Is Outsourcing your Payroll the best thing for your business?
Posted by
Peter W on Tue, Jan 24, 2012 @ 02:16 PM
Several years ago, outsourcing your payroll was in. It was a quick way to save time and streamline processes. But now, businesses are starting to take back control with in-house HR. Why? According to a recent study conducted by Accenture, failed HR outsourcing is not due to execution, but due to the strategy of outsource itself not fitting the business doing the outsourcing. 
Outsourcing works well for some areas and businesses, but not if information on skills and qualifications of individual staff members are vital to an organization's daily processes. Ideally, it should free up staff from related time-consuming tasks, but it could add other frustrations, like losing control of day-to-day data.
The Role of HR
The same Accenture study found some interesting statistics on HR executives:
- Over 70% of CEOs felt HR was 'very critical' to corporate strategy, but only 10% felt HR personnel understood that strategy
- Only 50% of HR directors saw their function as business critical
- Only 10% of CEOs were happy with HR's performance
Marketing executives also voiced the top 3 issues they face when it comes to HR; attracting, retaining, and growing a skilled workforce, supporting the business by focusing on core capabilities, and supporting business changes.
What we can learn from these stats is clearly there is a disconnection between what senior managers see the role of HR being and what the HR personnel see their role as. HR personnel and senior executives alike must realize that the payroll system is a very personal and important asset in an organization... so outsourcing is a big decision that must be examined carefully.
Here are some signs that outsourcing as a solution may not be the right way to go for your business:
- Your decision-makers need quick and easy access to personnel files, records, and payments on a day-to-day basis
- There are signs your employees are becoming irritated because accessing the data they need requires a cumbersome back-and-forth with the outsourcing company
- Ironically, outsourcing your payroll means hiring in-house staff to monitor and take responsibility for the outsourcing process
- You are not comfortable with the fact that your accountability and reporting requirements may not be met because they depend on the quality of an external system
While other activities are safe to outsource, your payroll may not be one of them. Each time you are faced with an option to outsource, think about how it affects your bottom line in terms of efficiency and productivity. Does it compromise how well your company knows its people? Will you still be able to proudly say that your company is backed by good systems software and processes?
What are your views and experiences on outsourcing in general and outsourcing HR/Payroll in particular? Share your thoughts in the comments box below.