Payroll lies at the heart of all business operations. Paying employees fairly and on time ensures that they feel respected and have a reason to do their jobs.
Because payroll is so important, it has a direct impact on other core business departments, like human capital management (HCM) and finance. One area where payroll is especially important is workforce management (WFM).
Payroll is dependent on good, accurate data coming from WFM. WFM manages and plans resources, and then Payroll uses the data from WFM to accurately pay employees.
Many of the core functions of both payroll and WFM overlap. For that reason, it is important that both departments are properly integrated and aligned. Failure to do so can lead to problems with data errors, low employee engagement and poor allocation of resources.
The Intersection of Workforce Management and Payroll
Workforce management involves the strategic allocation of employees and resources to improve productivity and reduce risk. It covers tasks such as scheduling, timekeeping, leave management and regulatory compliance.
Through better workforce management, businesses can mitigate problems like staffing shortages and high turnover rates. They can also identify possible ways to improve productivity and reduce labor costs through better allocation of their employees.
There is significant overlap between the goals and methods of both workforce management and payroll. Both involve tracking and analyzing the time employees spend working. Both involve complying with regulations. And both work to ensure that money and employees are allocated properly.
Companies that take advantage of this overlap are at an advantage because they can help their payroll and WFM processes align and complement each other.
Common Problems with Misaligned Workforce Management and Payroll
Many companies have weakly aligned payroll and workforce management systems in place. This often leads to poor allocation of resources, both in terms of finances and of people.
These systems may fail to properly track time spent working. This makes it more difficult to pay people correctly and to determine when more or fewer employees need to be allocated. Ideally, there should be a single source of truth for this data, which other departments like HR can also access.
Misaligned payroll and WFM can make it harder to make educated decisions about overtime, staffing, and other workforce expenses. A workforce manager may not know which employees are eligible for overtime or which employees are more cost-effective to work additional shifts.
Compliance issues are harder to track when payroll and workforce management are not properly integrated. A company might inadvertently assign too much overtime to a worker if their system is not calibrated to recognize the mistake.
Misaligned WFM and payroll can also cause problems for salaried employees, even though they receive a fixed amount of compensation. Incorrect data could lead to issues with tax withholding, or to issues with getting time off approved.
Without proper alignment, there is a greater risk of errors, especially when relying on manual spreadsheet-based systems. There is also an enormous amount of time wasted transferring information from one system to another. These errors can be potentially quite costly.
Payroll, Workforce Management, and Employee Sentiment
Only about 23% of employees globally are engaged in their jobs, based on a study by Gallup. This cuts deeply into potential revenue, as engaged workers are more productive.
Payroll and workforce management offer some of the best tools for maintaining strong employee engagement to maximize productivity. When it comes to how employees feel about their work, it is usually easier to lose their respect than it is to gain it back. For that reason, it is critical to identify and avoid problematic situations.
Workers expect to be paid accurately and on time. This is one of the main functions of the payroll department.
It also helps if it is easy to pick up and adjust hourly schedules. This gives workers a sense of control over their professional lives.
Employees expect to have the resources they need to do their job and that includes the presence of coworkers. Repeatedly working an understaffed shift leads employees to feel overworked, and believe that their employer is either incompetent or does not care about them. Proper workforce management mitigates such issues.
And workers expect to be treated fairly. This means following labor and union rules as well as receiving adequate meal and rest breaks.
Failure in any of the above can quickly lead to an irreversible loss of employee engagement and a decrease in productivity.
What Properly Aligned WFM and Payroll Looks Like
Fortunately, modern software can provide effective solutions for aligning workforce management with payroll.
A well-integrated workforce management system relies on a single source of truth for the data involved with both workforce management and payroll. Managers in either department should have access to the same information regarding factors like scheduling, overtime and potential compliance issues. Human Capital Management (HCM) plays an important role here by providing insights about employee data and greater visibility into potential risks.
Workforce management software should use modern analytics tools to identify potential problems before they occur, as well as suggest appropriate solutions. For example, a good system might identify periods of time when the business is short-staffed, and then suggest workers to assign to that time based on the amount of hours they have already worked that week.
As with most business applications today, properly integrated payroll and workforce management solutions should be cloud-based and easily accessible. With an increasingly remote global workforce, this is more important than ever before.
Combining workforce management and payroll also helps organizations maintain compliance with the ever-expanding set of rules and regulations they must follow. These include:
- Taxes
- Garnishments
- Union rules
- Employment laws
- Data security regulations
The UKG product suite provides a unified system for HR, payroll and workforce management. For payroll in particular, UKG One View consolidates all employee data into a single viewpoint, in real time. This makes UKG an ideal solution for solving all the problems associated with both payroll and workforce management. Check out our upcoming presentation with Eric Lavalette at the Payroll Congress for more on this topic.
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