Financial Foundations: Selecting a New Payroll System
Selecting a New Payroll System Analyze your system, request proposals and evaluate vendors to determine how to upgrade your payroll process.
By Jo McClure
Your current payroll system is outdated, time consuming or your payroll needs have changed. So, you’re considering converting to a new system but aren’t sure where to begin. Should you search the Internet for vendors? Should you ask for advice from your sister-in-law who works in the HR department of a large corporation? Before you look outside your organization for feedback or advice, tap your internal resources and develop an internal project team. Successful selection and implementation of a payroll system hinges on getting the right people involved from the beginning. The project team can manage the project, make recommendations, complete aspects of the work and assess and evaluate the project through each development stage, as well as after the conversion is complete. Create A Project Team The project team should consist of individuals who have demonstrated skills in some or all of the following roles[U1]. Careful consideration also should be given to the current and potential end-users of the new payroll system. If you cannot identify your internal end-users, try creating a flowchart of your current payroll process to determine who is involved. Your team will generally consist of representatives from the following departments: payroll, accounting/finance, human resources, information technology, benefits and management. Depending on the size of your organization, you may have members of the team who represent several of these areas, such as an office manager who handles payroll, benefits and human resources. You may even need to involve individuals from outside your organization. For example, if you currently outsource your IT functions to a third-party provider, that vendor’s input will be essential to the project team. Additionally, once a payroll system has been selected, the vendor may include a project manager or implementation specialist to support your conversion. This individual would take a central role within the project. The formation of a project team across departmental lines will benefit the conversion in several areas. As the team members begin to set goals and define the scope of the project, they will share information on timing, resources and system requirements.
Timing Understanding the time commitment of a payroll system conversion and factoring in feedback from the project team regarding other internal responsibilities will be vital to setting a realistic timeline. For example, your accounting team is conducting an internal audit in the first quarter as well as closing the previous year’s books. If the accounting department will play a significant role in the final stages of the payroll system implementation, converting at the start of the New Year may not be possible. On another level, effective timing will keep the project moving forward. Scheduling payroll system vendor evaluations for a week in which two team members will be out of the office will result in additional effort and time spent bringing the absent members up to speed. Resources Often, the first resource considered when selecting and implementing a payroll system is financial in nature. Ensuring that the project team understands the budget for the new payroll system will help in determining and keeping the project in focus.
System Requirements Your project team’s input will greatly impact the assessment of the new payroll system requirements. The contribution from your payroll department team member regarding compliance requirements may be at the top of the list, but the feedback from your management team member who uses payroll reports to track labor costs is also critical. The expectation should be set for each project team member to supply the system requirements needed based on their area or department needs. This is also an opportunity to evaluate the current manual processes and plan for future automation. The team will need to consider interfacing issues between internal and external systems. This is also an ideal time to contemplate the possibility of integrating multiple existing systems into the new payroll system to streamline processes and improve efficiency. The most important byproducts of establishing a project team are often intangible, such as the sense of ownership and accountability created within the group. The buy-in from your project team can filter through the internal departments and ease the anxiety often associated with change. Relationships between departments can be strengthened and lines of communication opened. Participation on the project team also serves as an effective development opportunity for team members. It allows opportunities for coaching and assessment as well as preparation for future projects.
Jo McClure, CPP, is the director of payroll administration at Axcet HR Solutions in Lenexa and the vice president of the Greater Kansas City chapter of the American Payroll Association. You can reach Jo at (913) 754-5361 or
