Why HR and Finance Must Both Hold Payrolls’ Hand


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One ongoing political battle in many organisations is who the Payroll Service should report to. Finance wins over mostly because of the sheer expense that is payroll. Then there are those organisations that see the payment of their most valued assets as an integral function of the Human Resources team, so the Payroll Service sits under HRs’ wing. Politicking aside, if organisational leaders actually sat down and measured the pros and cons on either side, it would be evident that the Payroll Service must have a solid working relationship and open communication lines with both the HR and Finance teams.

An important consideration in the #HR-v-#Finance pull of the #Payroll Service is to attempt to understand the mentality of both players, in the most general sense. Pull out your organisations’ HR and Finance mission statements and try to find commonality between them… I dare you!

Human Resources people are typically “people people” whose purpose in life is to implement strategies and programs to recruit and retain proficient, nurtured, engaged and empowered employees and to keep them safe and well in the process. In HR, grey lines exist at every turn: special circumstances and impacts of decisions with on flow effects to other employment relation issues and/or future strategies. HR people regularly have to consider the bigger picture, often for what are seemingly the minutest of details to outsiders.

Finance people are typically “numbers people” who usually perform comfortably within the predetermined and unwavering confines of accountings’ legislated rules, local and international standards, authority levels and organisational policies. They are comfortable with black and white. Being very generalistic, the purpose of Finance is to compliantly account for and report on all financial transactions within the designated timeframes.

Picture putting your HR and Finance people in a room and performing a group personality test. The room would separate into three distinct groups. In one corner are the “creatives” and “counselors”, most of which happen to work in HR, and in the other corner are the majority of the Finance team who are the “methodicals”. Polar opposites in the personality spectrums.

Left standing in the middle of the room are the in-betweeners: a mix of bewildered people who may be wondering if they have chosen the right career path, and conversely, those people whose personality types allow them to move comfortably amongst the HR and Finance personalities. (Just a note… seriously consider the latter for Payroll Management positions.)

Back in the organisation, sitting in the middle of the HR and Finance personalities is your Payroll Team, a complex mix of all the personality types. Every sizeable payroll team seems to have at least one member who cannot function outside the documented rules, without exception and at least one who spends all their time bending over backwards to ensure the staff are kept happy, possibly at the expense of some of the rules.

One of the hardest tasks for Payroll Managers is to have their team provide outstanding service within the confines of such a regulated employment, taxation and accounting environment and in the timeframes established in the majority of industrial agreements. The primary objective of a payroll service is to consistently deliver fully compliant, on time, best practice, and cost and time efficient payroll processes at a minimal cost per employee, with a zero error rate and zero impact on employee relations. To achieve this in unison with the grey areas of HR, and the black white of Finance, is a constant struggle.

While it is important to understand the differences in personality and objective between Finance and HR, Payroll does not get to sit in the middle as an innocent pawn. Payroll Managers need to understand (and teach their team to understand) HR strategy and to know the impact of their service to employee relations, with the same veracity a Payroll manager will have their team understand the legislative, accounting and compliance issues.

While ever the conflicting requirements between HR and Finance continue on either side of the payroll function, this will not be achieved with any consistency. Your HR, Finance and Payroll Management need to come together and devise a workable strategy that keeps everybody working towards their common and individual goals. HR has to come to the party on the black and white deadlines and compliance, while Finance needs to work into to their authorisations and policies some of the grey HR requirements.

Only by understanding the personalities and the objectives of each of the business units and combining these into a workable solution for the benefit of the whole business, can the payroll team then begin to provide a consistently outstanding, service excellence focused and fully compliant payroll service. The absolute one certainty in all of this is that it doesn’t matter who the Payroll Team report to in the organisational chart. It matters that there is a solid working relationship between the HR, Finance and Payroll Teams so the best of both worlds can be achieved.

Food for thought for your organisation? I welcome your feedback!

If you have any questions you would like to raise personally, please email Louise Vidler at The Professional Payroll Manager.

© 2012 Louise Vidler T/As The Professional Payroll Manager.  All rights reserved.

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13 Responses to “Why HR and Finance Must Both Hold Payrolls’ Hand”

  1. I agree that payroll can exist in either dept and that this required cooperation between the two but do not agree that it is a separate entity — it needs to fit within Finance or HR … otherwise, the CEO has a new direct report (Payroll Manager).

  2. Hi, a good article but really this issue has been discussed for a very long time and as a Payroll professional, while i totally agree that we need to communicate effectively with both HR/Finance departments, I don’t believe that in every organisation Payroll necessarily has to report to either. We should be independent with our own voice heard directly by Senior Management and not have to be led by HR or Finance with their conflicting agendas. Would really like to hear some real solutions suggested as to how others deal with HR and Finance so that Payroll outcomes are met. Both HR and Finance may think they are the most important part of any organisation, but effective Payroll people need to be able to bend both of them to suit their own needs, even if they have to let them believe in their own importance. That’s the skill of Payroll.

    • Hi Gary, Thanks for the feedback. I am not advocating for payroll to report to either of the Finance or HR teams, just that we all need to have a serious relationship for everything to function perfectly. As a long time manager in both corporate and outsourced payroll services, I too believe we should stand on our own feet, but that is going to take a serious mindset change among the HR and Finance fraternity. I’m doing my bit to change the mindset and just need more people like you to join the voice.

      • Hi Louise, the issue is that Payroll has always been historically seen as the poor cousin of accounting and as payrolls become more complex worldwide a Payroll Manager needs to be able to deal directly with senior management at all levels to achieve our core role. This role is not just to feed finance with journals, recs or to satisfy HR with reports, it is first and foremost :
        1. To pay employees correctly
        2. To pay employees on time.
        Anything else is secondary. Any debate on payroll should therefore be seen from this payroll perspective, not from a HR or Finance driven one. Yes lets get Payroll out of both departments.
        Kind Regards Gary

      • I absolutely agree with you Gary!

  3. We are having this battle right now. Payroll was under HR and now moving under Finance. It’s true that payroll professionals have to be skilled at working with both groups, wherever your team sits. Those personalities are so true. Great article!

  4. This is a great article! As in many small companies, I am the entire HR/Payroll Department, and I also do some accounting. I think I do so well, and love my job so much, because I am one of “those people whose personality types allow them to move comfortably amongst the HR and Finance personalities.” Of course, in my situation, if HR, Payroll, and Finance can’t get along, we have bigger issues to deal with, right? 😉
    Joni

    • Joni, I love it! I’m sitting on a crowded train laughing at the image of you conflicting with your “other teams”. Thanks for the laughter before work and thanks for the feedback. Articulated beautifully!

  5. So true, whichever one you are in you must still work with the other. Our payroll service is located in Finance but we work at having a good working relationship with our HR department. Works for us.

    • Thanks for the feedback Connie. Good to see that there are teams that work at the communication. It is so important for payroll to get it right and we do a much better job when everyone is on the same page.

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