Car Nation Canada, a network of auto dealers, has been expanding over the past several years and opening up new dealerships across Ontario.
But since each dealership is responsible for providing its own payroll information, standardization and accuracy began to slip with each new location, says Jeff Clark, corporate controller at the Brantford, Ont.-based company.
“A lot of information had to be pulled and maintained from each of the locations, and then we had to do intercompany couriers to get all the hard copies (to Brantford) because all the time clocks were standalone time clocks,” he says. “That information had to be gathered on the Monday morning of payroll and sent either by fax or courier and it just created havoc.”
To regain control, Car Nation looked into outsourcing payroll so it could centralize the payroll system “seamlessly and without much effort,” says Clark.
“We were kind of outgrowing our in-house software and we wanted to broaden the horizon,” he says. “We’re working on centralization and this was a better avenue to be able to be centralized and be able to pull all the information from one location.”
After meeting with a couple of payroll service providers, Car Nation decided to go with ADP to outsource its payroll.
Moving to a centralized model for payroll in one location allows a company to easily standardize not just the payroll software but the practices related to pay, time and labour, says David McIninch, vice-president of marketing at ADP in Toronto.
“If you can get to the point where you can standardize practices and procedures as it relates to the technology, then you can often drive really great business practices just off the fact that everybody’s singing from the same songbook,” he says.
Centralization also has a positive impact on employee engagement, says McIninch.
“When organizations get to the point where they can standardize things like overtime rules and hours collection and a number of things related to the day-to-day processes that underpin the pay cycle, you can often drive really great employee loyalty because you don’t get the notion people working in dealership A have it any different than people working in dealership B,” he says.
The timekeeping system at 350-employee Car Nation was a major component that needed to be overhauled in the organization’s quest for centralization.
ADP’s software allowed Car Nation to use the same time clock with the same setup at all seven locations, says Clark.
“It allowed us to roll out unified standardization because even though they’re different dealerships with different makes and models (of vehicles), we’re still trying to standardize them and have a uniformed payroll system,” he says.
The new timekeeping system pairs a biometric hand scan with an employee number. This system helped Car Nation iron out a lot of the inaccurate information it was receiving from its old manual timekeeping clocks.
“There was a lot of dishonesty happening, so there was buddy punching and that kind of stuff,” says Clark. “So, this allowed us to be able to ensure people were properly punching in and out, and it became a more accurate timekeeping system.”
Moving from in-house payroll to outsourcing was a fairly seamless process, he says. Car Nation filled out templates and spreadsheets provided by ADP, and then ADP was able to export the information.
ADP also provided training for the HR and payroll practitioners at the organization on the new software.
The company ran two payrolls — the in-house system and the new ADP system — side-by-side for one dealership and did comparisons. Once it fixed the minor problems it had, it went live with the ADP system the first week of January 2012 in four stores and the following pay at the remaining stores.
“We basically had a representative ready at our beck and call,” says Clark. “We had one-on-one attention for those first several weeks — there was someone there still holding our hand.”
Outsourcing payroll can bring some significant cost savings to organizations, says McIninch. In cases where an employer outsources payroll and time and attendance to the same provider, it’s looking at as much as 40 per cent savings relative to doing it themselves, he says.
Another benefit is ADP also takes care of remitting payroll taxes — which is one less headache for Car Nation to worry about, says Clark. It also helped Car Nation in building some of its Workplace Safety and Insurance Board (WSIB) reports.
Throughout the changeover, ADP was able to identify problem areas — such as how vacation pay was structured — and make sure Car Nation was in compliance with current legislation, says McIninch.
“The goal was to look at the vacation pay structure — and anything else that may not be either standardized or appropriate for the environment they’re in — and ensure the necessary changes were made so Car Nation was both compliant in all areas of payroll and time collection but would also be able to roll out a cohesive vacation pay structure as well,” he says.
Employees have benefited from payroll being outsourced because they are paid more accurately and in a more timely fashion, says Clark.
While some of the dealerships were already using direct deposit, others were still using cheques and the company was sometimes “kind of sporadic with the in-house system,” he says.
“A lot of (employees) wanted to be on direct deposit, so it was a very welcoming thing,” says Clark. “A lot of employees don’t want to be standing in line on a Friday night to cash their cheque, so the introduction of direct deposit was received with open arms.”
And Car Nation is in the process of rolling out the ADP self-service online system, where employees can obtain their pay stubs online.
As in Car Nation’s case, when a company is looking to grow — whether it be increasing head count or adding new locations — it’s the perfect time to consider outsourcing payroll, says McIninch.
“It’s a really great time to deploy new technology because you’re already trying to make changes in the business anyway and, typically, change isn’t particularly incremental when rolling through a new process for payroll,” he says. “It helps the business become more efficient, save time and money.”