HR and payroll are two distinct but complementary functions that play major roles in an organization’s success. Payroll is responsible for paying employees accurately and on time and ensuring compliance with tax laws, while HR manages the processes leading up to an employee’s pay, such as hiring, salary increases, bonuses, time off, and much more.
The main connection between these two functions is people. Payroll activities are dependent upon HR people processes, and HR depends on paydays going off without a hitch. Both departments are also responsible for protecting confidential employee data, including financial information, social insurance numbers, and home addresses. That’s why it’s crucial for both departments to coordinate and work together.
With all of these shared people connections, you can see that HR and payroll share a common purpose. That’s why it’s peculiar that these complementary functions are often siloed within organizations. In an ultra-competitive job market, connecting HR and payroll is key to creating a better employee experience.
In this article, we’ll take a look at what obstacles stand between payroll and HR and look at solutions for building partnerships between the two functions that put people first.
Challenges facing the HR and Payroll connection
You have different goals
Payroll’s goal is to be accurate, on time, and compliant. HR’s goal is to recruit and retain the right people while building a solid company culture. This means payroll is focused on precision, while HR focuses on engagement and retention. When both teams don’t share similar goals, these differences can cause friction and division.
Your reporting doesn’t align
Depending on the organization, HR and payroll might not share the same reporting structure. Some organizations have payroll as a part of their HR department. In other companies payroll is considered a function of finance. These differences in reporting structures can create communication gaps between the departments.
Your data isn’t unified
Payroll often relies on the critical employee information HR collects and manages as part of their onboarding and performance processes. In order to accurately process payroll, payroll teams can sometimes find themselves cleaning up HR data or going back to HR to collect necessary people data in order to process payroll. Limited access to departmental data makes it tough for both teams to avoid backtracking and redundancies.
How to strengthen HR and Payroll partnerships
Clearly define roles and responsibilities
In some organizations, the roles and responsibilities of HR and payroll can overlap. Better defining roles and assigning specific responsibilities can help to solve this issue. Not only will it clear any confusion, but it will also be beneficial for job ownership and accountability.
A great way to define role scopes and responsibilities is through the collaborative creation of a process map. Through this process, HR and payroll teams can jointly agree on which responsibilities each team owns and what points of interaction should be outlined in the workflows.
Improve data integrity
In most cases, HR collects employee data, which is passed on to inform payroll. The problem is that the data can be frustrating for payroll to work with. Formats don’t align and key information is missing which can add extra steps to delivering payroll on time.
To improve the flow of data and its accuracy, HR and payroll teams need to work together to align data standards. Developing agreed-upon data standards will not only increase efficiency and data quality but also help to reduce errors and the time needed for correcting them.
This is also where having one unified HR and payroll solution ensures your standards are implemented everywhere in your employee life cycle. More on that to come.
Create shared KPIs
Without a doubt, HR and payroll teams have different goals. That’s why creating a handful of shared KPIs (key performance indicators) can help both teams to work towards the organizational goals they have in common. Issues like tracking missing timesheet information can act as a shared KPI for both teams to reduce payroll errors and ensure employees are properly documenting their time.
Developing KPIs for compliance, employee time, and more can help both HR and payroll increase their own efficiency while reducing friction and frustration between the two functions.
Unify with an all-in-one HR and payroll solution
As mentioned earlier, having one unified HR and payroll solution ensures the standards you set are automated and implemented everywhere in your employee life cycle. A single source of truth gets everyone on the same page using properly formatted data. By uniting HR and payroll processes through better HRIS software, both teams can avoid time-sucking manual data entry tasks and improve organizational reporting.
Most modern software solutions also offer employee self-service tools that drastically reduce manual tasks for both HR and payroll. With self-service tools, employees can input and update their own profile information, swap shifts, request time off, and access their pay statements. The result is less work for everyone and an empowered employee experience.