Companies wanting to cut costs should look to their pay packets – but not in the obvious salary slashing way. Smarter organisations are, instead, examining ways to reduce the sometimes high cost of processing pay. In other words, outsourcing the payroll function.
According to Mantrack business consulting manager Nichole Leyland, too much money is wasted because New Zealand and Australian companies don’t audit the true costs of using manual payroll procedures. “Employers in Australasia have been quick to cut staff to achieve necessary economies but are proving much slower to investigate and adopt automation to increase the efficiency of those left to face bigger workloads.”
Administering and capturing timesheet data, holiday/leave requests and human resource information with paper-based systems institutionalises waste, says Leyland. “That’s because it’s inefficient and cumbersome – and the data often contains high level of errors inherent in any people-driven process.”
Companies that do proper business case for payroll automation, invariably discover how much labour is involved in its manual administration, says Leyland. “Employee queries on average take between 30 to 240 minutes to resolve and can involve three to four people before final resolution. This, coupled with five percent of all leave requests not being recorded or pro-cessed can cost an organisation tens of thousands of dollars year.”
Greater automation of the payroll process also frees staff to focus on core business, adds Mantrack managing director Bruce Sullivan. “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.”
Sullivan’s business pioneered one of the first PC-based payroll packages created in this part of the world 17 years ago. These days Mantrack employs 60 people and provides online and outsourced payroll services to more than 300 companies throughout Australia and New Zealand.
And the more complex the company, the greater the benefit.
Affco Holdings, listed company that operates from eight processing sites employing more than 2800 people, has dozens of different pay awards and conditions to contend with.
Accuracy is very important, says employee relations manager Graeme Cox. “By updating award and OSH hazard management guidelines online, and being able to report to site management online, we’ve been able to eliminate substantial paper trails and speed up the process.”
Affco interfaced Mantrack’s Affinity Total Payroll and Business Process system with its own in-house systems to create an amalgam of in-house data input and online outsourced information processing. As well as providing updates, these can be used to measure the costs of particular jobs. Reducing the payroll paper trail allows the company to focus on the things that make it function better and more profitably, says Cox. He lists “manpower planning, labour and cost reporting, HR initiatives, staff communication and rapid corporate reporting that empowers line management” as examples.
The system’s flexibility has advantages extending across HR, payroll and management areas. “We work with Mantrack to ensure they know our business and we know theirs… so we can work together to get practical benefits.”
Outsourcing is partnership between external and internal staff, says Leyland.
“While online systems automatically eliminate involved reporting, users need to invest time with their systems supplier to fully exploit the system’s potential and adapt it to their own specific needs.”
Payroll details are goldmines of facts about the business. “We show people how to access the layers of information in their asset and how to invest time and money more efficiently. That way, outsourcing becomes what it should be, pathway to more profitable and efficient future,” says Cox.
Vicki Jayne is associate editor of Management.
Email: [email protected]
