While HR and payroll may have different functions, they are linked through their organization’s people. Payroll is responsible for making the payments and calculating the taxes that need to be withheld each month, while HR manage multiple processes related to an employee’s pay, such as salary increases, bonuses and incentives, vacation and leave days, and other similar elements.
When you think about these connection points, it reveals that in many ways HR and payroll are two sides of the same coin. However, what's often the reality in many organizations is that these two departments operate in their own silos – usually at the expense of the employee experience. Especially now, when employees are hyper-focused on how their organization supports them.
The effect of siloed HR and payroll teams becomes even more detrimental when we realize the relationship between both teams thrives when both departments recognize they share a common sense of purpose – which is to improve the employee experience instead of taking away from it. So how can HR and payroll work better together and build a better partnership that puts their organization's people at the center of all they do?
Common challenges in HR/payroll relationships
To help our HR and payroll teams create stronger partnerships, we first need to understand what the typical blockers we have to get over are. Here are some examples:
- Different goals: Payroll’s goal is to be as accurate, efficient, and compliant as possible when delivering payroll. HR’s goal is to attract and retain the right people and build a unique company culture. So this means payroll focuses on precise calculations (a payroll register that’s out of balance by one penny will keep many payroll professionals up at night), while HR focuses on less concrete concepts like employee engagement and retention (so grossing up spot bonuses is an important retention tool). Ultimately, this can cause friction when both teams don’t seem to share similar goals or use the same terms.
- Reporting structure: For some organizations, HR and payroll don’t share the same reporting structure. While some organizations have payroll as a part of the HR department, sometimes payroll is considered a function of finance and reports to that department instead. These differences in reporting structure can further contribute to the gap between the teams.
- Control of data: Many times, this is a big point of contention between HR and payroll teams. HR is often charged with collecting and managing critical employee information that payroll relies on to accurately process payroll. So payroll teams often find themselves cleaning up HR data or having to go back to HR to collect a small (but important) piece of people data in order to process payroll.
Luckily, there are four quick, practical steps you can take to alleviate these friction points and start building better partnerships between HR and payroll. Let's take a look.
1. Defining role scope and separation of responsibilities
At some organizations, the scope and responsibilities between HR and payroll are fuzzy. Having clear roles and separation of responsibilities is not only good for compliance, but also good for ownership and accountability. A further benefit to clarity in this area is maximizing strategic impact for both the HR and payroll players involved, helping your teams to meet the expectations of the modern workplace.
A great option for defining role scopes and responsibilities is having your HR and payroll teams collaboratively create a process map like the one shown below. This can help everyone mutually agree on which processes each team owns and where the points of interaction should be in those workflows. It can also have the beneficial side effect of helping get managers on board with what you're doing too.
2. Setting data integrity expectations
As I mentioned earlier when going over common challenges, HR is often on the frontlines collecting employee data, which then goes on to feed payroll. And on the reverse – payroll data can contain a wealth of insights for the HR team (particularly around pay and pay equity).
To improve data integrity, HR and payroll teams should work together to create a joint set of data standards. Joint standards typically continue important information about data formats (for instance, should a date of birth be entered as 01/01/1990 or 1/1/90?) as well as auditing procedures. Developing a set of standards will help drive more consistent, quality data through HR and payroll processes – and ultimately reduce errors and time spent correcting them. And being on one unified HR technology solution for both HR and payroll helps greatly in ensuring these standards get implemented everywhere in your employee life cycle, but we'll get to that later.
3. Creating shared key performance indicators (KPIs)
While HR and payroll teams may have different goals, they can create a few shared KPIs to align their teams around common objectives and get everyone pulling in the same direction.
For example, tracking payroll errors due to late or missing timecard information can be a commonly shared KPI – as payroll needs to reduce errors, while HR needs to make sure employees are compliant with documenting their hours worked. And that's just one example. There are a ton of metrics around things like compliance, budgeted vs. actual hours, and business continuity that would help both HR and payroll maximize their value.
4. Using one modern solution for HR and payroll
Because HR and payroll have historically been siloed functions, many organizations have separate solutions managing HR and payroll processes. HR and payroll teams who are looking to build a stronger partnership can work together to identify an end-to-end solution that handles both HR and payroll in one system.
A single solution will help eliminate manual workarounds, duplicative data entry, and poor reporting. In addition, a modern, full-suite solution will provide employee self-service tools, which can reduce the time HR and payroll spend on fielding employee requests and changes.
Conclusion: HR/payroll collaboration isn't just beneficial, it's essential
By working with each other to understand each other’s roles and by leveraging the right tools, HR and payroll teams can work better together, build a stronger partnership, and create more efficient and accurate processes that, ultimately, will have a positive impact on their organization and their employee experience. Plus, when these collaboration strategies get implemented the right way, they maximize the time HR and payroll can spend helping their people while minimizing administrative effort.
If you're curious about how to put the right HR and payroll technology in place to help build better relationships, check out our buyer's guide. It's full of practical tips for matching technology to your organizational and team goals.