Payroll Outsourcing: Is HRIS Spelled M-E-S-S at Your Agency?

12-27-2019

Payroll outsourcing is nothing new. For years, many firms outsourced their payroll function to reduce their costs and improve the efficiency of a largely non-strategic activity. But now, home care agencies realize that pay is the core of the employer-employee relationship, and must not only be delivered efficiently and perfectly every time, but also be delivered in a way that meets the unique needs of business leaders, payroll administrators, and employees themselves. In fact, data from m.Research earlier this year shows that over a third of the agencies surveyed are making HR investment a priority, and, in particular, are investing in moving their in-house payroll out to third-party service partners.

As payroll technology has advanced, and cloud delivery capabilities have become the norm, delivering on-time, always-accurate paychecks at low cost have become a baseline expectation. Faster access to data and increased computational and analytical horsepower also means that new trends in payroll have begun to emerge. The most important payroll technology trends we have seen focus on a payroll solution provider’s capability to accurately capture, calculate, and securely deliver the appropriate payroll data based on each user’s role.

  • Payroll administrators require complex functionality and visibility into pay data to manage multiple pay groups, jurisdictions, and other key variables that go into calculating accurate payroll. These practitioners are under ever-increasing pressure to ensure organizational compliance and deliver critical reporting and analytics.
  • Leaders of agencies need access to pay data in order to make critical sourcing and talent decisions.
  • Employees need their individual information to be delivered securely and accurately to ensure their pay shows up in their accounts on time. In addition, employees are also looking to their employers to help them manage their personal finances with tools like retirement planning, student loan repayment, and more.

Today’s agencies are looking for payroll partners that can provide them with the depth of functionality, accuracy, and experience, while still continuing to manage costs. Data from m.Research shows that of all the mid-sized (500-10,000 employees) organizations surveyed, nearly half cited the need to improve employee experience as one of the top three reasons they were changing payroll providers.

So what are providers doing to deliver this experience to employees?

  • Transparency. Because technology has made data transparency much more commonplace, employees now expect data transparency. They see real-time information from their banks, their favorite retail websites, their online fantasy sports sites, and many other venues. As a result, they anticipate the same kind of self-service transparency from their employers—an unreasonable expectation delivered by payroll partners.
  • Guidance. Helping employees with a variety of pay issues is key. Providing clear and simple guidance so that they can understand how their pay was calculated is central, as is offering scenario tools to help employees model the impact wage or deduction changes on their take-home pay, including the cost and value of any benefits offered.
  • Financial Wellness. As our work and financial lives have become intertwined, payroll and financial services now intersect as well. Employees have historically trusted their employers to help administer their 401(k) contributions and payments for benefits coverage. The trend toward employers being authorized by their employees to also debit monthly rental payments, monthly utility bills, and other transactions directly from their paychecks will only continue, as payroll technology and financial technology steadily move toward convergence.

Clearly, payroll is a fundamental transaction binding employers and employees together. It is also critical to how home care agencies interact with external entities, like regulators, benefit providers, and financial institutions. By modernizing payroll solutions, agencies can take advantage of technology and services to deliver a differentiated employee experience. And, importantly, it cements the data and relationship foundation upon which so many other elements of human capital management are built.

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