must ensure that you follow a set of best practices. There are several things you can do at every stage of the outsourcing process to make the campaign effective, and get maximum returns from your investment. 

In the following paragraphs, we will discuss some of the important dos and don’ts that you as a client should try and follow. They will help you develop a structured workflow and enable your outsourcing partner to perform effectively, to make the campaign a success. 


  • Do: Be Careful While Selecting Your Payroll Partner


Selecting the right payroll partner is crucial as it comes with long-term implications for your company. You must ensure that the service provider you choose understands your payroll idiosyncrasies well, and is fully equipped to handle them. Besides, factors like data security, and proper mechanisms to prevent fraud and embezzlement, are also vital parameters to look out for, while selecting a payroll partner. It makes sense to opt for a vendor who is known to you or your peers and comes with a proven track record. 


  • Do: Mention Your Pain Points and Special Cases at the Outset


Many clients do not mention their pain points at the start, leading to enormous problems later on. Even if there are only a couple of pain points or special cases that are causing problems, you must discuss them with the vendor. These are almost certain to cause problems when the outsourcing process is underway, with the potential to derail the campaign. Sounding out your outsourcing partner in advance will allow them to find a way to deal with these issues and minimise problems at a later stage, when they can prove to be costly for the business. 


  • Do: Make It a Point to Collaborate with Your Outsourcing Partner


One of the biggest mistakes that clients make while hiring a payroll outsourcing company, is to assume that they can wash their hands of payroll. This is a big mistake, because it is impossible for payroll vendors to operate totally independent of the support of the client. It is important to understand that working with a payroll vendor is a collaborative exercise where both client and service provider play crucial and complementary roles. Failing to provide the necessary support to the payroll vendor is sure to lead to the breakdown of the process.


  • Don’t: Disband Your Entire Payroll Team


Following from the above, clients should avoid making the mistake of disbanding the entire payroll team. Supporting your payroll partner requires you to retain skeletal manpower to help address issues which cannot be handled externally by the service provider. You can retain one or two of your employees for this purpose. They must know the job well and understand the calculations to liaise effectively with your payroll partner. 


  • Do: Ask Your Service Provider for Advice


Your payroll partner is more than someone who just gets the job of payroll done: they are experts in the field with vast domain knowledge and experience. Hence, if you are not seeking out their advice with regard to challenges that you are facing, you are clearly losing out. If you encounter any problem with your payroll, you should immediately approach your outsourcing partner. Chances are, they have seen the problem before and already have a solution which can be implemented.


  • Don’t: Introduce Changes Suddenly or Abruptly 


Any outsourcing activity compels an organisation to make considerable changes, including altering systems and workflows, dissolving or reorienting entire teams, and trying to effect modifications in employee behaviour. If these changes are introduced suddenly, it is likely to lead to large-scale disgruntlement among your employees. 

Change management can help organisations introduce these transformations in a graded manner which makes it more acceptable to workers. For example, if the payroll team needs to be transferred to another department, it is the duty of the company to explain that the move is advantageous to both the company and to them, as they can learn new skills and perform more productive roles. Similarly, shifting from salary cheques to direct bank transfers while disbursing wages, mandates that companies reach out to their employees well in advance, and explain to them the advantages of the move, while taking all steps to scotch rumours. 

Growing Your Business with Payroll Outsourcing 

Payroll outsourcing can provide significant gains to companies in the form of cost savings and better service delivery, while also enabling companies to redirect their resources from less productive activities, such as payroll, to more productive ones. But an unplanned approach to payroll outsourcing could result in major complications, turning the campaign into a liability. A few small steps and caveats could help you run the campaign seamlessly, reap significant benefits, and enable you to grow your business. 

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