Three difficulties of managing payroll internally
There are many advantages when you manage your payroll internally. You can design and control the process from start to finish to be sure that it meets your standards. Managing payroll internally is not always an easy job. Here are three difficulties that can challenge companies and how to overcome them.
1. Keeping informed about new laws, regulations and rules
Payroll team members and managers need to be aware of an intricate mix of local, state and federal legislation. An HRMS with a payroll module will usually incorporate federal and state changes in a timely manner but your team needs awareness about any changes in calculations. Local tax laws that go down to the county level can be particularly cumbersome to manage as there are so many variations and they come into effect at different times.
A key component to help your team to stay ahead of legislative changes is continuing professional development (CPD). Your payroll group needs adequate training to be sure that they are in compliance with changes in laws.
2. A diverse workforce adds complexity
Many companies have a global presence and will send expats on assignment to other countries. Global employees may require special handling due to additional allowances and split payments in the hosting country’s currency.
A survey suggests that 16% of organizations pay retirement benefits through their payroll departments. Retiree payments add another dimension of intricacy to your existing operational processes for regular employees.
Temporary employees are another area of concern. Temps are often excluded from the payroll and instead paid by agencies. Certain short-term workers such as interns may be included in the payroll process for cost saving reasons. When you have many different populations to pay, clear guidelines, processes and schedules are critical for your success.
3. Payroll’s position in the organization
Payroll departments occupy a unique position in a company as they need both HR and finance data in order to generate a correct pay run. If you reimburse expenses on your payroll it is another gateway to another team’s data and processes. If an employee’s paycheck is incorrect the payroll department is the first level of support to investigate any issues and to liaise with other teams.
An internal team can sometimes struggle if they are not empowered or respected within an organization. The payroll team provides customer service to employees but is also the contact point between other business functions. Make sure that your payroll team is staffed with strong collaborative leadership and that your company provides full support to your payroll team’s activities.
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