Specialist payroll outsourcing Specialist payroll outsourcing. How to get the best from a Payroll Services Provider

Transcription

1 Specialist payroll outsourcing Specialist payroll outsourcing How to get the best from a Payroll Services Provider

2 Content Title Page Introduction 3 Payroll Expertise 4 Approaching Payroll Outsourcing 5 Understanding the Payroll Remit 6 Blurring the line between Payroll and HR 8 Retaining Internal Responsibility 9 Setting Clear Objectives 10 Creating the Right Relationship 11 Engaging with a Provider 13 Valuing Employees 15 2

3 Introduction How much does an organisation value payroll? You may as well ask, how much does the organisation value employees? The service sector dominates the UK economy, contributing around 78% of GDP¹ and that means staff costs are without doubt the most significant annual expense. For many organisations, the decision to outsource payroll is simply about cutting costs and never having to consider payroll again. For others it is a chance to outsource not only payroll but certain aspects of the HR function as well. Neither approach is consistent with building a strong relationship with a Payroll Services Provider that delivers measurable business value. Poor payroll processes can result in: Late payment of employees. Use of incorrect tax codes. Missed overtime payments. Failure to reflect long term absence. Damage to staff morale. In an environment where staff costs increasingly dominate annual spend, payroll is business critical. ¹" 3

4 Payroll Expertise Payroll is a skill; in an increasingly complex legislative environment, it should be a valued skill. Payroll qualifications, such as the CIPP Diploma, are important; but in the era of RTI and auto-enrolment, it is on the ground experience that is proving essential. Payroll information is required for essential regulatory demands such as pension auto-enrolment. In any service industry, payroll information supports the effective management of what is both the biggest asset and the biggest cost base. Legislative complexity is prompting many organisations to consider a Payroll Services provider for the first time as they recognise that, in a changing payroll environment, getting this right requires more than good qualifications. There is far more to payroll processing than hitting a button once a week or month. 4

5 Approaching Payroll Outsourcing Organisations attitudes to the value of Payroll and the Payroll provider fall into two camps: Payroll is perceived as the most simple process in the business; a basic calculation that could and should be performed at rock bottom prices by pretty much anyone. This attitude is reinforced by companies offering services based on an incredibly low per payslip price at the detriment of service levels. In a complex payroll environment, how can the per-payslip price in 2014 be little higher than in 2000? An opportunity to Payroll provider to take on ever more complex tasks, many of which do not fall under the payroll remit. Providing Bradford Factor reporting or delivering a self-service portal for employees to log holiday hours and time is clearly an HR task; yet as organisations reduce internal staff and outsource there is a tendency to expect the provider to manage more than pure payroll. 5

6 Understanding the Payroll Remit Without doubt a Payroll Services provider should have the skills to manage payroll. These include: Making sure employees are on the correct National Insurance number. Ensuring bonuses and overtime are paid. Managing employee changes in tax code, and so on. These are core payroll functions and there are some straightforward processes that can be batched up and run together in a streamlined efficient manner to deliver economies of scale. 6

7 Understanding the Payroll Remit There are also, always, elements outside that standard payroll function that require input from the Service provider: Check information inputs. Understand the company s policy regarding payments, such as when dealing with PILON (payment in lieu of notice), expenses or compromise agreements. Organisations are less clear about the payroll provider s role in the increasingly complex payroll environment that now includes auto-enrolment and RTI. 7

8 Blurring the line between Payroll and HR Will a payroll provider have the in depth knowledge required to successfully implement autoenrolment? There are some aspects of the new legislation that can be supported by payroll: The information required for auto-enrolment is held within the payroll system. Payroll staff can undertake a number of tasks to support the calculation and administration. However, payroll staff should not be solely responsible for the entire auto-enrolment strategy. The core of auto-enrolment is an HR function; it is about instructing, educating and communicating with staff in the right way and at the right time. Payroll is a process for calculating employee payments rather than storing employee data and providing headcount reports and personnel information. A Payroll provider is not responsible for plugging the gaps in a client s HR skill set. Blurring the lines between payroll and HR in this way is a recipe for disaster. 8

9 Retaining Internal Responsibility Outsourcing payroll does not mean removing all internal understanding of the payroll function. It is essential to: Provide a point of contact for the Service provider critically, someone who has the authority to take responsibility for the relationship and has a basic understanding of payroll. Understand the extent of the payroll processing responsibility and the service level agreement. Avoid over-reliance and pushing the boundaries by demanding a provider works outside the set remit. Have realistic expectations and don t judge the provider on the quality of non-payroll processing activity which sits outside the service level agreement. When done well, with clear understanding on both sides, the relationship between client and provider can be extremely positive and ensures outsourcing delivers measurable value. 9

10 Setting Clear Objectives If an organisation goes into an outsourced arrangement with a low cost, out of sight, out of mind attitude, the chances of achieving a cost reduction and a smooth payroll process are slim. To get the right provider and the right relationship, organisations need to take a step back and delve deeper in to the business process and objectives. What economies of scale can be delivered by an outsourced provider? How can internal processes be improved? Can finance gain faster access to more accurate data? Will business morale improve as a result paying every employee the right amount, at the right time? How much value can be gained by enabling employee self-service and providing online payslips? It is only by factoring in these considerations that organisations can begin to truly assess whether or not outsourcing is the right route, and which outsource provider can deliver that service. 10

11 Creating the Right Relationship Achieving a slick, smooth and business improving payroll process is an evolution. Before starting a new relationship it is important to measure the current payroll process: How many errors occur each payment run? Can absence management be improved? What the trends are in spend for temporary employees? Identifying key areas for improvement and development will make it far easier for an organisation to work out how to construct the relationship with an outsourcer and ask the right questions to get the best value from the payroll process. How can the payroll provider deliver the information by the pension company for auto-enrolment? What is the best way of getting Time & Attendance information into payroll? How can that information be to get a better understanding of trends in staff costs? Understanding priorities is key to setting a Service Level Agreement that reflects the true objectives of the business. 11

12 Engaging with a Provider The best relationships rely on an honest approach where both provider and client can openly discuss and resolve issues to create a better, more professional result. Remember that this is a Provider working with your business, remotely, perhaps up to a week in every month: there is no way this company will know the ins and outs of strategy. If questions come back based on the information that has been submitted, it is important to understand why. Was there a valid reason for information being requested? If so, work with the provider to ensure the information requirements are clear. 12

13 Engaging with a Provider Accept that there will be issues and address them together for example, create new input formats to improve data quality. Adapt processes on both sides to ensure the right information is shared at the right time. Use regular account management calls and service level reviews to discuss day to day issues and asks questions. Expect regular meetings with the provider to air problems and discuss opportunities for improvement. With the right, open approach, both organisations perform as efficiently as possible and drive improvements month on month. 13

14 Valuing Employees Today record numbers of individuals are in work in the UK. New employee retention strategies are required. Caring for the employee is back on the agenda. Staff morale is an essential factor in boosting performance. This should have a direct impact on organisations attitudes towards payroll. Outsourcing payroll works, and works well. But organisations need the right mentality and understanding. Outsourcing does not mean out of sight, out of mind and there is a huge amount more to payroll than just pressing a button. It is those organisations that proactively embrace payroll that can gain the benefits not just in reducing costs but transforming business insight and improving employee morale. 14

15 Specialist payroll outsourcing It s reassuring to know that a team of experienced, qualified payroll professionals are looking after your valued employees. Bond Payroll Services have the expertise and technology to guarantee that your payroll is turned around quickly and accurately every time, for everyone. Bond Payroll Services is a Bacs registered and fully HMRC accredited expert payroll outsourcing solution for companies of all sizes, across all sectors. Bond Payroll Services already supports over 600 organisations, providing an established, professional, reliable and secure payroll outsourcing service. Contact us: +44 (0) sales@bond.co.uk