Multinational corporations spend increasingly large sums on outsourcing, particularly for global payroll. However, they pay surprisingly little attention to getting the best out of each dollar spent on outsourcing. Quite frequently, in-house staff who have no formal qualifications in managing outsourcers manage these overseas payroll contracts.
This article aims to help anyone who manages global payroll outsourcing. The suggestions I offer are based on perspective and experience from both sides, as a client and as a global payroll outsourcer. These will help keep you in control and ensure you get the results you expect by focusing on three areas:
- Managing performance
- Building a good relationship
- Helping yourself
Managing Performance
Global payroll managers can have a great influence on, and help improve, their outsourcer’s performance. There are some straightforward managerial steps to help you achieve this:
Clear, measurable objectives—You will be able to track your outsourcer’s performance if you set clear, measurable objectives. Then you can determine how your outsourcer’s performance meets your expectations. The objectives also will enable your outsourcer to focus all of its efforts on getting the results that are most important to you. In addition to standard metrics such as payroll accuracy, these objectives can include other factors such as query response times.
Regular reporting—After your global payroll objectives are set, back these up with regular monthly reporting and monitoring. Once your global payroll is up and running, these reports should let you know at a glance which areas are working well and which need remedial attention. Your outsourcer can help you by developing exception reporting to take “deep dives” into any problem areas. They will give you the facts, impact, and solutions at your fingertips.
Review—Quarterly meetings with senior management from both sides can help improve performance in a number of ways. Ask your supplier to analyze its performance for you for the current quarter against previous quarters. This will reveal whether it is making the required improvements you expect over time. These meetings also give the outsourcer a strong incentive to deliver on prior promises, as its senior leaders will want positive meetings based on successful results.
If you have performance-related payments in your payroll outsourcing contract, then ensure these payments are driven by the objectives that are most important to you. Assume that, like a salesperson with a commission plan, your outsourcer will be motivated to maximize its payments. This will prevent any disconnects between its behavior and your objectives.
Building a Good Relationship
We all perform better when we get on with colleagues. This is equally true for global payroll outsourcers, as their staff members will provide you with better results if you have taken care to build a good relationship with them. Again, global payroll managers can take some simple steps to achieve this:
Be objective—If problems occur, try to focus on the facts and not jump to conclusions too early. It is all too easy to blame your outsourcing partner, particularly when your in-house payroll teams do not wish to appear responsible. If you are objective and even-handed, your partner will be more likely to accept responsibility when it is at fault.
Set high standards consistently—It is much easier to work for someone who is consistent, even if they are a hard taskmaster. As a global payroll manager, set high standards from the outset and apply these consistently. This makes it more likely that your outsourcer will quickly adapt to meet your expectations.
Ensure continuity—If possible, insist that your outsourcer involve the same staff in setup who will be involved in ongoing implementation of your payroll. This retains critical knowledge and relationships. Once your global payroll is up and running, closely monitor any staff changes within your outsourcer. If new staffers have not had an adequate handover, put pressure on their managers to ensure this improves.
Helping Yourself
There is much you can do to get great performance from your global payroll outsourcer. If you make it easier for your outsourcer to do its job, you can help it to reduce costs and increase accuracy. This is good for you also, as it will improve the outsourcer’s performance and ultimately lead to lower charges to you. These are some additional steps you can take:
Listen—Seek your outsourcer’s feedback on any areas where you could help. This is an easy way to identify the improvements you can make in-house that can drive the outsourcer’s performance. In global payroll, accuracy and efficiency often go hand in hand. For example, standardizing processes and improving data quality could reduce the number of staff it needs to service your account.
Learn from mistakes—When global payroll is outsourced, any flaws in in-house processes and data do not magically disappear. On the contrary, they can have higher visibility as they cause issues for your outsourcer. Global payroll managers can use this to good effect, e.g., to improve data they receive from other departments.
Prepare for contract renewal—Changing global payroll outsourcers is difficult, but contract renewal gives clients an ideal opportunity to improve performance. Global payroll managers can use the renewal to develop new objectives for their outsourcers and incentivize them to keep their performance at a high level. If you start thinking early on about what you want to achieve from the renewal, you may even find your outsourcer delivers improvements ahead of time to keep your business.
Focus on Your Professional Development
Global payroll managers have a major influence on the performance of their suppliers. By focusing on their own managerial skills, global payroll managers can develop themselves and secure better service to their employees all around the world.