Why HR teams in Singapore’s retail industry use payroll outsourcing to have better jobs

By Scott Thomson – Chief Operating Officer, Links International

A retail HR team that frees itself from payroll administration will be more valuable in the business and have better jobs. It’s that simple. This is one of the most common pieces of advice we see being given by HR consultants (e.g. the Big 4) to retail HR teams.

As a result, there is an increasing trend of retail HR teams in Singapore that are working through HR transformation projects using payroll outsourcing as one of the easiest ways to free themselves from administration and elevate their role and impact on the business. And there is solid support that it’s working. For example, in our HR Tech in Asia Survey, over 70% of retail respondents reported that payroll outsourcing was highly effective at helping them elevate their HR function and achieve business outcomes. Ensuring that a retail payroll outsourcing project is successful in Singapore is hugely dependent on good planning. Over 60% of payroll outsourcing projects we work on are with retailers. Here are the key takeaways for a successful payroll outsourcing experience:

Why is payroll outsourcing the best way for retailers in Singapore to achieve HR transformation?

Chess Board

Retail payroll is generally the most complex payroll we work with and freeing the retail HR team from payroll administration means that the team can start focusing on strategic level activities which contribute more to the business. In short, the complexity of retail payroll is largely driven by:

  • Large headcounts with high turnover – Retailers in Singapore generally have very large headcounts relative to other industries and higher levels of turnover, due to the nature of front-line sales and the retail industry. This means significantly more onboarding and off-boarding of employees, minimum wage calculations, termination calculations, new joiner submissions etc.

  • High percentage of sales staff and complex commission calculations – Usually over 80% of a retailer’s headcount is sales staff, which results in significant additional work as a result of often complex commission calculations (e.g. store, team and even individual specific) being performed each month.

  • Part-time staff – Use of time attendance records, flexible working hours, shifts and rostering results in much more complex payroll calculations than full-time or salaried staff require. Time attendance systems can help automate this process to an extent, but a payroll expert or HR administrator is usually required to curate or sense-check the information coming into the retailer’s HCM or HRIS.

What factors are important for good retail payroll outsourcing services in Singapore?

There are a number of payroll providers in Hong Kong, Singapore, Macau, Taiwan and other retail destinations. However, not many payroll outsourcing companies are set up to service retail payroll outsourcing projects well.  Here are the top three attributes to look for in a good payroll outsourcing company:

1. A GREAT employment experience 

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One of the most important outcomes of your payroll outsourcing project is that your employees have a great employee experience. The last situation you want is an avalanche of employee complaints as a result of outsourcing your payroll – how do you avoid this?  

The key question to ask the payroll provider is from where will the payroll processing and support be delivered?

In-country processing and support is going to give you the best employee experienceEnd of story.

Note: nearly all regional payroll service providers in Asia use offshore Indian, Malaysian or Philippine hubs to process and support their payroll. While you may (or may not!) save a marginal amount with offshore processing, no amount of technology and ‘hub and spoke support’ models by themselves are going to give the quality employee experience that in-country processing and support provides. There is nothing worse than calling up a support center and having the support person not understand your employee’s accent, or even where your country is! It’s critical to avoid your employees having a ‘cheap’ HR experience that results in unnecessary complaints and headaches that prevent the HR team from achieving their HR transformation goals.

2. LOTS of experience with payroll retail and good references! 

Retail payroll is the most complex payroll and it’s critical that your payroll service provider has: 

Putting Puzzle Pieces Together
  • Extensive retail experience – How long has the provider been working with retail clients? Most importantly, will they be able to provide you with solutions for your retail C&B challenges? Chances are, if you are going through an HR transformation project, there will be a requirement to integrate with regional or global HCM, such as SAP, Success Factors, Oracle or Workday.  Does the payroll provider have experience integrating with these systems and any time attendance systems you have?
  • Client retention rate and relationship length – What was the turnover percentage of clients for the payroll provider last year? What is their average relationship length? These two questions will give you crucial insights into the service level that the payroll company provides. A client retention rate of less than 85%, or an average client relationship length of less than four years should send alarm bells ringing!
  • Good retail references – Don’t be afraid to ask for references! A good retail payroll provider will be able to readily provide you with references for other retail clients they have done a great job for. Retail HR teams are a pretty friendly bunch – if they can’t provide retail references, then they probably don’t do a lot of retail payroll (it shouldn’t take weeks to get the references or a promise of commitment!).
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3. Retail-focused technology 

Retail industry-focused technology means mobile-friendly technology. If, like most retailers, a large portion of your staff don’t have access to a company computer or corporate email address, then it’s critical that your payroll outsourcing provider has mobile access to pay slips, leave applications, password resets sent to cellphone numbers etc. In addition, you need to know what their technology roadmap is. Is it mobile-focused? Do they have an application? Can reset passwords be sent to a cellphone number rather than an email address? 

Outsourcing retail payroll needs to be planned carefully and selecting an experienced retail payroll services provider is key! Most reputable regional payroll services companies in Asia should give you comfort in terms of non-retail specific factors, including Information Security, Service Level Agreements etc. However, at the end of the day, identifying a payroll company with deep retail payroll experience is the difference between the retail HR team transforming themselves or being bogged down in employee complaints.

Links International is the only regional payroll provider in Asia with 100% in-country teams.  Interested in transforming your retail HR team through payroll outsourcing?  Contact us now.