Three things payroll software does...but HRMS does better

Payroll may be one of the most success-critical pieces of technology in your organization. After all, nothing impacts an employee’s morale quite like a mistake on their paycheck. And heaven forbid that payday be delayed – that way mutiny lies!

All of which begs the question, should your payroll software be a standalone system (often managed by the accounting department) or should it be a module within your HRMS? As for functionality, both kinds of payroll system can handle wage calculations, tax processing, employment contracts, regulatory reporting, deductions, and benefits management – but which are the deciding factors?

1. Payroll contains sensitive employee data

Before functionality, consider security. With social security numbers, bank account details and salary figures, payroll records contain some of your most sensitive employee information. A jaded employee might not even blink at the loss of confidential corporate files, but tell them you’ve mislaid the number of their bank account or that all their peers now know their salary details and watch their blood pressure explode! Keeping this data in the same secure database as all your other employee information minimizes the risk of loss or breach and also keeps it in the hands of the HR team who are used to handling confidential matters.

Guide: four key principles of managing payroll with HRMS

2. Data integration

Payroll calculation draws on various data sources within your organization – time and attendance information, details of time off taken, the abovementioned employee records. All the relevant data sources are likely to be HR-managed and therefore within your HRMS. If only for ease of data transfer and reducing the potential for corrupted information or errors, it makes perfect sense for your payroll to be part of your HRMS.

What’s more, any number of employee changes can impact on their payroll calculation, including promotions, benefits changes, alterations to deductions, one-off bonuses, AWOL or sick absence, transfers, a suspension or even termination. Again, all HR data and therefore more efficiently and accurately accessed from inside the system.

3. HRMS payroll offers tangible benefits

With the efficiencies of integration come real benefits for both the organization and employees. First, a lower payroll error rate means accordingly less time is spent correcting problems. Second, HRMS payroll automation is usually hand in hand with time and attendance functionality, meaning that timesheets are more accurate and less subject to fraud. Third, payroll automation usually incorporates necessary compliance actions, keeping you on the right side of labor legislation (and a service contract for maintenance and updates usually puts the responsibility for implementing compliance changes on the vendor).