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Avoiding the pitfalls of payroll outsourcing

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article image Bruce Sullivan.

OUTSOURCING company Mantrack has produced a 12-point checklist for companies contemplating entering into outsourcing agreements.

Mantrack’s Bruce Sullivan says that - even though the Harvard Business Review has identified outsourcing as one of the most important management ideas and practices of the past 75 years - companies should look before they leap.

"During the technology boom, some unproven IT products were marketed by some inexperienced people. The market today is justifiably sceptical of claims and wants facts to back them up."

The most profound ongoing benefit of payroll outsourcing is that it frees company management and staff to focus on their core business.

"Instead of pulling more bodies into the bureaucratic swamp of processing and reporting endless transactions daily, weekly and monthly, finance people are freed for their true function of analysis and decision making," Mr Sullivan said.

Mantrack's PayOffice system is the result of pioneering work in payroll outsourcing that began 17 years ago in 1985, when Bruce Sullivan's business was the first company Down Under to develop a PC-based payroll package with automated Time and Attendance.

Bruce Sullivan says that even though on-line outsourcing has come a long way since then, prospective outsourcers should check to ensure:

1. The outsourcing company has experience with comparable types of organisations.

2. Benefits of outsourcing are thoroughly identified and costed.

3. A thorough and proven client familiarisation programme is in place.

4. A flexible technology platform is employed.

5. Automatic updates integrate with other systems.

6. Proven backup facilities exist.

Principles for managing outsourcing relationships once the system is installed:

1. Appoint a relationship manager within the client company.

2. Promote continuity.

3. Promote frequent informal communication.

4. Have a formal review process.

5. Prioritise and specialise.

6. Communicate with fellow employees.

"Breakdowns in technology are almost never the cause of breakdowns in outsourcing relationships - breakdowns in communication are frequently the major culprit," Bruce Sullivan said..

"It is very important to keep channels of communication open, because the adoption of new technology, however beneficial ultimately, will always encounter resistance in the short term.”

"A key point to remember is that technology can't work in a knowledge and communication vacuum - before people can use the vehicle, they have to know how to drive it, and where it can take them,” he said.

“Once people understand this, then technology becomes their servant, not their master."

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