How HRMS improves your payroll processes

Compared with introducing employee self-service, or digitizing your recruitment strategy, improvement of payroll processes is situated in a quiet commuter suburb on the outskirts of Dullsville. However… While it may not be seen as ‘sexy’, using the introduction of new HR technology to review and upgrade the nuts and bolts of how HR is done can be one of the most transforming aspects of HRMS for your business.

In fact, a recent HRMS report found that more than 30% of businesses selecting a new HRMS system listed Payroll as a must-have requirement. Put simply, any new software is an opportunity to review and examine the current processes for potential improvements and payroll is no exception.

What are you aiming for?

In a nutshell, ‘payroll maturity’. A mature payroll process is accurate, efficient, consistent, and is satisfactory to employees. It’s also almost always automated. It’s good to consider the four stages of increasing payroll maturity:

• Immature – decentralized processes, high error rates, little or no self-service access for employees, limited reporting.
• Reactive – payroll managed according to country or region, processes may be time-consuming, human intervention or input is necessary.
• Controlled – regionally centralized, both employee and manager self-service, largely automated processes, a variety of reporting options.
• Strategic – single unified payroll system, integrated with other business systems, standard processes are automated, employee satisfaction is high.

The impact of HRMS

How can a new HRMS help your business develop a payroll system of greater maturity according to the above scale?

Less human error
The more your payroll processes are automated, the less fallible human input, the more accurate the data contained in and used by the system. Given that the slightest error in an employee’s payroll tends to generate complaints, this positive aspect has a very practical benefit.

Consistent process
The problem with any HR process, including payroll, is that the more it depends on people, the less consistently it is carried out. This raises an obvious fairness issue in that some employees are effectively treated differently to others. Process review exercises, and the resulting improved consistency of results, means a more efficient system.

Better compliance
Compliance with labor laws and government/federal regulations is especially important for payroll with strict recordkeeping, withholding, and reporting requirements that depend on accurate information, including employee status and time and attendance records.

Once the system is set up correctly, you can relax knowing that most modern HRMS with an integrated payroll module will automatically calculate the correct federal and state income tax, Social Security and Medicare responsibilities, and benefits withholdings for your company. Similarly, such systems may include automatic updates regarding compliance legislation as part of the ongoing support and maintenance package, ensuring your payroll practices are current and compliant.

Any new technology should prompt a review of the system it is supporting, if only because sticking to the old way of doing things restricts your HRMS to behaving like a human being, thus losing out on potential performance enhancements to your payroll system… and the consequent improvement in the HR and Payroll team’s reputation, of course.