The Importance of an HR or Payroll Provider
There are several benefits when outsourcing HR or payroll services. A company that partners with you will be taking on the burden of your administrative tasks. Whether you have in-house HR, need additional HR assistance, or want to automate your payroll process, outsourcing can be a more efficient process for your business needs.
Here are just a few examples of the benefits of outsourcing HR and payroll services:
HR support: Does your business currently have in-house HR? Do you currently have a less experienced HR professional in-house and want to provide them with additional support? Having access to an HR team provides your team with the support and guidance they may need for their day-to-day needs.
State and federal compliance: Ensuring your business is compliant with ever-changing federal and state regulations can be stressful. Having a partner to track and advise on compliance-related matters takes that stress off your plate, so you can focus on other things.
Lowering risk: Having a provider take responsibility for processing accurate and compliant payroll lowers your liability.
To review ESC’s HR services, check out a sampling of our services here. To review ESC’s payroll services, check out a sampling of our services here.
How To Know When It’s Time to Switch HR or Payroll Providers
You or your team may begin to feel that the outsourced services being provided to your business are not as suitable as they once were. Here are some factors that may impact your decision to look for HR or payroll services elsewhere:
- Your internal team struggles to work effectively with your provider
Having the ability to work effectively and collaboratively with your HR & payroll provider is not always guaranteed. Depending on the type of service model your business is receiving, one of your team members may need to have regular contact with your provider. An example of this would be a payroll manager staying in regular weekly contact with a payroll provider. However, if the payroll provider fails to respond and maintain communication, your business’s payroll could be impacted.
- You consistently have errors in payroll or other services
Experiencing consistent errors in a service that you are paying for can be frustrating. Whether it’s HR errors impacting employee records or payroll errors, these issues directly impact your employees. You or a team member may find yourselves spending valuable time trying to correct your provider’s error- costing you time and money.
- There are opportunities or capabilities you’re missing out on
Many outsourced providers offer services and capabilities that may bring your company up to speed. Whether it be technology, or how your payroll process cycle runs, there is always room for improvement. For example, does your business currently onboard employees using paper forms? Most outsourced providers will onboard your employees electronically, so it’s a smooth and easy process. Or maybe your HR manager is responsible for providing W-2s to employees each year. Most outsourced providers allow your employees to access electronic W-2s themselves, so your HR manager doesn’t have that task on their plate anymore!
- It takes time or effort away from other responsibilities
When engaging with a company that has not upheld its end of the bargain, sometimes you may be spending more time on administrative tasks that you did not intend to do. For example, your current payroll provider may require you to check certain formulas for your payroll because they cannot do it. Or maybe, you spend 3 hours each week trying to fix their mistakes because they haven’t taken accountability for their errors.
- Your employees are not having a good experience
Your employees’ experience working with an outsourced provider can make or break their perception of your business’s work environment. For example, if your payroll company has had consistent errors in your business’s payroll, it directly impacted your employees. Some of your employees may rely on their paychecks each payday to be accurate so they can take care of themselves and their families. This may lead to turnover if employees feel they are not being paid on time or accurately.
What You Should Look for In a New HR Team
When looking for a prospective HR team, there are a few factors to take into consideration:
Customer support: Do you have a direct HR professional working with you, or are the services offered an online-only option? Having the ability to build a relationship with your HR professional can make your experience much more impactful. A dedicated HR professional will understand your business, as opposed to an outsourced provider who may only offer a 1-800 customer service representative.
Strategic HR services versus Tactical: A majority of HR firms offer tactical HR services- typical operational services like letters, reports, and a focus on policy. Tactical HR is often referred to as being “reactive” while Strategic HR is proactive. Strategic HR places emphasis on long-term success and collaboration; meaning your teams’ and your employee’s values and strategic goals will be integrated into creating a better culture for your company. Strategic HR can also offer specialized projects, engagement surveys, compensation analysis, and more, creating a more in-depth view of your business’s structure.
To learn more about strategic and tactical HR, check out this article from HRM Handbook.
Opportunities for training and development: Will partnering with this HR provider allow you the opportunity to participate in training? Will you and your team learn skills that will bring value to your business?
Impact on employee experience: Will your employees feel a positive change in company culture? Will your employees be able to connect with your HR professionals and feel comfortable sharing information with them?
How to Switch Payroll or HR Providers
Switching to a new payroll or HR provider may feel like a daunting task. The process itself requires time to research different companies, their service models, pricing, and whether forming a partnership with them can make a strong and positive impact on your business. For example, when you connect with a new payroll provider, you will need to transfer data to them so they can begin the implementation process. You will need to let your current provider know that you will be ending your current contract and moving to a new provider. Your new provider should have a streamlined process for you to follow (submitting necessary data, reports, etc.) and then you will need to notify your employees and let them know your business has switched over to a new payroll provider.
When to Switch Payroll Providers
If you find yourself considering switching over to a new payroll provider, the best time of year to do so is Q4, with a first payroll in January. As the year ends, your payroll will be ready for January, allowing you and your employees to have a clean slate with one W-2 form, instead of two W-2s if you had switched from another provider in the middle of the year. Of course, you can switch providers at any time. Some business owners prefer a clean slate in January, while others do not mind switching providers mid-year.
How to Initiate a Switch in HR or Payroll Providers
When engaging with a prospective HR or payroll provider, contact them and ask what services they provide. Be sure to ask specifics, for example, consider your HR employee manual. Will they provide you with a template that you will need to fill out, or do they create a custom-made handbook for you and your business’s specific needs?
After making initial contact with a prospective HR or payroll company, you can expect them to reach out and discuss what services you are looking for. Before you contact a company, have a list of the services and support you are looking for, so you can weed out some companies that may not be a good fit for your needs.
Data to Collect from Previous Provider
As you begin your transition to a new payroll provider, you will need to gather data and information from your current provider. A few pieces of data that may be needed include the following:
- Your business’s FEIN, legal name, address and SIC code
- Demographic file of your employees’ data
- Previous tax records and W-2s
- State unemployment insurance
- A voided check
- Your business bank account information
HR and Payroll FAQs
What should an employer consider when selecting a new HR/payroll service provider?
An employer should consider the quality and quantity of services the provider offers. Evaluate what services your business currently needs and compare your list to the perspective HR/payroll company’s services. Ensure that they can fulfill all your needs, and then review what other services they will provide that will enhance your current processes.
How can an employer ensure a smooth transition to a new HR/payroll service provider?
Communication between you and your new HR/payroll provider will go a long way. Do not be afraid to ask for clarification when you are going through the transition process.
Encourage collaboration: If your business has an in-house HR professional or payroll professional, encourage them to engage with your new provider. Your new provider must have a foundational relationship with your team because they know your business needs best!
What are some common challenges that employers may face when switching HR/payroll services, and how can they be overcome?
Employers may find themselves feeling intimidated by undergoing a conversion process. However, finding a provider that provides clear guidance, and support will create a pleasant experience for you and your team as your business transitions to a new provider.
Choosing the Right HR Provider
Choosing the perfect provider for your business will take time. With your team, create a list of prioritizing the services that your business needs. What would you like your new provider to do for you? Will your new provider create a long-term positive impact on your business? Are there any specific HR concerns that you have? Many factors will determine which HR or payroll provider is the right fit for your business needs. If you have been looking for outsourced HR and payroll services, please contact us. For the past 28 years, ESC has been providing HR and payroll services to hundreds of businesses in need of assistance. We’d love to connect with you and discuss how we can support your business’s needs.