10 October 2017
If someone was to ask you how much your payroll operations cost, would you know the answer? It seems like a straightforward question, yet the answer for many HR professionals is often hard to pinpoint. Understanding – and therefore being able to make future projections – about how much your payroll costs requires a clear appreciation of various business components.
So what are the steps you need to take to understand the total cost of payroll over a set period? That’s where Total Cost of Ownership comes in.
For those unfamiliar, Total Cost of Ownership (TCO) is a financial calculation intended to help business leaders determine the direct and indirect costs of the products and systems that their organisation uses. It is often the case, however, that organisations lack the tools and skill sets required to land on accurate internal business calculations – something which has a hugely detrimental impact on cost-management projection and associated business decision-making.
So how often do companies monitor their payroll costs to implement business improvements?
Surprisingly, research carried out in Belgium by our Payroll Service Alliance showed that only a third (35%) of enterprises continually monitor and measure their payroll processes with a view to identifying areas for cost and time savings. In addition, a further 35% of respondents revealed that, while their organisations do monitor payroll costs on an ongoing basis, no efforts – or indeed, plans – are ever made to draw findings from this data. This is quite staggering when considered that these enterprises have gone so far as to set aside valuable time and resource, yet have no opportunity to gain any real return on investment. The situation amongst SMEs (organisations with between 100 and 500 employees) was no better either, with only 10% of respondents saying that their organisation has TCO measurement processes in place when it comes to their payroll operations.
When considering the importance of TCO in the context of payroll and HR – a business function with ever growing importance in the wider context of any organisation – it becomes clear that optimising processes whilst streamlining costs is paramount to ongoing business success.
Here we outline two key benefits that come with calculating payroll’s Total Cost of Ownership:
By calculating the TCO of an organisation’s payroll, HR professionals can achieve a much clearer overview of their total costs in this area, as well as a breakdown of expenses by service. This breakdown is especially insightful because it enables businesses to easily determine which services are essential versus those which could be discarded, as well as key aspects of the payroll process that need to be changed in order to deliver better ongoing value in monetary terms.
Amidst today’s war for talent, and with millennials’ tendency to career hop, accurately assessing personnel requirements is a growing challenge for all organisations, irrespective of geography, sector and size. The task of determining requisite headcount, and indeed, making future projections relating to skills gaps and recruitment, naturally falls to the HR department – so how can calculating payroll TCO support these HRs in optimising headcount for greater business productivity and performance, whilst at the same controlling payroll costs? Simply put, TCO enables more precise data from which more accurate forecasts can be made. Additionally, better cost control saves significant costs in the long term, meaning HRs can boost their recruitment budgets with the costs that would have otherwise been lost to inefficiencies within their payroll systems.
Ensuring that Total Cost of Ownership is calculated correctly creates a clear foundation from which to further shape – and optimise – HR and payroll operations. So, next time someone asks you how much you spend on payroll and whether your operations are optimised from a cost perspective, you can rest assured that having adopted the TCO model, you’ll be able to answer with clarity and confidence.
To learn more about what the Payroll Services Alliance can do for your business, please get in touch.
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The clock is ticking on the UK’s exit from the European Union on 29 March 2019. But we still don’t know the terms of its departure or what impact Brexit will have on employment both in the UK and the 27 remaining EU member states. Faced with this level of uncertainty, HR and payroll teams need to start their HR Brexit planning right now.18 February 2019
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30 October 2018
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Is your HR and payroll team feeling the heat this summer? With the weather heating up, most of us want to get out and enjoy the sun or escape on a holiday. However, with more staff members out of the office, this can mean that the payroll team might be running on reduced numbers. And, typically, less team members results in a higher workload for those in the office. This is where HR and payroll technology can help, giving HR teams a well-deserved summer holiday.3 August 2018
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The results of SD Worx’s recent international survey are in! With 1,500 respondents from nine European markets, the survey reveals that up to 87% of business leaders are now asking for employee data to inform business decisions—HR and payroll data is now being regularly used by business leaders.11 June 2018
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30 March 2018
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The end of the payroll year is typically a very stressful time for payroll teams. With an extensive amount of tasks to be completed within tight deadlines, any mistakes can be costly.
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In an increasingly globalised world, there is a vast array of opportunities for businesses to explore. For companies looking to expand their international reach, payroll is one of the biggest consideration factors. Operating in multiple countries has its fair share of challenges: each region has its own local legislative requirements, and complying with these is crucial in maintaining both reputation and revenue. Here’s how outsourcing can help.12 January 2018
Technological advancements are helping to turn a vision of digitally accessible, automated payroll processes into reality. Here’s five predictions for the future of payroll:5 December 2017
A recent survey carried out by SD Worx revealed that out of 4,000 European employees surveyed, 44% had been paid late by their employers and 48% of those that had been paid late had also been paid incorrectly. The research exposes several risks for businesses associated with not paying their employees correctly: let’s explore the top three.13 November 2017
Businesses in every industry have been affected by the way that we now rely heavily on technology. Technology is now a part of everything we do – both at home and work—and in order to stay relevant in today’s world, all industries must continue to be innovative and remain up to date with technological advancements, especially in the workplace.19 October 2017
Big data and analytics have now entered numerous industries, including healthcare, financial services and retail. Despite many HR and payroll providers now using big data as part of their services, the industry has predominately been slow on the data uptake, in comparison to adoption within others. HR and payroll is largely an industry that relies on human intuition, rather than data and statistics, however, providers have started to see for themselves benefits of big data and analytics, and thus are beginning to implement these into their services.10 October 2017
It’s a well-known fact that businesses need to continually adapt in line with macro-environmental changes in order to maintain and grow their competitive advantage, but in the fast-moving retail sector, this is especially true. The advent of technology has clearly had a huge impact on retailers across the globe in recent years, with online retail purchases catapulting tenfold and the industry as a whole riding high.10 October 2017
The objective for payroll professionals used to be simple: all they had to worry about was paying employees accurately and on time. As organisations increasingly look beyond local domestic boundaries, the complexity of payroll operations has expanded and evolved so that the level of payroll sophistication has increased As a result, the needs and requirements of organisations globally have become more complex.6 August 2017
With Britain voting to leave the EU last June, 2016 was a big year for pan-European news. And, while the full implications of Brexit remain to be seen, it is clearly creating much discussion amongst business leaders who are already starting to plan ahead for the legislative changes that will no doubt impact both their operations and compliance.
One of the business areas most likely to be affected is international HR and payroll, so with that in mind, ‘Brexit and Business’ will be one of the key themes at our upcoming 2017 SD Worx European Conference. This year’s event will be bigger and better than ever before, taking place on the 8th February at London’s Hilton on Park Lane.