Everything you need to know about HRMS payroll
First of all, a brief caveat. Do the next thousand words or so contain everything you need to know about HRMS payroll? Unlikely. They do contain a lot of very useful information; including an overview of the core differences between HRMS payroll and ERP payroll, and the advantages and disadvantages of using HRMS payroll. And, a selection of very useful links to other HRMS World payroll resources that should answer any questions raised as you read on…
These days, it’s common to find payroll bundled up in the features of an HRMS. It makes perfect sense in terms of data. Most HRMS options include time and attendance, workforce scheduling and absence management; exactly the data needed to calculate payroll. What’s more, there are also opportunities – with more sophisticated systems – to draw on performance statistics and venture into the world of predictive analytics, comparing performance and rewards, accurately identifying your high-flyers, and even profiling them for characteristics that can be fed into your recruitment campaigns.
At its most basic, a payroll function will calculate and pay salaries, withhold the appropriate taxes and deductions, and organize the printing and delivering of paychecks.
But if you’re faced with the choice of purchasing an HRMS that includes payroll or having it either standalone or wrapped up in an ERP system, there are a few factors – and pros and cons – to consider.
Differences between HRMS and other payroll systems
Automating payroll carries clear advantages, including:
- Easy access to compensation and reward data.
- Less need for data input (if the information is already in a system, then the payroll software can be set up to access it, ensuring single input).
- A reduction in staffing time and overheads.
- A coordinated approach that doesn’t rely on a collection of databases, files, and spreadsheets.
Which automation option you choose depends, as ever, on the business needs of your organization but there are some broad factors which should influence your decision.
- Integration: whether part of a single HRMS or a standalone module, your payroll needs access to relevant data to do its thing. That means integration, whether as part of a single package or through smooth access to the information kept in its ‘sister systems’. But more than simple access to data, integration includes following through on the implications of events or actions. For example, booking an employee onto a training event should automatically take them off the work schedule during the event; it should also trigger pay-related consequences, such as payment of additional supplements or different rates.
- User experience: as with any software, the UX is critical. Is it user-friendly? Does it process quickly enough to avoid frustration? Are relevant updates made seamlessly, giving users confidence in the system? A useful perspective is to view a system according to the quality of its self-service options. Are they easily understood by users? Do they add real value and convenience for users?
Payroll advantages using HRMS
So, what’s in it for you to opt for HRMS payroll?
- Compatibility: when all the data is kept in the same system, and staffing details (names, numbers, bank accounts and so on) are kept up to date by the employees themselves, payroll errors are reduced, including the possibility of over or underpayment. For payroll, this is basic-but-essential stuff, paying people correctly.
- Single portal access: if all HR-related systems are accessed from the same point, the ease of the user experience is improved. Whether it’s a worker wanting to check their paycheck, or a CFO interpreting the figures ready for a board meeting, you’re looking for something intuitive and simple (and preferably, in line with your other business systems in terms of usability).
- More secure data: your payroll records contain a great deal of sensitive personal information (including social security numbers, bank account details, and salary figures). When all such data is kept in the same secure location, the risk of a security breach or data loss is minimized.
- More accurate data: an HRMS payroll, by virtue of its integration, means fewer errors. Which means, consequently, less staff time spent on correcting such errors.
- Less opportunity for ‘deliberate errors’: the administration of timesheets and time and attendance by the same system usually means a closer focus on such recordkeeping and therefore less chance of time theft or other fraud.
- Cost: total cost of ownership includes far more than the figure on the system’s price tag, incorporating a number of costs that may be somewhat less obvious. Naturally, one system that includes all your HR functions will be less expensive than buying two or more systems and then persuading them to talk to one another.
- Compliance: a significant benefit of any automated business system is improved legislative and regulatory compliance. However, the relevant labor laws change, the right HRMS payroll module will keep you on the right side of official scrutiny.
Potential disadvantages of using HRMS
- All the eggs are in one basket: dealing with a single system and vendor can be convenient, less complicated, and more cost effective. However, the flip side is that should the system crash or otherwise cause problems, everything and everyone is at risk of a payroll error. If business continuity is of special importance, then keeping systems separate might be a better move.
- Not all payroll is the same: some larger companies may have different departments handling their own payroll. If so, the likelihood is that those different departments have different systems, differing priorities, and even different attitudes. Any move to bring everyone together in a new way of doing things is likely to encounter teething troubles, resistance, and miscommunication.
- Setup costs: yes, payroll integrated with your HRMS is often a good thing and offers longer-term cost savings, but making the shift can be expensive up front. For example, a new system often means user training and more in-depth training for those HR staff who must administer the system. As with any technology purchase, before you start, be sure that the investment is likely to pay off.
Which system should you choose for payroll?
Though different organizations’ needs and requirements will of course vary, this is a short list of well-established vendors providing HRMS with payroll included to start you off:
APS stands for Automatic Payroll Systems, which is a bit of an indicator of the company’s history and of its strong focus on payroll management. APS are a leading name in the field and their software offers streamlined payroll functionality integrated with the expected HR processes, including time and attendance, recruitment, and absence management. A variety of employee and manager self-service features are available, including via mobile.
A well-established vendor specializing in small to medium-sized businesses, BambooHR’s cloud-based platform includes payroll. With multiple language and currency options, the system may be particularly well-suited to organizations with a global reach.
Another long-standing brand, the Kronos’ Workforce Ready platform is cloud-based and offers payroll alongside recruiting, onboarding, performance management, compensation planning, time and attendance, scheduling, and absence management.
A fully configurable, all-in-one HR, talent management and payroll system, UltiPro is used to handling millions of employee records across its combined cloud accounts.
ADP Workforce Now
Another ‘big name’ in payroll and HRMS, Automatic Data Processing may be the oldest name in workplace automation, combining payroll with benefits management, compliance, and a range of analytics and benchmarking functionality. All modules use a single database for reduced input and administration and users have a range of self-service options.
Any employer needs reliable payroll and the business case for automation (fewer errors, greater efficiency, reduced costs) is hard to beat. Though it may not be the best option for every organization, HRMS payroll is usually an easy option with possibilities for wider benefits, linking as it does your payroll calculations to your wider HR activity.
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