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Why You Should Be Thankful for Payroll

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Why You Should Be Thankful for Payroll

If you have ever worked in payroll, this will probably sound familiar to you. Years ago when I worked in a busy payroll department, we had a name for ourselves: the cesspool. Everyone was always dumping on us.

Such is the working life of many payroll professionals. Nobody ever calls payroll when they’re happy with their check, but you better believe payroll hears about it if somebody gets paid wrong. Payroll workers are often treated terribly by employees and by the business.

In reality, payroll is one of the most secretly influential departments and a vital part of any business. Though most people think payroll is “just the push of a button,” it is much more complex than that. Most payroll teams are ready and able to be a strategic partner — but only if you empower them to contribute in meaningful ways.

Any strategic partnership has to start with a healthy understanding and appreciation of the partners and their objectives. With that in mind, here are three reasons why your organization should be thankful for payroll this holiday season.

Payroll Is More Complicated Than You Think

Most people don’t realize the complexities that go into running payroll. They forget that HR, benefits and many other inputs all feed into payroll. If any one of those inputs is wrong, payroll usually gets blamed. Simply put: If you give payroll bad data, you’re going to have bad payroll results. I believe it helps to conceptualize payroll as a reporting tool, with the pay statement as the report that comes out.

It’s also important to remember all of the human inputs from other departments that go into that report, and how those data points aren’t always well-planned. That’s because decision-makers in the business often don’t understand or value the payroll process when they’re putting these requests in, and payroll usually doesn’t have much leeway to push back.

Take bonus payments, for example. Many companies process bonus payments off-cycle because they want them to be special payments, which can be problematic. Sending an off-cycle bonus request to payroll usually triggers an exception process that requires manual inputs. More manual inputs means a higher possibility of mistakes, but the people doling out the bonuses don’t take this into consideration.

Similarly, I’ve seen numerous payroll clients get last-minute requests to process payments because the business units don’t understand the payroll process enough to know that it takes two days to complete a direct deposit. They simply send a note that says, “We’ll need this paid tomorrow.” They don’t understand the process requires a printed check that often has to be mailed or overnighted.

These are just a few examples of the behind-the-scenes complexity that is an inherent part of payroll but is rarely appreciated. Even a little more understanding of the process could go a long way toward improving payroll’s relationship with the rest of the business.

Payroll Can Be Strategic with the Right Support

Payroll typically isn’t thought of as a strategic business unit; it’s seen as a service that is transactional only. But I’d warn that companies taking this approach are missing a major opportunity to add value to their organization.

Organizations should be talking to payroll about best practices regarding payments, and working with payroll to build processes that support those strategic policies. In many organizations there should be a team that can build and strengthen those processes by intelligently pulling in key information such as compensation data, salary data, benefits data, sales compensation data, commission data — anything that ends up on a paycheck.

Smart companies encourage business units to collaborate with payroll to improve processes and implement standards around them, while also putting some guardrails around payroll so that the department doesn’t have to respond to every whim of every unit without a voice.

Payroll Saves You Time and Money

Payroll is a valuable, money-saving business function, often auditing and fixing challenges behind the scenes, but few people understand this. And I’ll admit it: Payroll is usually quite ineffective at public relations. It often fails to explain via data and statistics how it has audited to make sure employees get paid correctly. But the value it adds is undeniable.

For example, I’ve seen an empowered payroll department help an organization realize that paying people monthly in advance was causing it to lose a considerable amount of money on overpayments when people left the company. Other times it helps the business understand why biweekly is a better process for payments from a financial standpoint, or why paying weekly is challenging because of limited resources. These are the types of dynamics that should be openly discussed at any company.

Whether payroll sits in a shared services organization, HR or finance, leaders in these parts of the business should be driving these important, collaborative conversations. If your company is still treating your payroll department like a cesspool, you’re wasting a valuable and strategic partner that can play a vital role in your success. It’s time to show a little appreciation.

Kimberly Carroll loves change and helping others through her role at IA. Kimberly’s clients look to her as a sounding board, therapist and mentor. She is passionate about change and using her background to influence HR leaders to truly transform their organizations.

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