When is the right time to change the payroll services provider?

The right time to change the current payroll provider may depend on various elements like overall HR/financial performance indicators, HR/ financial company strategic imperatives or operational risks.

There are two distinct situations when to consider a change:

– When the service you receive from your payroll provider is already running properly however you want to increase the total value of ownership (you need a better, faster, service).

– When the service you receive from the payroll provider has gone or might go wrong and you want to reduce the total cost of ownership.

Going more in detail, companies should consider changing the payroll provider if the current one:

– is unable to provide up-to-date features or customizable solutions or they will offer them at unjustifiably high costs.

– is unable to provide efficient customer service or quantifiable optimization between parties or within your company’s HR department.

– takes too much time to respond. Having quick responses is important for efficient payroll management, as delays can lead to errors and other complications.

– generates frequent errors in the payroll process or rising costs from various reasons (lack of flexibility from the provider’s side, staff high turnover).

– uses an outdated or inflexible payroll system. This can lead to inefficiency, higher opportunity costs (time, people), and even compliance issues if reports cannot be generated as needed.

– lacks the ability to customize reports or otherwise optimize.

– consistently fails to meet service level agreements (SLAs), doesn’t provide the functionality you need, or has a history of technical issues.

– applies fees which are higher than market rates or have increased significantly over time.

– cannot keep up with your company’s growth. It can’t scale to meet your needs anymore.

–  doesn’t offer the features or capabilities that your company needs, such as self-service portals, mobile apps, or advanced reporting and analytics which would show a medium and long – term return.

– is involved in a merger or acquisition that could impact its service offerings or support.

Before making the decision to search for a new payroll provider, ask yourself some design questions, like the following:

1. What outcome do you expect of the new payroll provider? (How do you expect the situation to look after the problem is solved in specific KPIs). Make sure your requirements are realistic and attainable.

2. How can you achieve the desired outcome? (shortlist of 3 parameters that will have most impact on your individual decision).

3. What return should the outcome deliver? (total value of ownership of the solution).

4. What level of investment is appropriate to solve the problem? (What investment level makes sense for your company?). When making quality business decisions, budgets are altered and created.

5. How soon do you need to see results? (Timing expectations must be clearly defined, reasonable, attainable as well).

6. How will your company buy, implement, and measure the results of the solution?

In the end, it all comes down to one question: is this service still works for me and my department?


Daniela Zsigmond
MD Romania,

Related content