Transitioning Payroll Companies: Taking the Pain out of the Move

Change is hard.  I recently began the transition process from a big, international bank to a smaller, local bank.  Needless to say, I didn’t realize how hooked I was.

You see, when I first became a customer at the big bank, they wanted me to leave that day with their whole kit and caboodle.  For example, I only went in to open a checking account, but when it was all said and done, I was also the reluctant owner of a savings account and a credit card. Clearly, they had me hook, line, and sinker. Still, the soliciting didn’t stop there.  Throughout the years, I added a secondary checking account, and enrolled in their privacy protection plan. 

Staying Too Loyal

Photo of a tablet with a collage of words related to customer loyalty.
Customer Loyalty by Nick Youngson CC BY-SA 3.0

Now, one thing that prevented me from transitioning from that bank for so long was their relentless sales tactics.  For instance, I couldn’t call in to Customer Care for a routine issue without being sold the latest and greatest.  Once they had my ear, I was often told that these were products and services only provided by this particular bank.  At the time, I didn’t realize that this was their strategy for making it difficult to leave. 

Another thing that kept me loyal to the big bank was that it was simply too hard to leave.  Each time I thought about transitioning to a new bank, I remembered that I would have to undo all the direct deposits, disable the online bill payments, and I’d have to find a new identity protection plan.

Elevator Music and Time to Think

Finally, I had had enough.  The straw that broke the camel’s back was simply one more erroneous fee that I had to try to negotiate off my account.  As I sat on the line for minutes on end, listening to elevator music and thinking about how long it took me even to get through the automated prompts, I knew this was the end of the line for us.  It was time to find a new bank, despite how hard it would be to unhook myself to leave.  Obviously, transitioning would be a challenge, but worth it in the end.

Now, that was a long preamble to express empathy.  Simply put, I know how you feel.  In fact, you have probably been with your huge payroll provider for umpteen years.  So, you subscribe to everything, right down to their monthly newsletter that only sells you more products and services that you’re not entirely sure you want or need.  You would like to experience a smaller, locally owned and operated provider, but you are unsure of how to start transitioning. 

Well, you are not alone.  Interestingly, many smaller payroll companies went into business because they understand that frustration, and want to offer a different experience to clients.  Transitioning doesn’t need to involve tears, and there are ways to make it a little less painful.  Here are some things to consider before you make a change, and some things you can do to make you wonder why you didn’t decide to transition sooner.

The Pain of the Same

A friend once quoted author and life coach Tony Robbins to me, saying, “Change happens when the pain of staying the same is greater than the pain of change.”  Now, the friend actually gave me the advice because of my infant son’s poor sleeping habits.  Nevertheless, I remembered those words, since they apply to nearly any situation in life.

There is much truth to that quote, because many of us require a good dose of discomfort before we feel prompted to get out of our current rut.  So, think about your own situation.  Are there things that seem to be status quo for your current payroll company, which you wish you could change?  Here are some pain points that frequently drive clients to seek other payroll providers.

One Size Does Not Fit All

First, the size of the payroll provider is important to the client experience.  Not everyone enjoys feeling like a number, or a cog in the wheel.  While some find comfort in using a giant, seasoned payroll company, there are advantages to smaller payroll providers.  For example, many newer payroll companies emerged because of frustrations with the big guys.  They saw areas in need of improvement, so they became the change they wanted to see in the payroll industry.  Smaller operations are notoriously more flexible, because they don’t have as many people involved in the decision-making process.  Therefore, size is one reason that some companies decide to transition to a smaller payroll company.

Fees Galore

Second, the fee structure can often be confusing with some payroll providers.  It is not uncommon to hear of certain publicly traded national payroll companies that use shady sales tricks.  For example, perhaps the sales force offered aggressive discounts to earn new clients.  After 12 months, however, the discount evaporated, and clients were left paying 50%, 75%, or even 100% more than the original agreed-upon fee.  When this happens, clients become angry, and the trust is lost.  It seems that some players in the industry do not value honesty and transparency.  Therefore, price is another pain point that prompts transitioning to a new payroll company.

Client Service Dissatisfaction

Third, client service is an important aspect of any business.  Typically, the bigger the payroll company, the greater the number of accounts per client service representative.  So, it’s easy to understand how clients might feel like the care they receive suffers when they work with a larger payroll provider.  Once clients feel like they don’t receive appropriate attention, they often start considering transitioning to a payroll company with better client service.

These are just a few of the reasons why clients decide that the pain of the same is worth the pain of transitioning.

Taking the Pain out of Transitioning

So, once a business decides to take the leap, there are a few things they can do to make transitioning a little less painful.

Get Organized

Many small businesses already recognize the benefits of outsourcing payroll. So, if you are currently using another payroll company, it should be easy to pull the information you need from their platform.  This will include the employee data for any active or terminated employees paid within that calendar year.  Furthermore, you will need to pull the year-to-date reports showing their gross-to-net earnings.  If you are not using a payroll provider, you will need to pull those reports from whatever platform you are using.  For some companies, this might require piecing information together.  This is because sometimes companies store information in different places, whereas payroll companies tend to keep payroll-related information together in one place.

Establish a Timeline for Transitioning

Once upon a time, businesses tended to hold off switching payroll providers because they wanted to have a clean, year-end break.  With improved technology making auditing easier, that is no longer a concern.  In fact, it can be a breeze to make the change at any point throughout the year!  However, there are certain times that are easiest to switch.  For example, the start of a new quarter makes for an easier transition.  Also, businesses would be wise to schedule the transition at a time when all the key players are available.  So, try to avoid transitioning when the office manager or payroll processer are on vacation.

Familiarize Yourself with the Transition Process

Now that you will be using a completely new system on regular basis, you will want to acclimate to the platform.  If they offer a virtual tutorial, take it!  Furthermore, if the sales rep or client service manager offers to walk through your first payroll with you, accept the offer!  Familiarizing yourself with the system and your point person will only improve the transitioning process. 

Confirm Fees before Transitioning

Since many companies change payroll providers due to price issues, make sure you are clear on what you will be paying with the new provider.  Understand what you get for your base fee, and know how much you pay per employee.  Also, be sure to ask about special discounts for things such as loyalty, veteran-owned businesses, and referrals.  Companies that value your relationship will often look for ways to show their appreciation.  Additionally, feeling good about how you’re spending your money will make you feel better about transitioning.

Consider and Transition

Now, without a doubt, the thought of change can be daunting.  Instead of sticking it out to avoid a painful transition, decide if the discomfort you feel in your current situation is worth making a change.  Once you consider the things that make your experience with your current payroll company too much to bear, you can begin thinking about transitioning.  Then, make a checklist of the items you can do to make transitioning easier on you.  Furthermore, if you remain organized throughout the transition, your new payroll provider will also have an easier time transitioning.  Without a doubt, a smooth transition could be the start of a beautiful relationship.

Image of two men in an embrace, happy about their business relationship.
Photo by Mohamed Hassan | Source

About Journey Employer Solutions

Service: Journey puts service above all. We believe if you offer a great price and great technology, but don’t have A+ level service, it’s worthless. 
Technology: Journey has the advantage of being forward thinking and fast moving. Our decisions are not based on stockholders, but on clients looking for advanced offerings. 
Value: Journey takes a client trusting their team as a crucial part of their business very seriously. We realize cost is an important consideration and set extremely fair pricing.

This is not meant to provide legal counsel or advice. Every situation is different. Please contact an HR professional or employment attorney before taking any action.

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