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Outsourcing the payroll function to neutralise risk

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The payroll administration function in business has emerged as the most important discipline – so much so that left to anyone untrained or inexperienced, could easily derail operations and cripple a company.
Human capital management (HCM) and HR specialist CRS Technologies acknowledges that there is still uncertainty in the market over which approach to take with payroll – whether or not to manage the process internally or to outsource.
The need for skilled practitioners in payroll is one issue, says James McKerrell, CEO of CRS Technologies. But another is the lack of statutory and legislative knowledge.
“The continued development of the legislative framework that governs payroll administration and human resources means that companies have to have the necessary skills on board to ensure compliance. Not having this knowledge exposes a company to unnecessary risk,” says McKerrell.
According to CRS Technologies the South African market is very astutely regulated and businesses have to keep up with a number of statutory updates that must be adhered to.
“If a company chooses to manage payroll in-house and rely on their own skills, systems and knowledge, the truth is that compliance issues are often overlooked and this forms cracks in the system,” McKerrell adds.
Another reality is that outsourcing to a credible expert service provider can be a worthwhile undertaking once a company identifies governance and risk issues, or when a non-payroll individual is managing the payroll.
In a market that is rich with payroll and HR-focused service providers and solutions, many businesses fall into the trap of partnering with the first available or most eager supplier.
“It is important to assess the vendor’s track record, statutory and legislative capability as well as the ability to be transparent and informative,” says McKerrrell. “Before partnering with anyone, assess the vendor’s offering for value add options to help them engage and empower their employees.”