01 December 2020

Abigail Vaughan, chief operating officer, Zellis, discusses the issues

Payroll will always be a mission-critical function for any organisation but in the current climate making sure that it runs accurately, efficiently, and compliantly is more imperative than ever. As the pandemic continues, many payroll teams are struggling with challenges like adapting to remote working, managing a loss of capacity, and complying with rapidly changing legislative measures.

As a result, an increasing number of organisations are considering deploying support from an external payroll service provider, in order to ensure continuity, build resilience and save much needed costs at a time of considerable financial pressure. However, evaluating a potential payroll partner is no simple feat, especially as both customer expectations and provider capabilities have evolved significantly over the past decade. So, if you are considering a managed payroll service, here are four areas to focus on.

Expertise and experience – It may go without saying, but you need to be completely confident in your provider’s expertise and experience that they can get it right each and every time. At the moment, it’s particularly crucial that they can quickly assess what new legislative measures mean for your payroll and respond to them in a way that aligns closely with your business objectives and protects the colleague experience.

But a good provider’s expertise shouldn’t just cover payroll processing and compliance. It should also cover the ability to proactively propose opportunities for improvement and advise on how payroll and HR (human resources) can add strategic value to the wider organisation, especially during the current period of uncertainty.

It’s valuable to spend a bit of time to understand the people behind your payroll service provider. How are they trained? How are they kept engaged and motivated? What technology do they use? What is their approach to innovation? Building trust and transparency with the people running your payroll is key to a long and successful partnership.

Tailored solutions – An ‘out-of-the-box payroll solution’ could be something of a contradiction, since no two payrolls are quite the same. Every organisation has a unique combination of workforce complexity, sector-specific challenges, internal controls, colleague terms and conditions, and strategic objectives which influence how payroll is managed.

A good supplier should have the scale, expertise, and flexibility to meet a customer exactly where they are, using standardisation where it makes sense to do so but also developing a tailored solution which directly solves their issues. Perhaps most importantly, the supplier must be willing and able to adapt to change, since both stakeholders and priorities change over time.

Ultimately, traditional payroll outsourcing is being displaced by fully fledged managed payroll services which are characterised by a much closer and more strategic partnership between customer and provider.

Cost efficiency – Unsurprisingly, the pandemic has seen process efficiency – and, by extension, cost optimisation – go straight to the top of the agenda for payroll teams. To achieve this, organisations need to accelerate the digitisation of their operations, with a particular focus on areas like cloud, journey automation, and data analytics. For many, process transformation will be more easily achieved by working with a payroll service provider that already has the right technology in place.

A provider’s use of technology is key to its ability to deliver – and to continue to deliver – real customer value beyond simply running the payroll. Remember that journey automation is by no means the only way to drive payroll cost-efficiency. A provider that knows how to use payroll and HR data strategically can help organisations make smarter and more profitable business decisions.

Customer satisfaction – Another trait to look for in a payroll service partner is a strong approach to customer satisfaction and, more specifically, a mindset for continuous improvement. All providers have to be held accountable for delivering on what they have promised in their SLA (service level agreement), but the best of the bunch will look to go above and beyond.

At Zellis, for example, we give each client a dedicated customer success manager who, amongst other things, is tasked with championing service improvement, even if the client’s feedback is already excellent. So if there was only one error in last month’s payroll, we would focus on reducing that to zero next month.

Ticking all the boxes
Working with a managed payroll service provider may not be right for every organisation. However, as the pandemic has exposed inherent flaws and points of fragility in payroll operations, it’s worth evaluating the role that an external partner might play in addressing both short-term needs (e.g. adopting new government subsidy schemes) and long-term challenges (e.g. cost reduction and digitisation).

And it doesn’t need to be all or nothing. Most providers can provide support on just part of the service (such as payroll processing), while others can provide advisory services for customers who just want some additional support for their in-house team.

In any case, don’t settle for an out-of-the-box solution. Instead, find a solution that ticks all of the right boxes.

Featured in the December 2020 - January 2021 issue of Professional in Payroll, Pensions and Reward. Correct at time of publication.