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Payroll Outsourcing Can Help Organisations Deal With Payroll Disruption

Payroll disruption is more than just an inconvenience, especially for HR and payroll. It offers the opportunity for business leaders to pause and reflect on the efficiency of their current payroll processes, especially when the bulk of the payroll processing work can get stuck in administrative processes.

In 2022, as most countries move towards an endemic phase in the post-COVID-19 world, organisations are shifting towards long-term productivity instead of prioritising short-term sustainability. This is attributed to the rising pressures for increased efficiency, with automation bearing the brunt of the workload to ensure smooth running of HR and payroll operations.

As organisations today shift towards hybrid working – a mix of remote as well as office working – it becomes even more imperative to relook at HR operations and how it can support this change in business model. This is where payroll outsourcing can bring about a multitude of benefits amidst this time of disruption, including easing the burden of payroll processing, compliance and data accuracy on HR professionals.

Adaptability to your organisation’s business model

An organisation’s business model may change over time and payroll outsourcing can be adapted to the changing business model. For organisations facing a combination of the following in their payroll workflows: dencentralised model, ill-defined policies or utilisation of multiple vendors, outsourcing payroll may potentially free up a significant chunk of resources and time. For example, organisations with a decentralised model may face difficulties standardising payroll processes across countries. Given that payroll data is not consolidated in a central platform, this may prevent generation of critical people insights and impede key decision-making. Similarly, poorly outlined payroll policies can result in a waste of resources and time, particularly if corporate imperatives are accelerating at a rapid pace and payroll processes or technology fail to keep up.

Payroll outsourcing offers a solution for organisations to centralise their critical payroll data while ensuring accuracy and compliance. In a time where change is constant and pay-related legislations are constantly being reviewed and updated, an external payroll provider can help to ensure compliance with the ongoing changes. Moreover, with workplaces rapidly becoming decentralised, leveraging on an external payroll provider allows key payroll data to be centrally located and facilitates ease of access and retrieval.

Key performance indicators of payroll operations

On top of ensuring timely and accurate payroll processing, HR needs to also monitor and track key performance indicators (KPIs) of payroll operations to understand operational efficiency and productivity. For example, tracking the accuracy of payroll data or the timeliness of salary disbursement to employees. These are additional duties that HR professionals have to undertake on top of payroll processing.

By outsourcing payroll, these KPIs can be provided by the external payroll provider. At the same time, business leaders can leverage these insights to determine the effectiveness of their outsourced payroll operations and its scalability during business expansion.

Centralised payroll operations and data

The key advantage about outsourcing payroll operations is the centralised database. A single payroll outsourcing provider allows organisations to establish a single source for operational, strategic and tactical levels throughout the organisation for accurate information. This means having a central HR database where critical employee data and payroll information is stored. Not only does this streamlines data retrieval and enhances the accuracy of payroll data, it allows deeper HR and payroll insights, facilitating data-informed decision-making.

With the plethora of payroll vendors available in the market, narrowing down to a single vendor can be a time-consuming and tedious process. Start by identifying key payroll needs that the organisation requires. Thereafter, ask the payroll provider whether they are able to support these key payroll needs. What is the extent of payroll services that the vendor can support? How are regulatory updates reflected in the system? What channels are available for customer support? How is the payroll provider refining their processes for continuous improvement? What were some of the service transformations in the face of continuous disruption? With the ever-changing global landscape of payroll operations impacted by external factors such as the COVID pandemic, HR needs to look forward in identifying change and capitalising on the potential of outsourcing their payroll to third-party vendors to maximise organisational efficiency and performance.


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