Is outsourcing your payroll department the right action for you?
01 September 2019
This article was featured in the September 2019 issue of the magazine.
Jason Davenport MCIPP MIoD, CIPP chair, discusses the fundamental issues and provides ideas and guidance
In the first of a series of three articles, I would like to impart lessons learnt for consideration of whether outsourcing is the right strategy for your business. The second article will focus on the relationship to be managed and recognising what you need to have in place to support that; and the third article looks at how best to bring your payroll back in-house should you need to.
Firstly – what sort of an organisation are you? Do you recognise that you already outsource many services? This is often applied to allow the business to focus on its core service offerings, or to ensure that functions of expertise are handled by professionals in that field. You may already have a team working to manage those relationships, and ensuring daily delivery is maintained to a high standard of service. What lessons can be drawn from those who manage these service contracts? I imagine very regular contact, working almost hand in glove and being responsible for client-side delivery are very high on the agenda to create best practice success.
Secondly, as a business what are your values? If you are in the public sector, then the citizen’s agenda and spending tax-payers money wisely are high on your radar. Not for profit and charitable status also have a similar driver for prudence and even privately-owned businesses and PLCs whilst recognising the language of profit still want value for money from any partnership they are procuring.
...ensure you are considering the right steps to be ‘fit’ for outsourcing...
So, do the above values resonate with you and do you already outsource several services to ensure your business runs effectively?
Thirdly, ask yourself what are the drivers for outsourcing this key element of your business? Are you looking for compliance and to reduce risk? Do you prefer this work handled by a fully qualified, trained team? I would hope that it is not simply to reduce cost within the business model today; however, it may be to create capacity for other work within the teams that are normally responsible for delivery. It may be one or more of the above or a consideration of other factors that are driving a strategic review of how best to serve your business and its employees.
Fourth, in considering outsourcing, have you determined what size team you would need to handle the outsource arrangement and ensure it is managed and client requirements are fully articulated to the outsourcer? This is often an area overlooked. I will go into more detail of what is needed in relationship management in the article to follow, but it is worth considering whether all aspects of a department’s role will sit with the outsourcer or if some elements will remain with yourselves. An example of this maybe the handling of company cars: if handled by the current team, and not be covered by the outsourcing arrangements, then provision needs to be made for this activity to be covered in the future.
Finally, how is success measured? Think about what level of starters and leavers you have today in terms of attrition. How many changes are made each month and how quickly do they need to be effected, especially if contractual and affecting pay for employees? A service is to be measured in several tactical ways: volumes of data handled and how timely and accurately they are completed create an efficient service.
Today’s employee base and managers alike may also want choices in how they interact with the service. Not just traditional routes such as face to face, telephone and email; they may also be looking for other options such as chat facilities and instant messaging without the need for voice interaction. The level of customer service and channels available to you then move from efficient to effective in the delivery style. A part of measuring success is also about the first four components to this review and whether culture and values align which for larger businesses creates more synergy to work in partnership together to the benefit of both parties.
The above five considerations are only a start, but it is important to be thinking about all the above to ensure you are considering the right steps to be ‘fit’ for outsourcing and make the best of the relationship. To be successful, it is not about abdication but rather delegation.
The next article will look at the relationship requirements in more detail. If you do have any comments or considerations, please do contact me at the email address provided in the Chair’s message.