Selecting and implementing payroll software is no small task. Whether as a stand-alone best-of-breed solution or as an integral part of a wider HR information or management system (HRIS or HRMS), there are countless organizational and technical issues that must be addressed before the new system can be judged successful. These issues, taken with the continually-evolving variety and complexity of payroll and HR software have created a niche market for subject matter experts in the field—experts that have the requisite knowledge and experience to be able to provide insights and actionable advice on everything from requirements definition to data migration to full-scale project management. However, with consultancy costs named by PricewaterhouseCoopers as one of the main ‘hidden costs’ of managing payroll, the undoubted benefits of a consultant's services must be weighed against the additional expense of engaging them. When making the decision whether to go it alone or enlist help, there are a number of factors to consider prior to launching into the payroll consultant selection process. Here's our list of the top 4.
Payroll Consultant Factor #1: An Understanding of the Payroll Software Market
First of all, to make the right payroll selection decision, an organization must comprehend the software market. Even something as simple as industry terminology can be difficult because HR and payroll software can (like many specialized languages) be confusing. Indeed, as HRMS Solutions Inc. point out, "Here is an example of words that have similar meanings: 'SaaS', 'Software-As-A-Service', 'Cloud Computing', 'Hosted', 'Subscription', 'ASP', 'Application Service Provider', 'On-Demand', 'Intersourcing' and 'Pay-As-You-Go'." While each of these terms overlap in their definitions (and definitely in usage) and some are now definitely less ‘fashionable’ as the market has evolved, the fact remains that they are still largely trying to describe the same thing. While confusing, decoding this verbiage is hardly unmanageable. Nevertheless, it’s a prime example of the sort of thing that should present no difficulty to an experienced consultant, whose understanding should go beyond accepted definitions to embrace each term’s benefits, risks and advantages.
Payroll Consultant Factor #2: Experience with Payroll Technology
The expectation is that a new payroll system will have long-term benefits and therefore a long lifespan, meaning that for most organizations a payroll software selection is certainly not a project that is repeated often. By its very nature then, this aspect of the process means it is unlikely that internal personnel will have explicit hands-on experience with this specific type of software. With outside expertise however, the organization is entitle to expect that the consultant has worked on numerous and varied systems. This entitlement is made explicit in an article from Phenix Management International: "There are many consultants… who have been through the… selection and implementation process literally dozens of times. They understand the process. They are familiar with the vendors and the ever-changing inventory of products available in the market." An integral part of an organization's consultancy decision must include an honest examination of what relevant expertise and experience exists in-house.
It should also be noted that given the current economic climate, few organizations are over-resourced, and many are actually dealing with acute staffing shortages. Sometimes the most compelling reason for hiring a payroll software consultant is that the in-house alternative would take valuable personnel away from essential day-to-day operations and service provisions—regardless of that person's level of expertise or experience with a particular solution.
Payroll Consultant Factor #3: A Broad Payroll Automation Skillset
Selecting and implementing payroll software requires system skills, project skills and people skills. From business case through to go-live, either a consultant or in-house manager will need to: audit existing payroll processes and identify prioritized and future needs; create a detailed technical specification or RFP (request for proposal); manage the vendor selection process in an objective and measurable way; engage employees in the project and handle organizational change management issues; coordinate the supporting training strategy; and take responsibility for any arising technical requirements and issues.
Furthermore, payroll is a fundamental piece of application software, which when fully leveraged may be linked to time and attendance, scheduling, leave management systems, performance management; and perform functions far beyond straightforward ‘payday processing’, handling compensation planning and strategy and contributing to sophisticated wider HR and business analytics. Payroll software selection and implementation requires a clear understanding of all functionality, how those functions can interrelate and, ideally, specific knowledge of the particular product being installed; a tall order for anyone and necessitating an extremely broad skillset.
Payroll Consultant Factor #4: Credibility and Objectivity with Stakeholders
Given the variety of stakeholders in any software project, from C-level to data entry clerk, whoever leads the exercise must be perceived as credible and – on certain issues – be able to present a view that focuses on the organization as a whole and avoids bias towards any particular department (HR, IT, etc.) As Phenix Management's Al Doran asks, "Are there diverse opinions between management groups on the direction, relative needs and priorities for systems development and implementation?" and "Does your current project manager have the credibility with top management, divisions and departments to ensure ready acceptance of the actions required to select the best system?" The answer to the first question is almost invariably 'yes', in which case the project manager's credibility (consultant or not) and objectivity becomes a critical success factor.
The Bottom Line on When to Hire a Payroll Consultant
Payroll consultants can be expensive, but leveraging their expertise and specialized skills for non-routine projects is generally a far superior option to trying to build in-house skills that will see limited future use. Depending on the circumstances, a hybrid arrangement prove to be the best option – some, if not all of the above factors may be dealt with by an internally-appointed project manager, with an external consultant engaged to manage specific phases or issues within the wider project. CompareHRIS.com's Clay Scroggin asks: "How complex are your requirements for an HR system? If you are looking for a basic entry level system for less than a 100 employee company, you probably don't need a consultant to help you pick a system that will match your needs and budget. If, however, your company has several thousand employees and you are looking to integrate time and attendance, HR, payroll, and talent management systems, the obvious answer might be that a consultant can greatly assist with your system selection, implementation, or improvement process."