Reduced Cost Of Payroll Errors

Evidence and data. Interviewees consistently highlighted that ADP HCM Managed Services significantly improved their payroll accuracy, reducing errors and associated costs. The senior manager of HR systems and operations at a manufacturing company contrasted the current state with prior chaos: “We had no confidence in our payroll and in whether or not we were paying people correctly. We used to call it the Wild West of payroll.” After moving to ADP, they reported that errors became “very minimal” and accuracy was “very good for years,” eliminating the need for emergency fixes and restoring employee trust. This improvement also resolved long-standing reconciliation issues: “We could never reconcile our general ledger in all those years with the prior vendor. That became a nonissue when we moved to ADP Managed Services.”

The financial benefits of accuracy were clear. The same senior manager of HR systems and operations in manufacturing explained that their previous managed services vendor made payroll errors that drove tax filing mistakes and penalties: “We definitely had a higher volume of [tax errors]. Knowing what we’re capable of today and how little issues we have, there were definitely errors on our previous vendor’s side.” By reducing corrections, the company avoided amended returns and compliance risks. Similarly, the director of HR at the publishing company noted that ADP’s rigorous checks cut payroll corrections, thus reducing fees for issuing manual checks: “Manual checks used to be outrageous. Now, we might go two to three months and only have one or two manual checks or errors.” This improvement not only saved money but also streamlined payroll cycles, allowing staff to finish processing earlier and avoid overtime. At the retail organization, the payroll manager reported, “We’re saving a lot of money on penalty pay.”

Improved accuracy also delivered operational benefits. At the publishing company, payroll deadlines became predictable thanks to ADP’s Managed Services guardrails. The payroll manager at a retail organization recalled that ADP’s proactive data checks prevented missed paychecks for new hires and seasonal staff, boosting morale and reducing escalations. They also described how ADP handled commission errors quickly, “If I get them on the phone at 9:30, by 11:00 they have already stopped payment and they’re giving me a preview.” These rapid corrections prevented reputational damage and ensured employees received accurate pay on time.

In short, improved payroll accuracy through ADP HCM Managed Services reduced compliance penalties, eliminated costly manual corrections, and enhanced employee confidence. The interviewees confirmed that the shift from systemic errors to stability meant payroll was no longer a source of disruption and, for some, was even a source of improved employee satisfaction and retention.

Modeling and assumptions. Based on the interviews, Forrester assumes the following about the composite organization:

• Payroll errors average three per employee per year, or a total of 15,000 each year across the company.²

• The average cost of fixing a payroll error is $291.³

• In Year 1, the organization avoids 90% of the payroll errors it was experiencing before deploying ADP HCM Managed Services. By Year 2, that rises to 95%.

Risks. The risk that another organization may experience a different financial impact in this benefit area depends on several factors:

• The size of the organization.

• The rate of payroll errors and the average cost of fixing them.

Results. To account for these risks, Forrester adjusted this benefit downward by 10%, yielding a three-year, risk-adjusted total PV (discounted at 10%) of $9.1 million.

Reduced Manager Time Devoted To HR Administration

Evidence and data. Across all interviews, a major benefit of ADP HCM Managed Services was reducing the time frontline supervisors and field managers spent on payroll and HR-related tasks, allowing them to focus on core operational responsibilities. Interviewees explained that one of their goals was to give time back to their people, particularly supervisors in manufacturing plants, field locations, and retail floors. Before automation and ADP HCM Managed Services team expertise, these supervisors would spend from 5 to 10 hours a week managing complex timekeeping and payroll issues, HRIS tasks, hiring and onboarding, and benefits administration. Now, they average less than 1 hour a week, a dramatic reduction that keeps them on the floor, engaged with employees and/or customers, rather than behind a desk.

The senior manager of HR systems and operations at a manufacturing company explained: “We’re a manufacturing company, and we have very complex payroll and timekeeping, just because of the manufacturing and the unions. If we didn’t have ADP HCM Managed Services, our supervisors would be spending a lot of time trying to manage that.”

Interviewees highlighted how ADP’s mobile app eliminated the need for field employees and their supervisors to drive to a central location to do their time sheets or share a single computer at job sites. The director of financial reporting and assurance at a public utility recalled: “The mobile app really gave us a lot of that operational efficiency and probably more correct data. We no longer have people driving in to the operations center to do their weekly HR tasks. Their other option was to, one at a time, get on the supervisor’s computer to do their timesheets. So somebody would be off the job doing stuff on the computer and then they’d switch in and out, or the supervisor would end up doing a lot of it. This is a much better solution.” With the ADP mobile app, supervisors approve time remotely, saving hours each pay period and improving accuracy. Interviewees noted that this flexibility was critical for crews working in remote areas, where interruptions were costly and inefficient.

Customers also described how lean field teams benefited from ADP’s employee and manager support center and knowledge base. Instead of answering benefits or payroll questions themselves, supervisors direct employees to call centers, freeing time to work on finance or operational duties. The director of HR at a publishing company explained: “If [frontline employees] have benefits questions, we tell field staff to give them the number to the call center. Or if they just have general questions about policies and procedures, we have all of that information on the knowledge base. The call center will walk through the details that are on the knowledge base, and they’ll help employees that way.” This shift was especially valuable because all interviewees’ organizations were working to run with lean teams, meaning any time saved from administrative tasks directly impacted productivity.

Finally, the payroll manager at a retail organization reported that managers no longer faced complaints about missed paychecks, thanks to ADP’s proactive data checks and rapid issue resolution. As she put it, “No one’s coming, complaining to them that they didn’t get paid,” which boosted morale and reduced the time supervisors spent troubleshooting payroll problems.

In short, ADP HCM Managed Services streamlined processes that once consumed hours of supervisors’ and field managers’ time — whether through mobile tools, centralized support, or error prevention — allowing these leaders to stay focused on operations rather than administrative burdens.

Modeling and assumptions. Based on the interviews, Forrester assumes the following about the composite organization:

• The frontline supervisor/manager workforce totals 250 FTEs.

  • Half of the employee base is engaged in frontline work and management.
  • Each frontline supervisor manages approximately 10 people.

• Before switching to ADP HCM Managed Services, each supervisor spends the equivalent of 8 hours a week engaged in HCM-related administrative tasks, such as timesheet reconciliation and approval, hiring-related and I-9 compliance activities, benefits questions, and training.

• After the move to managed services, those supervisors spend approximately 5 hours a week on HCM-related tasks. As managers become more accustomed to leveraging the tools and expertise from ADP, they save an additional 1 hour per week in Year 2 and Year 3.

• The average fully burdened hourly rate for these supervisors is $73.⁴

• The organization recaptures 50% of the time saved with this benefit in productive labor.

Risks. The risk that another organization may experience a different level of benefit in this area is related to:

• The size of its frontline supervisory staff relative to the rest of the organization.

• The supervisors’ rate of pay.

• The amount of time supervisors spend on HCM-related activities before moving to managed services.

Results. To account for these risks, Forrester adjusted this benefit downward by 10%, yielding a three-year, risk-adjusted total PV (discounted at 10%) of $3.9 million.

Increased Payroll Team Productivity And Optimization

Evidence and data. Interviewees emphasized that ADP HCM Managed Services dramatically reduced the administrative workload for HR and payroll teams, enabling leaner staffing and freeing time for strategic work. The payroll manager in a retail organization described the shift from constant pressure to confidence: “Friday was a no-no. You couldn’t take off on a Friday as a payroll administrator. Fast forward, three years after implementation, my team can actually take off on Fridays. … It’s quiet.” They explained that this improvement stemmed from ADP handling data validation, payroll previews, and compliance checks, which previously consumed entire days. They added that the team no longer spent hours on manual data entry or emergency corrections, noting: “I’m not spending hours keying in information. … ADP does it for us. Our pay dates are kind of a breeze.”

Interviewees provided specific use cases highlighting some of the time savings. The publishing company reduced audit preparation from “maybe 100 hours” to “under 36 hours” because “ADP can pull everything in an instant” for compliance reviews and 401(k) audits. The publishing company also saw annual payroll corrections fall by “80% to 90%,” saving hours of troubleshooting each cycle. The director of HR at the publishing company explained how ADP HCM Managed Services transformed the roles of many of the team’s managers in the field. They said, “We share HR duties with finance staff in the field, and what I’ve noticed is that [those employees] now have more time to do their finance duties because they can get their HR work done much more quickly in a designated time period.”

The director of HR in the publishing vertical also called out notable changes in workload on her team: “Some days our benefits manager wouldn’t even get anything done because she was on the phone all day answering questions, but now she doesn’t get behind because she partners with ADP.” She continued: “Our new payroll manager is actually able to go home at a decent time because payroll gets processed a day early. ADP allows her to focus more on processing information, pulling the reports, and supporting and servicing our internal people.”

At the manufacturing company, the senior manager of HR systems and operations summed it up, saying: “We are more project focused and can do more with less because my team’s not tied up in the transactional items. They have time to focus on other priorities or other projects that better the organization.” At the public utility company, the director of financial reporting and assurance relayed how ADP’s tools and partnership helped her team work faster and avoid bottlenecks.

These efficiencies not only prevented payroll delays but also improved employee experience and reduced penalty costs, such as California’s “check-in-hand” requirement that separating employees must receive their final wages at the time of separation. As the payroll manager at a retailer explained, being able to meet this requirement put the company in a position to improve employee experience overall: “We’re also not missing those first paychecks for the retail staff. Yes, even if they only worked 2 or 3 hours their first week, they’re still getting paid on time.”

In short, ADP HCM Managed Services transformed interviewees’ HCM operations by eliminating repetitive tasks and improving compliance, allowing them to redeploy significant headcount to more strategic work or handle growth without adding new hires. As the payroll manager at a retail organization summed up, “The greatest benefit is confidence that if I have back-to-back meetings for 10 hours, my payroll’s not falling behind schedule and not just being glanced at because we’re out of time.” The director of HR in the publishing industry also noted that leveraging ADP HCM Managed Services ensured “things get done … in a fashion where we’re still compliant.”

Modeling and assumptions. Based on the interviews, Forrester assumes the following about the composite organization:

• The composite requires the equivalent of eight FTEs to support its payroll needs prior to outsourcing with ADP HCM Managed Services.

• After outsourcing, it reduces payroll team requirements by 75% in Years 1 and 2, increasing to 88% in following years.

• The average fully burdened annual salary for the team is $82,331.⁵

Risks. The risk that another organization may experience a different level of benefit in this area is related to:

• The size of the payroll team prior to implementation.

• The average rate of pay for the team.

Results. To account for these risks, Forrester adjusted this benefit downward by 10%, yielding a three-year, risk-adjusted total PV (discounted at 10%) of $2.5 million.

Reduced Legacy Software Fees

Evidence and data. Interviewees specified various types of direct savings from software, services, and sometimes hardware costs they avoided after engaging with ADP HCM Managed Services. In some cases, these were competitive managed services providers; in others, they included third-party point solutions that were supplanted by managed services personnel and technology, as well as hardware such as time clocks or servers supporting legacy on-premises HR applications.

Modeling and assumptions. Based on the interviews, Forrester assumes the following about the composite organization:

• It replaces one or more third-party payroll-related software solutions when it switches to ADP HCM Managed Services.

• Annual fees for those solutions, including licensing fees and associated costs for updates, upgrades, testing, and configuration changes, total $350,000.

• The organization fully sunsets these contracts an average of six months after switching to ADP HCM Managed Services.

Risks. The risk that another organization may experience a different financial impact in this benefit area depends on several factors:

• The annual cost of legacy hardware, software, and competitive managed services solutions displaced once the organization transitions to ADP HCM Managed Services.

• The length of time the organization continues to use and pay for those solutions after deploying ADP HCM Managed Services.

Results. To account for these risks, Forrester adjusted this benefit downward by 10%, yielding a three-year, risk-adjusted total PV (discounted at 10%) of $640,000.

Savings On Payroll Hiring Costs

Evidence and data. Before engaging ADP, interviewees found it difficult to retain qualified payroll practitioners, and even more difficult to recruit new ones as their long-term payroll team members retired. Payroll is a specialized discipline and can be difficult to source, especially in rural or competitive markets. Interviewees explained that these roles required deep knowledge of compliance and union rules that vary significantly in different geographic markets and industry verticals, making it costly and time-consuming to find qualified personnel.

Interviewees agreed that ADP, with its focus on payroll operations, attracted top quality payroll practitioners because it offered them training, development, and a long-term career path within the function. With ADP taking on much of the payroll administration, these organizations were not faced with the challenge of retaining and/or recruiting new payroll talent in a very difficult marketplace.

Modeling and assumptions. Based on the interviews, Forrester assumes the following about the composite organization:

• Without the move to ADP HCM Managed Services, the organization would have needed to replace two payroll practitioners per year.

• The average cost to replace a payroll practitioner is 200% of their average annual nominal (not fully burdened) salary, in this case $61,000.⁶ This comprises the cost of recruiting, interviewing, hiring, onboarding, and training a new payroll practitioner, as well as the cost of contractor staffing fees due to the scarcity of payroll talent and elongated time needed to fill open positions.

Risks. The risk that another organization may experience a different level of benefit in this area is related to:

• The number of payroll practitioners on staff and their average churn rate.

• The organization’s rate of pay for payroll practitioners.

Results. To account for these risks, Forrester adjusted this benefit downward by 10%, yielding a three-year, risk-adjusted total PV (discounted at 10%) of $546,000.

Unquantified Benefits

Interviewees mentioned the following additional benefits that their organizations experienced but were not able to quantify:

• Improved security and business resilience. Interviewees emphasized that ADP HCM Managed Services delivered strong security and business resilience benefits, which were key drivers for adoption. The director of financial reporting and assurance at a public utility stated: “Probably the biggest driver for me is the level of cybersecurity that ADP has. And the protection of the employee data. Their cybersecurity team is phenomenal. They took a hurricane to their main facility, and it was basically seamless to all of us.” Similarly, the director of HR at a publishing company highlighted the peace of mind from ADP’s cloud-based systems: “They house our data. They’re very secure. … It gives us peace of mind to know our information is safe.” These capabilities reduced risk, prevented penalties, and ensured continuity, offering value that smaller internal teams could not replicate.

• Enhanced employee experience. Interviewees noted that ADP HCM Managed Services improved employee experience primarily by ensuring timely, accurate pay and providing accessible support. The payroll manager at a retailer explained that before moving to a managed services model, payroll days often created problems for first-line supervisors. Now, though, employees benefit from immediate assistance through the ADP-managed service center: “If an employee calls, they get an immediate response now instead of having to wait until a member of the HR team is back from vacation or a day off. It boosts morale all around.” Similarly, the senior manager of HR systems and operations at a public utility highlighted the convenience of the ADP mobile app, which allows field employees to manage time and benefits themselves from anywhere. These changes reduced frustration, saved time, and created confidence that payroll and benefits processes would run smoothly, contributing to a more positive overall employee experience.

• Strengthened compliance and risk mitigation. Interviewees reported that HCM Managed Services significantly improved compliance and mitigated risk by streamlining processes and leveraging specialized tools. Companies operating across multiple jurisdictions found this especially valuable. As the director of financial reporting and assurance at a public utility explained, “We use the Total Absence Management system for federal and state leaves and for ACA compliance.” ADP’s platforms and managed tax services helped interviewees deal with complex tax jurisdictions and leave laws, reducing exposure to penalties and fees such as late tax filings and ACA-related fines. The same director also noted dramatic efficiency gains in audit preparation, “Instead of it being maybe a few days, it would have been a couple of weeks [before ADP HCM Managed Services].” These improvements ensured timely filings, accurate reporting, and proactive compliance, effectively mitigating financial risk.

Flexibility

The value of flexibility is unique to each customer. There are multiple scenarios in which a customer might implement ADP HCM Managed Services and later realize additional uses and business opportunities, including:

• Access to ADP Assist and coming AI tools. Interviewees expressed optimism about ADP’s AI capabilities as a way to further streamline processes and enhance efficiency. Although current benefits were not quantifiable, they acknowledged that AI-driven tools like ADP Assist and automation features already help reduce manual effort and provide real-time support for employees and managers. For example, the senior manager of HR systems and automation at a public utility noted that their operations team uses AI assist that’s available with the solution, highlighting its role in enabling self-service and minimizing reliance on payroll staff for routine inquiries. Interviewees said that they look forward to expansion of these AI capabilities to improve accuracy, accelerate issue resolution, and deliver greater flexibility for employees working nontraditional hours.

• Broader adoption. The interviewees in this study currently use ADP HCM Managed Services primarily for payroll but see potential in adding capabilities like talent acquisition, advanced scheduling, or expanded benefits administration. For example, the director of HR systems and operations at a manufacturing company reported that they use onboarding and E-Verify but leave recruiting local. Expanding centralized recruiting capabilities could streamline hiring for rural locations. The payroll manager at a retail organization said they plan to implement ADP for Canadian employees, signaling an opportunity to standardize processes across geographies for consistency and efficiency.

• Enhanced self-service and mobile tools. The director of financial reporting and assurance at a public utility emphasized the importance of ADP’s mobile app and suggested leveraging it further for training and communication, saying, “I’d even like to eventually have some training out there — just click on the button and do the training on your phone while you’re sitting.” This reflects an opportunity to use mobile capabilities for more than time entry, such as for learning and compliance updates.

Flexibility would also be quantified when evaluated as part of a specific project (described in more detail in Total Economic Impact Approach).