Payroll Outsourcing: Who Should Make the Decision?

Baxter County, Arkansas just got a new human resources director who is now tasked with deciding on a number of initiatives including whether payroll should be outsourced to a third-party vendor. Despite ongoing questions among local officials, a county judge who also serves as the county’s chief executive ruled that the decision to outsource payroll lies with the HR director and not the local Quorum Court.

Residents of Baxter County can rest knowing that the payroll outsourcing issue has been settled. Everyone involved now knows with whom the decision rests. But most American companies don’t have the luxury of a single person making the decision. Deciding whether to outsource payroll generally has to go through at least several layers of management, if not before an entire executive board.

Small Business Owners Have Final Say

Small business owners may have the easiest time deciding whether to outsource payroll or not because they ultimately have the final say in everything their companies do. Of course, this is assuming that the small business in question is not a limited liability corporation with multiple officers who all have a say. When officers and boards are concerned, payroll outsourcing decisions become more complicated.

Officers and Board Members

Companies with officers and designated board members tend to look at payroll outsourcing decisions in different ways. Each board member and officer sees the decision through the lens of his or her own perception, influenced by a desire to protect individual interests. Practically speaking, this can lead to fundamental disagreements over whether outsourcing is the right way to go or not.

Imagine the chief financial officer wanting to hire a company such as Dallas-based BenefitMall with the understanding that outsourcing payroll will save money. Perhaps the chief information officer isn’t on board with the idea, citing security concerns as one reason to keep payroll in-house. The entire board ultimately looks to the chief executive who may have an entirely different opinion altogether. At some point, they have to come together.

Payroll and HR Staff

It would be rather interesting to know how many payroll outsourcing decisions are made only after getting input from payroll and HR staff. Why? Because these staff members are the workers in the trenches; they are the ones who put in the work to make payroll and benefits administration run smoothly.

A survey of payroll and HR staff might reveal they would love to outsource payroll so that they had more time to devote to other tasks. On the other hand, staff may fear outsourcing would jeopardize their jobs. Their opinions do deserve consideration nonetheless.

Staff and Independent Accountants

There is one more group of people whose opinions may influence the decision to outsource payroll: staff accountants and their independent counterparts. Their opinions matter in light of the fact that outsourcing payroll will have an effect on the bottom line. If outsourcing ultimately saves money, the accounting staff would probably be in favor of it. Any chance that outsourcing could cost the company would be reason for accountants to object.

It should be clear that the decision to send payroll and benefits administration out to a company like BenefitMall is not always an easy decision. That said, the fewer channels the decision has to go through, the more easily the decision is made.

Is your company thinking about outsourcing payroll and benefits administration? If so, make sure the decision goes through all the proper channels. That’s the best way to ensure that whatever decision you eventually reach makes the most sense to everyone involved.

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