A Case in Point A Payroll Benchmarking Study

Transcription

1 A Case in Point A Payroll Benchmarking Study Ole Pedersen Vice President, Sales & Marketing ADP Canada

2 Overview Payroll Benchmarking Study To outsource or not to outsource Best Practices for Payroll Management Emerging Trends for Outsourcing From Transactional to Strategic

3 Why a Payroll Benchmarking Study? University of Montreal s affiliated School of Commerce (HEC) is dedicated entirely to the study of today s management issues and benchmarking best practices First in a series of studies dedicated to best business accounting practices Payroll management is a natural starting point

4 Payroll Management An Initial Result An average of 83% of the cost of payroll management is incurred prior to the actual processing of the payroll

5 The Payroll Management Process Managing employee records Managing payroll data Producing the payroll Period-end processing Calendar year-end processing Fiscal year-end processing 14% 69% 8% 6% 2% 1% Payroll processing 17%

6 Payroll Management A Second Result Information technology is a key factor in the performance of a payroll system Relates directly to the collection of payroll information Data management represents 69% of the cost of the payroll management process

7 Managing Payroll Data Correcting, verifying and authorizing 20% Filing information in employee records 7% Reporting on the data collected 4% Collecting the data 35% 21% 13% Recording the data Making the necessary adjustments

8 Payroll Management A Third Result Companies that use automated time collection realize significant cost savings Average Cost (per employee/ per year) Manually completed time sheets $ Automated time collection $ 61.94

9 Payroll Management A Fourth Result Outsourcing payroll processing is more economical than performing payroll in-house

10 Cost to an organization with 300 employees 1,000 employees 3,000 employees Cost per employee Outsourcing payroll $ $ $ processing Without outsourcing $ $ $ 58.18

11 Payroll Management A Fifth Result Adopting best practices is key to payroll management

12 Best Practices for Payroll Management Electronic payment Can save $0.80 per transaction in bank charges and supplies alone Standardization of payroll cycles Adopting a single payment system reduces transaction costs

13 Best Practices for Payroll Management Electronic payment stubs not only provides employers with savings on cost of supplies but also gives employees on-line access to their records reduces the involvement of human resources or payroll staff in answering questions and updating employee-level data Employee Self-Service Service

14 So, what does it all mean? Companies that adopt best practices in payroll management and take advantage of economies of scale by outsourcing reap the greatest benefits Shifts the focus of payroll management as a transactional process to a strategic activity

15 Outsourcing Allows Shift in Focus Add value shift cost improve process Migrating from transaction processing to a strategic focus will yield efficiency gains. Efficiency Savings OLD: Focus on Tactical/Transactional NEW: Focus on Strategic Contributions Effectiveness Gains Source: Anderson Consulting Transaction Processing and Administration Workforce Acquisition and Development Business Partnering Change Leadership

16 Efficiencies of Outsourcing Outsourcing helps achieve full or partial displacement of key cost components Labour Software Installation Forms/Media Increased hardware capacity Collection and distribution Liability

17 Efficiencies of Outsourcing With outsourcing, companies can also take advantage of intangible costs: Opportunity costs Increased flexibility Ability to shift resources to more strategic pursuits Disaster recovery and security Increased confidentiality

18 So, where is outsourcing headed?

19 Outsourcing: Past, Present & Future Information Economy Value from intangibles -- knowledge, creativity, strategy People rather than things are the value store Rise of Knowledge Worker as scarce resource Employee self-service Business Evolution People Business Model Process Manage Costs Data Manage Growth Host Opportunity Creation/ Effectiveness Efficiency ERP Automation Mainframe Packages Client/ Server?? Internet Technology Evolution

20 The Future of Outsourcing Integration Takes on a New Meaning Service value-added will move from least cost to best practices Think carefully about a partner for the long term

21 Integration Takes on a New Meaning What does integration mean with the technology of the Internet? Distance is disappearing as a consideration Data integration will become a key capability with your vendors

22 Service Value-Added is Moving from Least Cost to Best Practices Disruptive technologies Speed has always been an outsourcer best practice Systems are forms of codified best practices. There must be investment in added product and business process capabilities.

23 Think Carefully about a Partner for the Long Term Relationships with vendors will be much closer than they are today The costs of switching may increase, not decrease Point-in-time comparisons become almost irrelevant

24 Some Final Thoughts on Outsourcing There will be a lot more choice as ERPs and traditional service providers converge Every decision is likely to include a significant outsourcing opportunity without giving up functionality Financially, the outsourcing business case will only get stronger

25 Questions?