Challenges of the HR profession
Honestly, I don’t envy HR managers nowadays. They face more and more complex challenges due to the continuous transformation of the labour market and employer obligations, such as the change of job-seeking habits, the shortage of high-quality professionals, continuous generation management, the requirements posed by technological development, or the additional tasks associated with the GDPR.
The challenges may grow even further when a company comes up with the idea of payroll outsourcing in Hungary. Now I will present some thoughts in relation to weighing this option. We can observe huge differences in terms of attitude towards outsourcing and client priorities. While some companies follow the principle of ‘outsource as soon as possible’, their argument being the degree of human exposure, others have a ‘safety first’ attitude. As an accounting and payroll outsourcing service provider in Hungary, in both cases our task is to show a direction, maintain a safety net and provide know-how, taking into account the priorities of the client and providing the latest technological conditions and the highest professional standards.
The first steps of conscious, carefully planned payroll outsourcing in HungaryIt is important to keep in mind that outsourcing involves more than just switching between payroll systems, digitalizing paper-based records, and migrating data. It is not uncommon that an outsourcing schedule broken down into several phases and concerning even several months needs to be developed, covering a full-scale HR and payroll processes due diligence, social security benefits status revision, the adaptation of HR administration tasks, the transfer of existing employees, as well as the retraining and further employment of employees approaching retirement.
There are no two identical projects, but the key factors are the same:
- professional competence,
- use of the latest technology,
- consultancy approach,
- and consciousness.
On the client’s side, consciousness regarding the requirements posed towards the partner to provide payroll services and the realistic timeframe for implementation of the changes are of huge importance. When preparing the schedule, it is important to consider the extent of changes the existing corporate culture is capable of adopting. For me, it is always exciting to organize the steps of payroll outsourcing jointly with the client, customizing them in accordance with the given corporate culture and the characteristics of the industry.
Hidden traps in the organization – Payroll process due diligence
There are many publications explaining the advantages of outsourcing that anyone can find with a well-targeted google search, but despite that, it is still not easy to assess the risks associated with different decisions and to choose a direction to follow. We need to put a lot of trust in the service provider for this. Before making such a decision, it may be helpful for the HR manager to identify as a first step the material and human risks associated with the current processes. A process due diligence can answer this. In the case of large enterprises, we frequently see situations where the continuity, professional quality and legal compliance of internal payroll and the satisfaction of the employees depend on a single person responsible for the payroll. In such cases, the absence of substitutability, the sharing of professional knowledge and control points integrated into the processes may lead to serious negative consequences. Companies in such a situation may face hidden tax and labour risks, the potential financial consequences of which are difficult to assess from the perspective of the senior executive. Outsourcing may seem to be a good solution for minimizing this risk and reducing human exposure, but it can only be successful if we do not forget to rethink our internal processes either.
When reviewing the labour processes, it is practical to deal – among others – with the procedures related to the enrolment and exit of employees, preparatory activities related to payroll, the process of end-of-the-month and mid-month payroll, the process of transferring wages, the administrative steps related to benefits in kind, the system for recording working hours and the associated processes, the order of data provision, reporting and the annual opening and closing processes.
The BPiON team can support its clients in the course of such due diligence by identifying redundancies in the processes and legal non-compliances, assessing and displaying in a numeric form any tax and labour risks, pointing out any missing control points and making suggestions for optimization of the payroll, labour and HR administration processes. If required, as a result of the due diligence we can prepare internal regulations and list the specific steps of transformation of the processes. The goal of a due diligence process may also be to prepare the company for outsourcing to take place in the near future and to develop processes that are appropriate for collaboration with a payroll outsourcing provider. With conscious preparation and diligent planning, the lead time of outsourcing can be decreased and success and employee satisfaction can be ensured.