Or, how to succeed where others fail.

Many organizations approach the idea of implementing a new payroll solution with a great deal of trepidation. Most managers believe it’s difficult, time consuming and a minefield teeming with areas for mistakes. Plus, payroll and HR administrators have been sensitized to feel that they alone must manage this project. Why? Because, it’s important to get everyone paid properly and, “ADP/PayChex told me I need to manage the changeover.” Benepay Technologies says, “We agree payroll is critical, and because it’s so critical, you need to take the right approach.”

The right approach to switching payroll systems is to be smart, strategic and controlled. Those three items are actions of leaders, not managers. In fact, when you take a leadership role and choose the right payroll partner, the minefield disappears, the difficulty diminishes and the time involved is put to good use. Leaders are: smart about when they start the process and expect to finish, strategic about choosing their battles and controlled about what they’re changing.

What To Do and Not To Do?

Take it from an insider: executing the details of setting up a new client on payroll provides the first opportunity to learn about that organization’s policies and practices. The new provider learns what you want, how your company works and its payroll policies. And that knowledge is one of the keys to getting great long-term support. Additionally, the new provider should have deep expertise in the details: the system setup, the payroll reconciliation, the year-to-date amounts, the administrator training and all of the data calculation details. If your new payroll provider is asking or demanding that you take on any of these responsibilities, STOP! They’re setting you up for failure by asking you to do their job – a job you’re paying them to do.

Organizations should never manage the process. Instead, organizations should lead the changeover in 3 areas: the go live date, data input, and the expected (DRAFT) results. These 3 milestones are the most important touch points in any payroll implementation, making them the ones you want to watch.

Set the ‘Go Live’ Date

Out of the assortment of approaches the one that seems to work best when changing vendors is to start on a new calendar quarter. Set the go live date to your first payroll in January, April, July or October. Starting on a new quarter means that taxes for the previous quarter have been collected, paid and filed/reported. So, your ‘old’ payroll vendor should have a $0.00 balance and your new vendor can start payroll with clean quarter-to-date and year-to-date balances.

And, one of the new vendor’s services – when they’re entering the amounts paid – should be to reconcile those QTD/YTD balances. The new vendor should double check what you paid in taxes versus what should have been paid. Yes, changing mid-year gets you a free reconciliation! It’s always better to catch errors early. If the actual and expected don’t match, STOP! Stay with the ‘old’ vendor until the issue is fixed and the IRS/State tax balances are $0.00.

Verify the Data Input

Key to a smooth changeover is providing good data. For payroll, providing good data means a variety of things must be right, from employee home addresses to tax information to benefit premiums to 401k and general ledger interface file formats. Your payroll vendor will thank you when you deliver all the data fields needed in the electronic formats required. But, be careful here. After receiving the files is where payroll providers typically fall down.

Most payroll providers tell administrators “Just give me the data in the format you have and we’ll take care of it.” That’s OK, but remember the minefield analogy? That ‘just get it to me’ attitude is setting you up for failure because the data needs to be verified, and only you can verify your organization’s data.

Verifying all that data is a messy task that shouldn’t rely on the quality of your provider’s staff. To get good data you need a good process – a detailed listing of what’s needed and when. Remember, as the leader of this process, you set the goals and the manager needs to report progress towards the goal. What better way to report progress than with a checklist? The manager – payroll provider – needs an implementation checklist.

Validate the Expected Results

The final touch point is to ensure that all the pay/tax amounts are being calculated correctly. This means one or more payroll reconciliations using parallel payrolls. The concept is that:

  • You run your regular payroll with your current vendor,
  • You provide all the source data (timesheets, leave and data changes) to your new vendor,
  • Your new vendor enters the data into their payroll system and
  • Then compares the results against your current vendor’s amounts
  • Finally, your new vendor reports the unresolved mismatches to you.

That comparison should uncover any setup, calculation or data errors. And, clean results also give you confidence that the new provider understands the details – and your requirements.

Reconciliations should be done by the new provider – not you. But, you should be asked to examine the reports – the data output. Later, it’s these reports that you’ll use to examine payroll every period. Better to become familiar and ask questions now.


Wouldn’t it be perfect if you could take on just enough of the process to be efficient – manage just the pieces you can control? We think so. If you position yourself as the leader of the team then you’ll no longer need to fear payroll implementations.

Tackle the implementation process at the beginning of your evaluation, in the first meeting with vendors. Armed with a sturdy implementation checklist and knowledge of how the process should be done, you’ll ask the right questions to ensure that vendors live up to their commitments. Start using this Guide and the Checklist today.