I have many conversations with many people. It is a fundamental part of my job. Some of these people are employees, some customers, some potential customers, and some with my broad network of associations, advisory organisations, analysts, the press, market research companies, etc. On the topic of HR & payroll, which accounts for most of the subject matter I discuss, I am often asked about the importance of HR & payroll and its role in the business.
What is clear is the importance of HR is deemed higher than that of payroll. If you ask any payroll professional, I think they would agree that payroll is not seen as a high-profile piece of the jigsaw puzzle and arguably never has been. Many organisations see payroll as a process that just happens with noise around payroll only made when there are mistakes and problems and payroll silence being the goal as it reflects a successful and accurate function. It’s this silence that causes the profile of payroll to slip down the order of priority and therefore attracts a false reflection that it is not important.
But HR is also important. Transactional HR drives an accurate payroll. A workforce interacts with HR via technology, so their experience of that interaction drives employee satisfaction. A good HR technology showcases the organisations investment in its people and the importance of employee’s engagement. I think most HR professionals would agree that an efficient HR function uses strong technology, automation, employee and manager self-service, minimal manual processing, and a lean department of back-office HR professionals.
On almost a weekly basis, I have conversations where I hear that an organisation has invested heavily in HR technology without any consideration for payroll. Some of these organisations have not even considered payroll within ‘the plan’. It is not uncommon to hear about organisations who have spent tens and hundreds of thousands of pounds in their HR technology and after adopting it, expect to bolt on a cheap and basic payroll like a shed on the side of a stately home. And I have no idea why.
The Employment Rights Act 1996 includes a legal requirement for employment contract to state the date on which the employee will be paid and how much (via rate or salary etc). Therefore, in cases of not paying an employee on time or paying an employee inaccurately (i.e., underpayment) arguably could be construed as a deduction from wages. As the payment date is a contractual term, failure to adhere to this can be a breach of contract and employees have the right to initiate legal action on their employers if they feel there has been a breach in their employment contract. From initial research, these claims look to potentially result in up to a five-figure compensation figure if it is found that there was a breach.
Legal obligations and implications aside, missed or incorrect payroll is not a pleasant experience to be on the receiving end of either. I don’t know many people who aren’t reliant on that paycheck landing prior to a boat load of direct debits being paid out of their accounts; mortgage, insurance, loans, phone, credit cards, fees, etc. So, a missed pay date, or an underpayment is painful and if late payment charges are subsequently involved, expensive for the employee. Not to mention potential claims of charges, inconvenience of manual corrections and advances, off cycle corrections, time, administration for the business, the emotional and frustration element destroys employee confidence, trust and engagement.
I think it would be safe to say that in a payroll failure situation, your employee would prefer a well invested and accurate payroll solution over a well invested HR solution experience.
But remember, it’s not a competition; my advice would be to invest equally in both and provide human experience knowing that behind the HR system is a payroll that’s not at risk of failure because funds ran out or the profile of payroll in your business is low.
My advice to anyone looking to invest in HR (and payroll) is level up the game and if you can’t do that in your organisation, speak to me personally because I will help raise the payroll profile in any organisation, as I do week in and week out.
I have worked in this industry for many, many years and have seen and witnessed some amazing and horrendous scenarios in both HR & payroll. The only thing that unifies them all is that whatever the outcome, it always impacts people. Your people.
So, if your organisation recognises payroll as an important and accountable process within your organisation, then I commend them. Your organisation is one I would be happy to work in. But if your organisation is guilty of a low profile for payroll then it is important that we, as HR & payroll professionals, raise the profile of payroll and give it the recognition, priority, and investment it deserves.
If your organisation does not view your payroll as a priority, why not look to outsource the function to an organisation whose core business function is HR and payroll? Let the Zalaris team look after it for you, because for Zalaris, nothing is more important to us, than your payroll. If you are interested in a no-strings-attached conversation, reach out to me – conversations are always free.