Even with payroll software development, serious problems continue to plague organizations’ ability to optimize the payroll management process. Overwhelming manual labor, costly errors, and outdated employee data remain timely and costly culprits. One study found that about 40 percent of organizations spend 80 or more hours annually on processes involving taxes, payroll, and accounting.
Enter HR payroll system integration
In response, companies have sought out ways to improve the payroll process. This is where HR technology has proven to be highly effective. An HRIS can streamline operations across business functions, including payroll management. So much so that a Deloitte study revealed that integration with other systems is one of the top three ways that organizations are seeking to enhance their payroll operations.
There’s an undeniable logic behind payroll integration. HR software gathers employee-related data that the payroll department also needs. Not integrating the payroll function into an HRIS, on the other hand, only creates mounds of time-consuming manual data entry and redundancy. A well-conceived HR payroll system, then, empowers both the HR and payroll teams to access the same information.
There are several powerful benefits associated with payroll integration:
- Optimizing analytics: Deriving actionable insights from people analytics is the key to better decision-making. This reality of today’s working world also applies to an organization’s payroll department. An organization’s HRIS functions as a single source of truth, containing all the information a payroll team needs to function optimally. An HRIS provides real-time information via a single database and reporting platform. A good payroll integration can then, for example, feed data back to the HRIS, which informs people analytics and reporting on important KPIs.
- Boosting engagement: The payment process is crucial to the employee experience. Payroll-related mistakes can quickly cause staffers to lose faith in their respective organizations. Repeated errors that go unaddressed are likely to lead people to start thinking about leaving a company. However, integrating your payroll into an HRIS largely eliminates confusion since time and attendance, payroll, employee records, and other HR-related needs are managed through a single interface.
- Payroll saves time, so HR focuses on people: A payroll integration dramatically reduces the amount of time spent exporting and importing data from one system to another. For example, fully integrating an organization’s time-keeping function with its payroll solution does away with the laborious task of keying in hours worked—data that payroll needs to complete to process staffers’ paychecks. The time HR saves addressing staffers’ payroll-related issues can then be used to focus on such people-centered priorities as building company culture, performance management, and learning and development strategies.
- Compliance? Covered: A payroll integration enables organizations to comply with complicated government tax regulations easily. This is because when your payroll is integrated into your HRIS, key functions like managing overtime, attendance records, and taxes are fully automated. Some integrated systems can even notify payroll if an organization is in danger of being non-compliant and automatically provide the information required for proper reporting.
- HRIS does away with silos: It’s worth noting that some payroll solutions do include certain HR functions, like time and attendance. However, organizations should be aware that these capabilities are not the same as HRIS platforms that help HR update and automate daily tasks, strengthen company cohesion, and provide a centralized source of people data. The risk companies run by using a payroll solution that only includes basic HR functionality is that it creates at least two independent systems that often don’t communicate with each other. Such a siloed mentality is bound to reduce organizational efficiency and, more importantly, weaken workplace culture.
Payroll integration for pain-free growth
Smaller organizations tend to rely on basic payroll software to manage staffers’ salaries. But things become increasingly complicated as a company goes into growth mode. The desire to one day modernize an organization’s people management system becomes a pressing necessity. This is the inflection point where an HRIS can bring much-needed precision to functions shared with payroll, including recruitment, salary, bonus payments, vacation leaves, and benefit deductions.
Besides the long-term benefits of payroll integration, there’s an interesting statistic that HR leaders may want to keep in mind when pitching the idea to their organization’s decision-makers: companies that adopt a unified HR system spend 25 percent less on HR admin per employee. Pain-free growth indeed.
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Adi Janowitz is VP of Customer Success at Hibob. Adi has vast experience in building and leading Customer Success organizations in SaaS companies. In her recent role, she re-built the EMEA CS department at WalkMe. Prior to that, she built the Idomoo global CS org from the ground up. Adi’s focus is on boosting retention by building a scalable KPI-driven CS organization while creating KPI coherency for the entire company.