Payroll and HR administration can be particularly problematic for retail industry companies, which is why many of them seek to source a professional services company that specialises in these areas. Once having taken the decision to work with a managed services provider, it is not always easy to find the right partner or to execute a successful project where the third-party can integrate their services successfully with your internal HR processes. These challenges resonate across the whole retail sector in Asia.

Retail industry HR and payroll challenges

HR administration and payroll need to be key areas of focus for all retail industry participants and there are important challenges that can have a significant impact on businesses. The retail industry faces very high levels of staff turnover, straining the HR team’s ability to maintain sufficient recruitment and training programmes and leaving no time to address underlying issues and to progress career development strategies. 

A significant percentage of staff operate on flexible working hours and seasonal peaks in demand requires temporary staffing. These issues make the collection of accurate attendance data more difficult and puts further pressure on regular staff and training programmes.

In addition, staff commission structures are often overly complex and subject to change, resulting in further complexity to payroll data gathering and calculation. Simply managing payroll processes can consume an inordinate amount of HR time leaving little left for recruitment, onboarding and staff training and, in a growth sector, these issues just continue to multiply. Businesses are either faced with hiring and growing a team of HR professionals that can cope with the peaks encountered or else seeking an effective and reliable managed services partner.

The pros and cons of a using third party provider

Using a global business service provider for the payroll process can have a significant benefit to retail businesses, bringing local expertise, scale and accountability to the issues. There are many benefits that can be gained from a successful partnership, including:

• The vendor has payroll and HR as its core business so will have local expertise to maintain compliance with local regulations;
• The vendor fully supports the business through seasonal peaks, allowing the HR team to maintain focus on employee career development and training to enhance their skills and knowledge;
• The vendor is on the ground locally, thus avoiding the many issues that arise when payroll is managed centrally in another country, also delivering a faster response from the local team.

But there can also be issues if the vendor does not truly work as a partner:

• poor communication between the vendor and the company can lead to misunderstandings and mistakes;
• a lack of good account management will fail to identify changing circumstances that the vendor may need to respond to or could have assisted with;
• HR staff feel they lack control when payroll is outsourced and resist change;
• frequent payroll issues and mistakes will create a negative impression with employees toward HR and the company. 

It is essential, therefore, that there is a good relationship between the vendor and the company from the outset, so care must be taken in selecting the right vendor to partner with, and simply using the same vendor as used in your head office may not meet your needs locally if they do not have sufficient local knowledge and experienced people on the ground. You need a vendor with a global footprint that can match your ambitious expansion strategy and support you in any country that you wish to target in the future.

How to have a successful partnership

There are many aspects that contribute to the success or failure of a sourced project, with effective project management, tight governance practices and regular and clear communication being especially critical success factors throughout all stages of the project. From the outset you need to have executive level sponsorship to champion and support the project, a clear project plan leading to a defined set of objectives, dedicated internal resources who understand your business and requirements, alignment of communications between the stakeholders at all levels, a project committee of 3 to 5 key decision makers to manage progress and swiftly make decisions if change to the project needs to occur and you must select a vendor that can satisfy your long term growth ambitions. 

It is important to prepare well in advance of the project initiation, bringing the temporary staff, needed to cover for the permanent team members that are allocated to the project, onboard in plenty of time to train them in the daily routine tasks that they need to provide cover for. The project will likely impact upon all of your HR team to some extent to ensure the full breadth of knowledge they possess can be accessed by project team members, and this also needs to be planned when considering any additional temporary cover that may be needed. The vendor should be able to help with provision of temporary cover when that is needed. 

If you view your project as just outsourcing a problem, then it is unlikely to achieve your goals. The best way to achieve success is to build a true partnership together with your managed services provider that will not only deliver your project but will stand the long-term test of time.