There are many options available for employers looking to outsource some or all functions of their human resources and payroll. Outsourcing allows companies to focus on their core business and save time by not having to worry about the tedious and sometimes complicated administrative tasks associated with these functions. Outsourcing can also give businesses access to guidance and support from HR and payroll experts, without having to go through the trouble of hiring (and retaining) someone with the experience and knowledge to be part of their in-house team.
One option for outsourcing is through a partnership with a Professional Employer Organization, or PEO. These companies generally act as a “co-employer” and in many cases will offer a full-service experience to include most, if not all, functions of HR. According to the National Association of Professional Employer Organizations (NAPEO), there are nearly 500 PEOs in the United States, serving over 15% of all employers with employee counts between 10 and 99. Another option is to go with a company that offers an Administrative Services Only, or ASO, mode. These companies usually tend to offer services that are more ala carte, meaning a business may choose to outsource specific functions, such as payroll processing, while keeping all other aspects of HR in-house.
If you’re a business that is currently employing the services of a PEO or ASO company but aren’t completely satisfied with the service, there’s bound to be a provider out there that can give you exactly what you need. However, switching service providers may not always be a simple process, and there are a few things every employer should consider when deciding on a new partner and making this type of change.
Expertise and reputation
Not all service providers are created equal, and it’s prudent for employers to do their research to find a partner that can provide the level of service and expertise needed to help the business function. Service providers with certifications from the American Payroll Association (APA), the Human Resource Certification Institute (HRCI) and the Society for Human Resource Management (SHRM) can be good indicators of the team’s knowledge, experience, and dedication to the industry. Examples of such certifications include Certified Payroll Professional (CPP) designations from the APA, or Professional in Human Resources (PHR) designations awarded by the HRCI. Client testimonials can also help, especially if those clients are businesses of similar size or industry as your own.
With all of the options for HR and payroll software, the features and user-friendliness can vary from system to system. Demos are a great way to see how a provider’s offering sets itself apart from the competition. Depending on your business, you may have specific needs that have to be addressed. Providers using platforms that allow for seamless integration of data and electronic processes can help cut down on administrative errors and minimize delays, which can be a huge advantage for your business, saving time and money.
There can be many costs associated with switching providers, which can include fees for implementation, onboarding, and more, usually based on how complex and labor intensive the setup is. While these are fairly standard costs for starting a relationship with a new provider, some employers may not be aware of the costs that their current provider might charge them for terminating the partnership. These can include fees for early contract termination, downloading data, and temporary data storage, system access, and support after the transition.
Most vendors will provide at least some assistance with getting your data transferred to the new system. Depending on the type of partnership and time of year the transition takes place, historical data may or may not be required in the new system. However, many employers choose to migrate historical data from their old systems so they can have all of their data in one place. Employers who choose not to migrate historical data may need to pay for a data dump of existing data, or extended access to their old system to manually access and download any necessary files and reports. Depending on the vendor, this might include electronic copies of employees’ pay stubs and tax forms, as well as other pieces of HR and payroll data.
The timing of the migration can impact a number of things, and may cause additional complexities in quarterly and annual payroll tax filings for your business. However, aligning the transition to the start of a new calendar year may not always be practical, and timing the switch to calendar quarters can allow for relatively clean breaks as well. Keep in mind this all depends on the type of relationship (PEO or ASO) that you are moving to and from, and in some cases the timing will not impact your business at all.
Impact to employees
Perhaps one of the most important things to consider is how the change will impact your employees. Moving to a new service provider might mean your employees will have to learn to navigate a new system and go through training on how to perform routine tasks such as clocking in and out or requesting time off. Of course, at the end of the day, you’ll want to do what is best for your business, but it’s always a good idea to look out for your employees. Keep your team informed so the change doesn’t come as a surprise.
Once you are set up with the new provider, you should have some assurance that your business will be taken care of, and you weren’t just another commission check for the vendor. Customer service can make or break the entire client experience, and having the right partner that you can trust with your business is critical.
At Valor Payroll Solutions, we go above and beyond for clients to make the process of setting up payroll or transferring payroll providers as easy as possible. By understanding the unique needs of each client, we can provide the expertise and support to make the transition as smooth as possible to our innovative digital solution. Once payroll is up and running, your dedicated rep will always be a quick call, text, or email away. Contact us and let us today and let us help ease your burden and streamline your payroll process.