Payroll: All systems go

by 21 Oct 2010

Payroll professionals are often frustrated by the lack of recognition the function receives for the important role it plays. Tom Washington explores the reason for this frustration and asks how technology can make a difference

It generates no income, is very rarely seen or heard, and very few outside of the function have an understanding what is actually involved in it. But when payroll goes wrong, everyone knows about it. So while it is a profession on which so many of us rely to survive, payroll is having a tough time getting the recognition it deserves.

The function itself is often associated with or as a part of finance or HR, and being recognised as a profession in its own right is one of its biggest challenges. Add to that the ever-changing legislative complexities and advances in technology, payroll professionals certainly have a tough task on their hands. Moreover, the current financial environment has resulted in a greater scrutiny of payroll costs and liabilities. As never before, payroll professionals are relied on to produce comprehensive reports to be analysed by the management team.

A payroll manager at a well-known investment bank, who asked not be named, emphasised the importance of the role and says that payroll is often seen as a processing task that anyone can do, but it should be recognised alongside that of an accountant or HR professional.

“People are funny about their money. How much we get paid is a very personal issue and determines how we live our entire lives; the respect that this deserves is enormous and should be treated as such. We all react differently to pay issues depending on our circumstances and it is an important skill for all payroll people to be able to adjust their communication style depending on the situation,” she says.

She claims that for the payroll function to be recognised for the work it does, a specific qualification needs to be available as is available in the UK and US.

“Whenever I have to recruit for payroll people it is so difficult to find the quality that is required particularly in the finance industry. While the Payroll Management Certificate Course through the Association of Payroll Specialists has gone a long way to ensure more payroll people are qualified, until we have an official tertiary qualification that incorporates not just the technical skills but more importantly the personal skills required for payroll we will not be recognised as a profession nor will we attract the right people to actually choose payroll as a career,” she says.

Craig Osborne, managing director at Sage MicrOpay, says that the payroll environment is a dynamic one, particularly in relation to legislative compliance. “Payroll professionals have to understand legislative changes, how it affects their payroll processes and how they will need to apply it to their payroll processes. A recent example is the introduction of the Paid Parental Leave legislation.”

To assist payroll, there must be continual improvement in automating processes and reducing processing costs. That’s where technology comes in.

A key sticking point, according to the payroll manager, is that many employers fail to integrate their payroll and HR systems. “For some reason, all the big companies I have worked for have chosen different HR and payroll systems, so there is no interaction between them at all. Why, this day and age would you not think it’s important enough that the HR system has full integration or even some interface with the payroll system? There’s people out there double-keying and doing reconciliations between two systems and it’s ridiculous.”

Recent findings from ADP payroll research show that just over 35 per cent of respondents have integrated HR, payroll and compensation solutions. This figure is considerably low, particularly when compared to the 83 percent of respondents that cited integrated functionality as either ‘critical’ or ‘highly important’. 

The State of HR-Payroll-Compensation Integration: 2010 study also revealed that almost half of the survey respondents are still using spreadsheets or even pen and paper (44 per cent and two percent, respectively) for planning compensation.

Terrence McCrossan, division vice president, marketing and strategy, ADP National Account Services, said of the findings: “Integration of these key systems and processes simplifies payroll and compensation changes throughout the year, reduces errors, and improves visibility for management, HR practitioners and employees.”

Furthermore, Sage MicrOpay’s Osborne says that technology can assist payroll professionals in relation to managing through automation their payroll function to provide ease of use tools and ensuring a seamless process. “Due to the cumbersome nature of payroll in relation to capturing data and processing, the automated reporting now available allows a user to produce in- depth and customisable reports for the purposes of the organisation’s reporting requirements,” he says.

“Paying employees correctly and on time is a critical part of the business function and as the payroll professional is of chief importance in the delivery of this, they are seen by c-level professionals as a valuable part of the business. The right technology will not only ensure that the payroll process is managed and audited, but in addition, save the organisation time by managing the payroll process to improve efficiencies.”

So with payroll battling on all fronts to boost its reputation and gain recognition for the role it serves, employers should be mindful that sensible use of technology can go a long way in helping its cause.