For many, the end of a fiscal quarter or year may be a time of reflection. Human Resources (HR) and business leaders might use this time to brainstorm ways to improve their productivity, efficiency, and profitability. Often, that involves either optimizing or replacing some of the tools and systems their organizations rely on to conduct daily business, such as their payroll and human capital management (HCM) solutions.
Whether you’re looking to start the new year off on the right foot or planning a mid-year change of your payroll and HCM providers, this guide will give you the insights and best practices you’ll need for a seamless transition.
Free up time and personnel with a new payroll provider
Changing payroll providers — whether you’re outsourcing for the first time or simply switching partners — can be a stressful proposition. You’ve invested so much time and energy refining your current process, cleaning your data, and executing essential tasks that it’s understandable to be hesitant about entrusting some of your most valuable data to a new outside partner.
However, doing so can free up time for other important tasks like supporting your employees and expanding your team.
How to vet a potential new payroll partner
The first things to evaluate in a potential vendor are their business history, services, and client roster. Look for a partner with a client list that includes company names you are either familiar with or who offer similar services to your company.
Just as you might call on references for a potential employee, you should also ask potential vendor partners for a client reference — or several — from potential vendors and actually give them a call. This will give you a good insight into their client service experience and the day-to-day interactions you can expect from them.
Be sure to ask about the vendor’s reporting and analytics capabilities, and pay particular attention to details about their data governance and security policies to make sure you’re not taking on any unnecessary risk.
Finally, ask them to describe the onboarding/transition process and to give an estimate of the timeline for completing the switch. Starting the process tomorrow but finishing in six months does may negatively impact your company’s productivity and efficiency.
Check out some additional ideas for switching payroll providers:
Best practices when making the change
Once you’ve begun your vendor selection process, make sure to follow these three best practices to minimize complexity and to eliminate any unforeseen issues:
- Reassess your current contract to avoid cancellation fees or other penalties.
- Define and evaluate potential payroll deduction and tax compliance challenges/issues, especially if your company operates across multiple states or locations.
- When you’re ready to change, be prepared to provide your new vendor with your company’s payroll tax returns, all relevant employee information, employee information, current earnings and deductions, and historical payroll information for the company and the employees.
New year, new HCM?
While payroll is an essential part of any business, it’s just one aspect of an effective people management strategy. Everything else — general HR administration, benefits administration, talent management — is often handled by a human capital management (HCM) software platform. The right software for your company enables your team to have better visibility into information and increased self-sufficiency within their tasks.
Why should you consider changing HCMs?
A well-integrated HCM can help HR teams streamline administrative functions like recruiting, benefits administration, and performance management — all while gathering valuable data and insights to help the business focus on people, productivity, and profit.
If your current HCM isn’t checking all the boxes or still leaves something to be desired, here are some reasons you might consider switching:
- Gain business agility and be more responsive to changing business needs.
- Improve productivity and efficiency by streamlining activities and consolidating them into one platform.
- Enhance data for better decision-making with better prediction and ongoing business trends.
- Deliver in-depth performance management feedback.
- Reduce turnover and enhance workplace culture by giving employees better visibility into their position and contributions.
To learn more about how to evaluate an HCM vendor click here.
3 best practices for successfully switching HCM providers
Starting a new relationship is fraught with risk if it’s managed poorly. Here are three best practices to keep in mind for when you do make the HCM transition
- Conduct a deep dive internal assessment to identify specific areas of need/improvement to accomplish with a new HCM partner; set a strong baseline expectation of your new vendor.
- Formalize the vendor selection and submit your request for proposal (RFP) which should be very specific to your business needs, not full of generalizations and assumptions.
- Whittle down the finalists, eliminate any poor fits and pay close attention to these other red flags.
Check out some additional tips to prepare for the transition.
What to look for in a new HCM vendor
If your current HCM isn’t built on a position-based architecture, your new one certainly should be. Rather than having the job tied to a person, it is instead linked to the position, which eliminates time-consuming and repetitive manual data recreation any time an employee joins the organization, leaves, or changes roles.
Your new HCM should also feature a centralized database, capable of aggregating data from across your organization and creating a single source of truth. A cloud-based HCM with a centralized database helps to ensure greater accuracy, currency, and completeness of your enterprise workforce data. Along with dynamic org charts and robust workforce planning tools, this central database makes it easier to standardize business workflows, improve reporting accuracy, and create more granular analysis.
Closing the deal
Changing payroll and HCM providers isn’t a decision to make lightly. But if your team has determined that gaining business agility, improving productivity and performance, and simplifying daily operations for your HR and executive teams, then following these tips and best practices can help to ensure a smooth transition and starting your new relationship off on the right foot.
PrimePay can help.
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