HR administration can often be the forgotten and less glamorous area of HR and has always been less fashionable than the higher profile areas of the HR strategist, employee relations guru or organisational development expert.



Author: Alan Marshall, Global HR Consultants

Topic: Outsourcing

OVERVIEW
 
Outsourcing administration has been very popular for quite some time, as organisations look to take items not directly aligned with core business outside of the organisation and link with specialists within their respective fields.

This article specifically looks at the outsourcing of payroll. An area full of people data and costs. Payroll sometimes resides in HR (its sensible home) or alternatively in finance - is it because HR are scared of all the number crunching, technical aspects and statutory legislation and/or finance will not let go of anything connected to numbers?

WHEN TO USE THIS GUIDE

Are you considering:

• Outsourcing your payroll or other admin areas such as HR record keeping or pensions administration.
• Alternatively, you may wish to replace/update existing systems and purchase packaged software.
• It’s a very similar process for both options.

10-STEP ACTION PLAN
 
1. The nicest thing about not planning is that failure comes as a complete surprise and is not preceded by a period of worry and depression.

• Have you asked yourself – why change at all?

• Improve efficiency, reduce costs, update old technology, not core business philosophy, headcount reduction ….. the list goes on. 

• Ask yourself. Are you changing for the right reasons?

2. Do you have any constraints?

• Any prescribed IT technical architecture you must comply with?

• Dependencies to/from other systems. (Time and attendance, other HR systems, general ledger, third party administrators such as pension schemes, banks, trade unions.

• Connectivity and security/encryption requirements? Consider the Data Protection Act and other regulatory items (for US owned organisations Sarbanes Oxley legislation is equally very important).

• Time constraints. Any existing contracts that need to expire or expensive upgrades to avoid?

• Budget. Do you have sufficient funds?

3. Baselining is probably the most important thing to establish before looking at outsource options. 

For example, if you don’t know where you are going you can’t be accused of being lost.

• Do you measure performance now?
a. Percentage accuracy.
b. Speed of responses.
c. Cost per payroll person.
d. Number of employees paid per payroll person employed.

• You need to apply the measures you require in the future, to your current system now in order to measure improvements in the new outsourced system.

4. Have you thought about a project team with specific roles and responsibilities?

• Sponsors, project leader, functional leader, functional members, technical members, project manager, temporary resources.
• Remember - the best specialists do not make the best project managers
• How will the 'day job' still get done? This is a common pitfall.
• An independent and skilled project manager plus appropriate temporary resources are the key to success.

5. You don’t know what you don’t know.

• You will need to write the requirements documents but do you know what you really want?
• The team should look at the market and learn, learn, learn, what is out there to assess best in class functionality and technology.
• Use search engines to get started.
• Exhibitions and shows such as www.softworld.co.uk/hrp/ are very good to see how many competing products exist and how many sales people will be beating down your door.
• It’s too early to get sales people in (do it at your peril).

6. How do you compare one glossy brochure with another?

• Create a functionality matrix so you can see what each vendor can provide (be careful as many vendors say they can provide everything).
• Interrogate vendors but don’t release vital project information until you have assessed their capability and they are actually prepared to prove their promises.

7. The requirements document:

• Also known as the ITT (invitation to tender), RFI (request for information), service definition, solution design.
• The bigger your requirements document, the longer it takes vendors to respond …. and the price will reflect it too.
• Try and make it succinct while covering every area.
• Your project team should build it and your sponsor group approve it.
• Challenge current processes especially 'but we have always done it that way' syndrome.
• Remind those close to the internal processes that it is a payroll you are looking for and every organisation has one.
• Management buy-in is essential and before they see the first quotation. (Otherwise your finance director will set the budget at the lowest cost seen, or even less).

8. Vendor selection is where it can all go wrong.

• Long lists to short lists.
• Eliminate those that don’t meet essential requirements or you feel nervous about.
• Do reference site visits preferably arranged directly by you and not the vendor. Vendors will always pick their favourites.
• Invite no more than four to your premises to give presentations of how they will meet your requirements.
• Each one to do a half day presentation followed by a separate half day debate by the project team.

9. Use selection tools to ensure equal treatment.

• Weighted scoring charts to ensure you don’t pick the nicest sales person.
• Cost comparison graphs over the life of the contract to ensure you understand the total cost and can see like-for-like comparisons.

10. Make your selection but don’t switch off the others yet as contract negotiations may uncover hidden items.

• You will need legal advice for the contract.
• Negotiate hard – you could be pleasantly surprised.

EXPECTED OUTCOMES | RESULTS
 
• Smooth transition from old to new systems.
• Cost savings achieved.
• Improved functionality.
• Customer satisfaction/delight.

ABOUT GLOBAL HR CONSULTANTS

Global HR Consultants is a pan-European company providing a global service in the area of HR administration and can assist you in a variety of ways from creating cost effective and competitive people-friendly policies to searching and selecting software solutions for a variety of HR administration applications. In addition, creative training services are available to provide your staff with the skills required to ensure your greatest assets are protected.

This organisation also incorporates www.expatexpert.co.uk to provide a friendly and efficient help service whether simple or complex in this highly specialised and demanding HR area.

Global HR Consultants
Contact: Alan Marshall
T: 01325 339058
E:: enquiries@globalhrc.co.uk
www.globalhrc.co.uk
www.expatexpert.co.uk