Common HR and Payroll Outsourcing Mistakes #1: We’ve always done it this way
Posted by: on 11 November 2014 in Human Capital Management
November 11 – by ADP
Most organisations highly value their HR function, and rightly so. Their knowledge of employees and internal procedures are second-to-none. The EY Global Payroll Survey (2013) finds that 28% of companies still rely solely on a complete in-house payroll delivery model. When asked what they considered to be the main driver for their existing Payroll and HR operating model, the largest number stated that it was simply the way things had always been done. They had not had the time to re-assess whether BPO would provide a suitable alternative. As organisations compete in ever-changing marketplaces, having the flexibility offered by BPO services could be of benefit.
CAN IN-HOUSE SYSTEMS COPE?
Relying on internal teams can be costly and time-consuming. Internal teams are often left under-resourced, under-trained, and over-loaded. A survey of CFOs, in collaboration with ADP (Managing Compliance in a Changing Environment, January 2013), found that 60% of finance directors agreed that companies have experienced increased pressure to respond to tax, employment and payment-related regulations in increasingly shorter timeframes during the past two years. The time needed to keep pace, however, isn’t always in-keeping with the pressures of day-to-day business. Deloitte’s Payroll Operations Survey (2011) found that only 27% of respondents have training or certification requirements in place for their payroll and HR administration staff. The payroll and HR administration staff for approximately 60% of respondents received an average of between 1 and 20 hours of training per year. This leaves HR professionals under skilled, and organisations exposed to risk.
Even if an internal team manages to cope today, the challenge is whether they can cope tomorrow, given the heightened level of expertise and reduced time and resources.
The time needed to keep in pace isn’t always in-keeping with the pressures of day-to-day business
The Deloitte survey found that only 13% of global organisations surveyed had a global payroll strategy in place. The desire to create a more strategic approach to Payroll and HR is there, but it is often the time and expertise to do so that is lacking.
INFRASTRUCTURE AND EXPERTISE
With a HR BPO provider, organisations have access to constantly updated best practices. The internal danger of thinking “we’ve always done it this way,” sees organisations rapidly fall behind to more innovative and flexible competition. BPO allows them not only to catch up but to overtake their peers.
Understanding and managing the ever-changing nature of payroll and HR administration is a monumental task for HR
An over-reliance on in-house teams or legacy processes can therefore leave organisations encumbered by slow and inefficient processes. Understanding and managing the ever-changing nature of Payroll and HR administration is a monumental task for HR, taking up staff time and resources. In contrast, BPO providers consolidate consistent and harmonised processes for all the countries in which they operate, providing a global network of local experts to support HR professionals. Outsourcing delivers partners with the knowledge and infrastructure necessary for meeting those needs, while reducing the pressure on in-house professionals.