Payroll is arguably one of the highest business risk areas in human resource functions within an organisation. As such should hold a place at the top of a company’s needs. Why then are more companies letting their payroll become neglected when there are other options on the table?
The importance of payroll in maintaining an effective and driven workforce cannot be stressed enough. Just as an organisation has set expectations for what they want out of their employees, so too does the pendulum swing the other way.
The idea of payday is more than just a beacon of hope at the end of the month for your employees. It’s also a major part of employee livelihood that empowers the ability to pay for one’s own or children’s education, put a roof over family’s head, ensure medical care when necessary, or perhaps even put some savings away for a rainy day. There is an onus on employers to meet the needs of employees as they meet the needs of the company.
One of the stumbling blocks for organisations in handling of payroll functions is a trend towards dedicating few resources. Assigning the responsibility to someone without the necessary skills or background, simply because they have spare capacity. This can be a recipe for disaster and a huge risk, especially when considering the consequences of non-compliance, all despite the fact that payroll outsourcing has been named as the fastest-growing segment of the global human resource outsourcing (HRO) market.
A recipe for disaster and a huge risk, especially when considering the consequences of non-compliance.
As it is, payroll itself needs financing, whether it’s in the form of systems or employees to handle said systems, meaning that companies that fail to equip HR department with the necessary tools or manpower will likely fail at some point.
Failure in payroll management can have a number of negative, long-lasting effects that can negatively impact your business. When employees aren’t paid on time, morale will begin to drop and employee retention becomes an issue. Unhappy employees are more likely to consider other options and seek employment elsewhere.
Another shortfall resulting from payroll management neglect is the wasting of valuable company resources. Manpower, time, and money can all be lost to ineffective internal systems, leaving your business reeling and your employees unhappy. This can lead to further and more serious issues related to non-compliance, where offending businesses could potentially find themselves facing audits, huge penalties and interest, and potentially expensive litigation.
The stigma attached to outsourcing something as critical as payroll management might leave the owners in doubt. But in reality, it’s simply handing over a core business function to a group of professionals who have the skills and tools to streamline payroll and make sure workforce is paid on time.
Some companies find it hard to admit defeat and get outside help. The best way to think about it is like this: if you’re willing to use outsourcing for marketing, public relations, or even HR, then outsourcing payroll management is no different.
Specialist outsourced HR and payroll service providers can provide more value than simply doing the job for you. Reputable service providers can help review and overhaul business processes so that once the partnership has ended, the company is in a position to take over where they left off and have a series of systems in place. Compliance with government laws and legislation, as well as tax records for every employee, equip companies with the information needed to keep the business running smoothly.
Ultimately, deciding whether outsourcing your company’s payroll functions differs from case to case. If your business output is suffering due to ineffective internal systems, then outsourcing might just be the answer for you.