HRMS Payroll Management: The Pros and Cons
When it comes to IT options for payroll, you’re definitely spoilt for choice. You could manage it through your HRMS payroll module, your ERP or instead go for a best of breed stand-alone payroll package. All three options offer benefits; the only choice that’s a definite no-no is trying to run it all from an Excel spreadsheet (although there are many who try).
If you go for the integrated approach, then the choice of siting your payroll within HRMS or ERP (assuming you have both) is probably down to which department has the bigger stick: HR or Finance. Either way, there are some pros and cons to having that functionality as part of a bigger system.
Pros and Cons
For a start, there’s compatibility. When your HRMS payroll module needs to draw on the employee database and lift out names, numbers, bank accounts and so on, there’s less likely to be a glitch or a problem with the access and therefore a reduced likelihood of over- or underpayment (or no payment at all!). When it comes to payroll, that’s a pretty fundamental performance indicator.
On the front end , you have the user experience. Whether it’s the payroll administrator accessing the system to run that month’s salary, the shop floor employee who wants to check their online payslip, or the CFO running a report for a board meeting, the interface should be intuitive and easy to use. Part of that ease comes from being accessed via a single portal and having a similar feel and functionality to any other self-service operations. This is, of course, much easier to achieve when the payroll software is part of a larger uniform whole.
The only choice that’s a definite no-no [when managing payroll] is trying to run it all from an Excel spreadsheet (although there are many who try).
Cost can be another issue: purchase, installation, maintenance, upgrades… the total cost of ownership of any business software is far more than the figure on the initial price tag. There’s little doubt that putting all your eggs (functions? modules?) in a single HRMS vendor’s basket usually leads to cost and process savings. The balancing risk of course is that should the basket crash then everything is at risk. From a business continuity point of view, many businesses like to keep payroll separate for just that reason.
Finally, the choice will depend on your business needs, your wider IT strategy, your budget and your attitude to risk. If you do decide to go the separation route, keeping your payroll management apart from your other HR and business functions, then integration becomes your biggest issue. Whichever best of breed supplier you choose, they have to convince you that their system can effortlessly chat to your employee database, your time and attendance software, your leave management records, and your finance system. It can be done, of course, but probing questions up front will save awkward moments (and failures) later.
Featured white papers
A payroll compliance checklist for US companies
A run-down of all the payroll compliance requirements your HRMS should help you hit
Three things payroll software does...but HRMS does better
Improvements to expect when you start managing payroll with HRMS
How to select an HRMS that will grow with your company
Ensure your HRMS selection team picks scalable software with these tips