Advances in payroll technology in the last decade have been largely responsible for allowing HR to move from a transactional to strategic function. Teresa Russell talks to several organisations that have both outsourced and run payroll in-house about which works best?
In 1999, the Howard government
made public its agenda to significantly
reform the Australian Public Service.
It envisioned a highly efficient, globally
competitive, customer-focused public
service that benchmarked best practice
in organisation management.
Commonwealth agencies saw benefits
in outsourcing a range of corporate sup
port functions including payroll services,
records management, human resource
management and human resource devel
opment. Several years later, Democrats
Senator Andrew Murray criticised the
Government. “There has been a huge
increase in (government) outsourcing, but
there hasn’t been a similar increase in
accountability,” he said.
Australian Hearing is a Federal Gov
ernment agency that outsourced its pay
roll according to government policy at
The organisation provides hearing-
related services to people of all ages to help
manage their hearing impairment. It
employs about 1100 staff in 100 perma
nent and 200 visiting sites across Australia,
competing for clients on the open market.
Peter Deverell, Australian Hearing’s
manager payroll and HR systems, says
that in 1999 payroll was outsourced to
a private firm, Can Deliver, which used
Frontier Software’s CHRIS21 as its out
sourced solution. Deverell was work
ing on-site for Can Deliver, but in 2005
got an offer he couldn’t refuse to join
He brought the other three members
of the payroll team with him. In October
2005, Australian Hearing went direct with
its relationship with Frontier, continuing to
outsource the backend function to it.
“The main reason we continue to out
source payroll is that the board and our
executive prefer payroll to be calculated
off-site to protect the organisation against
fraud. We see the license as a very expen
sive one-off cost and feel it is better to use
a per-person-per-pay system,” says
Denise Hanlon, executive manager
people and performance, has overall
responsibility for payroll at Australian
Hearing. She previously worked in a
smaller organisation where payroll was
managed by finance and was then brought under HR’s wing.
“Payroll was a law unto itself [when situated in finance]. The
more customer-friendly that payroll is, the happier staff are …
and the opposite is also true,” says Hanlon, who believes that
organisational priorities get proper focus when HR has ready
access to information such as turnover and absenteeism rates.
“The power lies with payroll. It adds a financial dimension to
HR. The trends it gives lets you know what is happening in the
business,” says Hanlon.
Australian Hearing has realised significant savings since it brought
payroll back in-house. Deverell says that initial huge savings came
by cutting out the middleman. These included removal of a
monthly fee, commission and the intermediary’s profit margin.
The organisation also renegotiated its contract with Fron
tier and achieved a better rate than it had been paying through
the vendor. Employing the previous contractors directly also
realised savings, despite the fact that the payroll team itself
was taking home more pay. The team has now been cut from
four to three, with Deverell’s management role largely focused
on HR metrics.
Deverell says that efficiency gains have
been tenfold as a result of moving from a
manual system to a kiosk-type system.
“There are no more payslips to get out
every pay day and leave applications are
approved by managers online,” he says.
Usually twice a year, Australian Hearing
gets access to enhanced features of the Fron
tier system. Because it is a statutory author
ity, it has to report HR statistics such as
turnover, unplanned leave and staffing pro
files to the minister and Department of
Human Services. Deverell’s role has evolved
into one of analysing, advising and report
ing on the HR trends in the business, as
well as managing payroll staff.
Hanlon says that for the last 12 months
line managers have been receiving data
packs about what needs attention on the
people side of the business. “The system
has allowed us to target absenteeism
hotspots, expose areas where several retire
ments are imminent at a particular site and
compare salaries around the country.”
The private sector targets its audiolo
gists for poaching, so management tries to
ensure that these salaries are on par with the
market, to minimise turnover related to
Hanlon concedes that the only weak
ness in the payroll system at present is that
Deverell is the only point of contact for
mining this information through reports
and that, in future, line managers may well
have access to these reports directly.
Norske Skog Tasman Ltd is a New Zealand-based pulp and paper mill that provides newsprints for the Australasian markets. Its 380 employees are located in the one mill in Kawerau on New Zealand's north island.
Over the last 10 years, it has used three different payroll providers, both on-site and outsourced, going live in September last year with outsourced payroll processing to The Pay Office, using its Affinity system.
Walter Naera, Norske Skog's HR advisor, says that legislative changes in the last two to three years have increased the complexity of payroll processing, thanks to the introduction of a government superannuation scheme (Kiwisaver), taxation changes, The Holidays Act 2003 and individual and collective employment requirements.
"Payroll used to be like an accounts payable function, but now it's about adding value. We have partnered with a provider that has a proven track record supplying technical expertise to the New Zealand market. With The Pay Office administering the back-end processing, we can focus on the front-end relationship with our staff," says Naera, adding that experience, transparency, auditand reporting functions were key criteria in vendor selection.
Payroll processing costs were halved in terms of time and money, allowing the payroll function to become a developmental HR advisor role as well, providing a succession path that previously did not exist.
Naera stresses the importance of choosing tried and tested software backed up by a local provider that employs experienced people. "It gives you confidence when dealing with people's pay that the people who wrote the software are still with the company 10 years later," he says.
Frontier began in Melbourne in 1983, Frontier Software has developed one of the world's most successful solutions for human resource and payroll management. The CHRIS (Complete Human Resource Information System) product continues to evolve to meet the changing requirements of its international client base. chris21 is the product of choice for 1500 organisations throughout Australia, New Zealand, the UK and Asia. chris21, a fully integrated HR/Payroll system, is supported by a range of products which focus on specialised areas such as Online Recruitment, Performance Management, Learning & Development, Employee/Managers Self-service and Web Services and is brought to life by a financial and philosophical commitment to web technology.
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