Cost-Benefit Analysis Matrix for An Organization Replacing its Internal Payroll System With Payroll Outsourcing

Construct a Cost-Benefit Analysis matrix for an organization that is considering replacing its internal payroll system with a payroll outsourcing service. Include direct and indirect revenue enhancements and direct and indirect cost reductions.

An analysis of cost-benefitsinvolves a breakdown of the variation of the cost-benefit ratio. It requires one to compare the current conditions to the projected new conditions that emerge after the HRIS venture (Hendrick, 2003). If conducted effectively, cost-benefit analysis can provide the user with a comprehensive financial gauge of both the positive as well as the negative effects of a potential internal payroll system prepared using an outsourcing service. It is imperative that an organization determines the liabilities and incentives of making such decisions or taking such an action.

 

Direct

Indirect

Benefit Revenue Increase employee productivity Quicker System

Improvedreporting options

  Reductions Pool various systems into one provider

 

Personnel’s time to perform other tasks

 

Cost New payroll system Implementation Trouble shooting

Assess the risks associated with integrating a new payroll system and suggest what the project management team can do to minimize those risks.

Outsourcing as a method of bringing a new method of payment has plenty of advantages. Among the advantages is money and time. By outsourcing a company is able to eliminate the costs associated with the acquisition and the training the staff specifically HR staff to run the system(Hendrick, 2003). When a company outsources the service, the HR section that would have been used to run the system get used in other areas in the company. However, outsourcing does not lack its share of risks. Employees for instance may not get to understand a pay roll system and their problems before they get to the day they receive the payments. Another major problem with payment outsourcing is the complications in access of personalized support by employees.

Employees do not get quick assistance as they would if the services were offered in the firm (Jaturong, 2009). Taking in account these issues therefore, a firm’s management needs to be very keen and perform better evaluations of a system before they bring it in. Such evaluations should anticipate problems and provide potential solutions and measures that can be taken to make the program efficient. A great way of ensuring that off-site service providers are being efficient and any problems arising are properly addressed a firm should send an employee on-site to monitor the progress and ensure the providers are doing a good job and any issues arising are being tackled (Hendrick, 2003).

Compose the tasks that would be needed to complete a Gantt chart (project schedule) for outsourcing the company’s payroll system. Compare the advantages and disadvantages of using a Gantt chart versus using the Performance evaluation and review technique (PERT) and critical path method (CPM) when managing projects.

The Gantt chart of outsourcing has a number of tasks that need completion. These are:-

  • Members of the team together with the manager of the project liaise in determining the functions and qualities they require from the vendor.
  • Extensive research is carried out to find potential vendors
  • Evaluations are conducted to determine the cost benefits (matrix) and the outsourcing replacement will have over the internal payroll program.
  • Choose vendors with guidance from the needs posed by the payroll system.
  • Transfer data to the firm providing the outsourcing.
  • Introduce new system to employees and managers trough training
  • Move to the new outsourced payroll system

 

Simplicity, planning ease and ease in scheduling for small projects are among the advantages using Gantt chart presents. Further than that, they can be easily read and communicated to members of the team especially as with regard to expectations over a certain period of time(Jaturong, 2009). Development of the charts is usually done during project planning and therefore updates need to be done on the charts upon completion of tasks to accommodate the changes that happen on the project with time.A Gantt chart usually indicates the tasks that need to be completed before a certain time or simply the what should be done by a time but they do not give an idea of the work and resources needed to have it done. This disadvantage do not provide a clear picture concerning a particular task unlike the Performance Evaluation and Review Technique and Critical Path Method. PERT for instance, gives a clear understanding by detailing the interrelation between the time needed and the expenses expected for task in all its phases.

Propose three (3) types of feedback loops the project management team can implement so that potential users of the new payroll system can provide advice, suggestions, and guidance to the team during project development and implementation. Suggest how the project management team can filter out irrelevant information and target critical information provided by potential users of the new system.

There exists a number of feedback loops in both the human and the environmental systems. The loops are the channels through which adaptation to cultures and the mechanisms are understood. Conversion of raw materials to usable products is a process that involves multiple activities. Companies have been using three feedback loops or strategies to put in place measures for correction (Jaturong, 2009). These are quality management, process improvement and maintenance management. ISO 9001 remains as the best guideline to base a quality management system on especially for the organizing department. Recent standards, not paying attention to any standard before ISO 9001, have been accepted and incorporated as guidelines for maintenance. The changes in the industrial environment have substantiated the new technology and measures that have been implemented in maintenance. Progress in maintenance is evidenced through reliability. ISO 9001:2000 Standards demonstrate Equipment Reliability qualities as required in Model for Quality Assurance.

The management of organizational activities of a process is done through a system known as process centered management. The process is managed under quality management systems that have PDCA as the approved techniques. A PDCA model follows a Plan, Do, Check and Act system. Recent activities in maintenance management have are not reliant on quality management systems that have specified features of management.  Such features are seen as changers of current maintenance practices to new breed of activities in maintenance management. Advice and suggestions in forms of feedback are vital to project management to ensure its continued system improvement. To ensure efficiency and reliability, a firm’s management team needs to properly evaluate feedback to separate useful information from the un-useful and make use of that which is critical. To ascertain this, the management team needs to adopt a system for approaching the feedback to ensure there is a proper knowledge management approach.

Suggest three (3) types of behavioral problems that employees can manifest as a result of replacing the organization’s legacy payroll system with an outsourced solution. Compose three (3) guidelines that a project manager can use to mitigate employee resistance to change.

Replacing the legacy payroll system with an outsourced payroll service may have a number of effects on the emotions and behaviors of the employees. Jaturong compares outsourcing to any other on-going operations in an organization that have an effect on the complex organizational life. Such processes have an effect on employees as they bring confusion, stress and decline in commitment (Jaturong, 2009). They employees may become reluctant to be involved or committed to the system due to distrust and insecurity. Jaturong further states that in the case where the degree of knowledge of the employees is lower than that evidenced in the outsource providers then they feel stressed and insecure about their position (Jaturong, 2009). This seems therefore that the employees may feel reluctant to accept the outsource. They may seem to be rejecting it since they feel threatened. Their commitment and loyalty to the company goes down.

There is also distrust coming from them not believing in the outsource and its handling of the payment. The lack of proper knowledge of the outsource and the fact they have new people from another organization they are not fully familiar with handling their payment may make them distrustful of the outsource vendors.  To prevent the behaviors, attitudes and emotions of distrust, un-commitment, disloyalty, stress, rejection and internal war against the outsource may be stopped by taking three measure before and during the outsource. The same person states communication, involvement and training as the three keys to successful outsource .The company should therefore ensure there is efficient communication between the departments in the organization as well as between the employees and the outsource vendors and vice versa (Jaturong, 2009). They can bring a number of employees onboard to work with the vendors as involvement increases trust and improves the relationship. Training and seminars should also be done to familiarize to create connection between vendors and employees.  The seminars before and during the outsource should create trust and enhance the communication between the two parties.


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