The successful management of a global workforce relies on fluid, organized interaction between human resources and payroll. But what happens when payroll-HR workflows break down? At a minimum, necessary steps to correct issues will cost the company in time, money, and employee satisfaction. In worst-case scenarios, misaligned HR and payroll functions can put organizations at risk of being out of compliance with critical pay-related regulations.
With so much at stake, it's important for HR professionals to work with their payroll colleagues to maximize the flow of data and communication between them. To get the most out of the payroll-HR workflow, the HR department should understand how data is collected, identify how the HR function can help improve payroll administration, and use analytics to monitor ongoing workflow efficiency and impact.
Understand data collection and transfer
To maximize the partnership between HR and payroll, both teams must understand the data collection and transfer processes that enable payroll processing. Specifically, HR needs to develop their understanding of how payroll data is collected and managed in the HRIS, and subsequently sent to the payroll system. Does that transfer happen via manual upload, a scheduled feed between systems, or a full integration? This basic understanding of how data is managed between functions can serve as a starting point for identifying potential opportunities for process improvements.
For example, a closer look at how data moves between the payroll and HR systems can reveal delays or errors caused by unnecessary manual uploads or poor timing of data feeds. Ideally both HR and payroll would leverage centralized, cloud-based systems that allow for automated data sharing, to minimize manual effort and thereby reduce the risk of errors. If those systems are integrated, HR teams also benefit each time they receive the accurate, complete, and timely payroll data they need to make key decisions about talent management, employee benefits, and salary changes.
Improve the data feed
More accurate data from human resources means more accurate and timely results from payroll, and both benefit company-employee relations. The success of the payroll-HR workflow impacts every step of the employee lifecycle, which makes it an imperative for teams to seek out areas for improvement in the way HR data interfaces with payroll. For a start, HR professionals could look at the error rates for these data points:
- Are job site locations correct?
- Is classification (exempt or non-exempt) status and pay rate data correct?
- Have all benefit selections been accurately applied?
- Do employees accurately record time worked?
- Are managers approving and managing paid time off within the pay period?
- Is performance bonus and salary increase data updated as required?
- How quickly is termination status updated in the HCM?
- Is contact information accurate and available to deliver last payslips as per local requirements?
- Is rehire eligibility captured in the HCM?
As teams analyze ways to improve the data feed, they must look for process improvement opportunities in the HR workflow. This could include providing additional employee or manager training to ensure everyone understands what’s required to achieve accurate HR data. Additionally, business leaders may want to consider options for a more robust integration that will reduce the chances of error due to manual entry or uploads.
Use analytics to monitor impact
Both the HR and payroll departments hold a wealth of information that could be used to improve processes across the organization. The first step in leveraging this asset is identifying KPIs that support overall goals. For example, examine call-center metrics to understand why and how often employees request data changes. Look for trends to determine if the data is wrong or requires an update because of a change in employee information. Similarly, refer to employee complaint data to assess whether issues with payslips are impacting employee engagement. These KPIs can have important implications on employee satisfaction results.
It's also important for HR teams to look at payroll metrics. The volume of data input issues experienced in payroll runs will help HR measure the accuracy of the data being sent to payroll from the HRIS. Inaccurate data can lead to erroneous pay runs that delay employees' receipt of timely, accurate pay and benefits. These types of errors are frustrating and can cause hardships for employees.
Another key payroll metric is the number of issues per 1,000 payslips, which quantifies how many employees are affected by inaccurate data. Employee-employer trust rests on the expectation of receiving the correct pay on time. When that doesn't happen, trust erodes, and employees begin to disengage.
Maximizing the payroll-HR workflow offers an incredible opportunity for the two functions to partner. Better data and process management not only gives the organization the information required to make strategic talent decisions, it also allows employers to deliver on the promise of paying employees as promised. If both HR and payroll understand what's needed to ensure reliable data, track relevant KPIs, and work together to resolve issues, they can empower organizations to retain current employees and become known as a trusted employer in the marketplace.