Top 5 Dangerous Myths About Outsourcing Your HR & Payroll

HR and Payroll processes can be time-consuming and tedious, which can lead to aggravating data errors or worst, costly fines.

Your employees rightfully expect to be paid on time, the accurate amount, and to the right bank account. They are financially dependent on how your business handles HR and Payroll.

You have probably thought of outsourcing your HR and Payroll processes but have decided against it after hearing the rumors or myths about outsourcing which make the whole process seem daunting. And if done wrong, then yes,  some of the rumors are true in their own way. However, with the right solutions, partners, and support team, you will find these myths are simply that, myths. Here are the most common myths on outsourcing and what you can do to fix your biggest HR and Payroll issues.

Outsourcing costs an arm and a leg!

When evaluating HR and Payroll outsourcing expenses, companies typically only look at the hard cost of software but should take in to account a myriad of other factors including:

  • The cost of installing and maintaining an in-house payroll system
  • Data security and redundancy expenses
  • System upgrade costs
  • Hard costs of check stock, envelopes, MICR toner, bank fees for direct deposit, check cost, positive pay expenses, and delivery/handling expenses
  • Labor expense for processing payroll and managing HR, answering employee’s payroll and benefits questions, as well as reprinting lost checks and earnings statements
  • Time spent by leadership on training and oversight of payroll staff
  • Cost of correcting human and tech errors which may include extra labor, non-compliance penalties, lawsuits, or even fraud

A large national CPA firm recently did a study that estimated these expenses to be 18% MORE than simply outsourcing to a high-quality payroll vendor. 

I lose control when I outsource my payroll.

The reality of outsourcing payroll is that you actually create more control(s). By utilizing a sophisticated roles based application, you can have security profiles that give access or take away access to certain areas in the system. A few use cases are:

  • Give access to review/edit time cards but not to see wages and process payroll
  • Give access to enter payroll but not submit so that an “approver” can actually review and submit the payroll
  • Give access to view pay rate but limit who can edit them

Keep in mind that most higher end payroll applications also have very in depth audit capabilities; make sure your solution and any one you are looking at does as well.

I lose the flexibility to do it “my way” when I outsource.

If you choose the right company that has expertise in the HR and Payroll world, they’ll be able to customize the solution to fit your needs, but better yet, even advise on better ways to do things. There is nothing worse than automating an already bad process.

 Image of three succesful business people using a tablet during at meeting

All vendors are equal.

When looking for an HR and Payroll provider, get to know the words “prove it!”

  • Ask to be shown the solution specific to your needs via a customized demonstration
  • Ask for references and make sure to follow up on them
    – Anyone can find a happy client so be specific and ask for references in your industry that are using the same solution you’re looking to use
  • Don’t “assume” because the company is large they are the best. Many of the largest providers in the world have older technology that is less configurable and more of a “boxed” solution than other providers you may find in your local market
  • If you want a smooth transition, you’ll want to find a company that will listen and get to know you and your business before crafting a solution for you. Look for a “partnership” vs. just another vendor.

Payroll is just payroll

Payroll is only the tip of the iceberg. Most modern systems have modules that can be activated to help solve your timekeepingbenefits, talent attraction and talent management challenges as well as provide a full suite of other solutions the expand the gambit of HR.

HR and Payroll do not have to be hard; in fact they can be customized for what works best for your business. Freeing up the time, money, and workforce hours you need to help your business grow. Partner with a trusted HR and Payroll partner who can create a custom solution based on your needs and you will find that outsourcing can be the solution for your business headaches.

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