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Sole custody of payroll

Category: Blog HR

With characteristics of the ever nurturing Human Resource Department (HR) and the strict but fair rules of the Finance / Accounting, the discussion of Payroll, and who should have sole custody, is not a new question.

Let’s face it! Both departments don’t see eye to eye at times but this debate must be put to bed!

Payroll is more than just number crunching and auditing, it is a complex jigsaw on deductions earning code, various incentive programs-commission and bonuses, fringe benefits and other recorded manual checks.

Many experts would agree HR should be responsible for payroll as they believe payroll is effectively a service to employees of the company. The HR department is better equipped to deal with queries from employees about their status or any changes. HR deals with confidential documents for all employees, making this a sensitive area within the company, and must be dealt with in a professional and trusted manner, kept in safe hands.

HR is perfect for keying those changes to employee status, pay rates and updated commissions. However, others believe that those are purely ‘data entry’ items and auditing and ledger entries finance / accounting process is far more important for a company and must be carried out with vigilance. As an employee’s status’ changes, so does the tax associated with those changes and can cause implications within the Finance department.

Despite what many think, a survey shows 49% of people believe Payroll should live with Finance and 40% with HR. Of the remaining people, 11% would go into care from an outsource body or have no clue in the matter and put it up for fostering. Research also has found that many finance professionals would rather it was part of HR, and HR would rather it was in part of finance! Poor Child?!

Payroll fits to both HR and Finance and can vary to where it’s sitting under, depending on the company’s policies, their size and where they are based in the world. With both departments debating a strong case to why they should have ‘sole custody’ of payroll there must be a way to find a balance between them, or help each achieve their goals, which is, to focus on paying employees on time reducing the chance of making Payroll ‘the problem child’ in the company. This can look like an impossible task as both professionals are a breed of their own. With accountants and auditors… they work under strict and unforgiving guideline while HR are on the other side of the spectrum, and does everything in their power to ensure employees are nurtured and paid as accurately and as timely as possible. Employee advocates.

As times change, so does technology. With many cloud based systems, it’s making this ongoing debate more and more redundant as we see these systems slowly integrating departments’ responsibilities into one solution. With a system that has security levels to what a person can see and change, these system can abide by a company’s policy around payroll, and allow the relevant person from a different department to change what is needed.

Soon we may see a shift in people’s views on the responsibility of payroll leaning towards HR. The reason for this is that Payroll needs to be nurtured and will need a structure in place. Finance’s sole purpose is to pay the right amount of ‘child benefits’ for example. Cloud based systems will soon be integrating into the HR department making it easier to: follow the paper trail of employee changes to their individual payroll; allowing the Finance / Accounting department to check in, and making sure that all is in order, reducing the chance of undermining each other.

A problem shared is a problem halved. HR & Payroll share a symbiotic relationship and in the cloud, both can work for the good of the company and employee.

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