background img

The New Stuff

Survey reveals that opinion is split as to where payroll should sit within an organisation

 A survey by UK business management and information systems
provider, Advanced Business Solutions, reveals that opinion is divided as to
where the payroll function should sit within an organisation. The majority
of respondents do, however, agree that payroll needs to be connected with
the HR and finance departments regardless of where the function resides.

Advanced Business Solutions carried out the research with 79 human resources
(HR) and payroll professionals from both the UK and the USA.

The survey reveals that 36 per cent of HR and payroll professionals believe
that the payroll function should sit between an organisation’s HR and
finance departments. 25 per cent state that the payroll function should
reside within HR and 24 per cent believe that the function should be part of
the finance function. The remaining 15 per cent of participants took the
view that payroll should be outsourced to a third party payroll specialist.

One of the respondents, a UK HR professional, who believes that payroll
should be part of the HR function, states: “Payroll contains confidential
and financial information and for that reason it should stay within HR.”
In contrast, another respondent, a UK payroll professional comments:
“Payroll is a big part of any department’s costs and so must be held
under finance.”

Simon Fowler, Managing Director of Advanced Business Solutions (Commercial)
says, “These findings highlight the uncertainty about the payroll function
in general. As payroll naturally spans both HR and finance, it appears to be
the precious orphaned child of an organisation – highly valued but without
a clear home.”

Although opinion is divided as to where payroll should sit, the majority of
respondents believe that the function is important to both HR and finance
and should therefore be connected to both functions as highlighted by the
following respondent: “…from an accounting standpoint it makes sense for
payroll to be under the finance umbrella, but from a pure employee
standpoint it is more sensible to have payroll fall under the HR function.
However it really doesn’t matter as long as the functions are

Fowler agrees that it is vital that payroll is linked with both HR and
finance and that having the right integrated software systems in place is a
key enabler: “Payroll is crucial to both HR and finance and so needs to be
linked with both functions. Integrated payroll, HR and finance software
systems are vital to achieving this connected, joined-up approach.”

Fowler adds, “If payroll systems and processes operate in isolation from
the rest of the organisation, the payroll function is not operating as
efficiently as it could be. By duplicating data entry across the different
payroll, HR and finance systems, this could result in administration errors
and lengthy processes. A standalone approach to payroll also fails to
deliver a single, holistic view of each employee which could result in
ill-informed decision making.”