oll tax laws in the context of fast changing federal policies relating to payroll taxation (Payroll tax law is really cumbersome task when the payroll system is managed internally)
Decreased accessibility – When the payroll system is managed by an external outsourcing provider, the firm’s payroll services information are stored on a server outside the organization. Hence, the company finds difficulty accessing payroll figures and other employee data as and when required
In case of a mistake in payroll tax deductions, retirement plan deductions, sick leave compensation, or employee benefits, it is not possible to correct the mistake fast. This issue may lead to employee dissatisfaction
Employee resistance to change may be the most important risk associated with integrating a new payroll system. Employees would worry about the efficiency of a new system as it relates to their salaries, compensation, and other benefits. Hence they are not likely to accept the change. In the words of Lambert (2005, pp.1165-1167), even a well developed payroll system may fail to perform flawlessly if it is not integrated properly. Undoubtedly, such a situation will certainly result in employee dissatisfaction, which in turn may hurt overall organizational productivity. Sometimes the company’s staff may not be informed of all features of the new payroll system, and therefore they would not be able to manage the system in an effective way.
However, the project management team can minimize those risks to a great extent by implementing proper change management policies prior to the actual integration of the new payroll system. The project management team should closely work with the HR team to coordinate their activities and to ensure shared efforts to convince employees regarding the necessity of the change planned. In addition, the project management team must ensure that there are skilled and experienced personnel to handle the newly integrated system efficiently.