Rob Silzer a famous author & Psychologist once said, “Financial Resources may be the lifeblood of a company, but human resources are the brains”. In today’s world HR & payroll truly play an important role for an organisation to run smoothly.
Human resources (HR) are that part or division of an organisation who is responsible for sourcing, screening, recruiting, training job applicants, as well as administering employee-benefit programs. HR plays a key role in helping companies deal with a fast-changing business environment and a greater demand for quality employees.
Payroll is the compensation an organisation must pay to its employees for a set period or on a given date. This requires a collaboration with the company’s HR team, accounts team & Payroll Team. It is usually managed and overlooked by the accounting or HR department of a company or outsourced to a Payroll Specialist. Small-business payrolls may be handled directly by the owner or can be given to a third-party payroll company to manage.
It is seen that Payroll & HR overlap in a way that is crucial to maintain a thriving organisation. Although both roles serve different functions in an organization, they are both similarly involved in employee relations.
Integrating these two functions can help mitigate risks & help ensure continuous organisational growth.
Let’s look at the top reasons why HR & Payroll are crucial for business success:
- Statutory Compliance
It’s the responsibility of the payroll department, which is its own independent department in many organizations to administer salary transfers or pay checks to employees. Consistency & Accuracy with statutory compliance is key here. An employee’s relationship with management is built on a foundation of trust where the payroll process is accurate, steady & stable. Similarly, HR helps to communicate transparently this payment information to the employee upon hire. With a smooth functioning payroll department coupled with a dedicated or
outsourced HR team, your employees will know how & when they’ll get paid. Statutory compliance such as TDS, Income Tax, EPF, Professional taxes & ESI are all managed & Complied by the HR & Payroll Team.
- Employee Retention
Retaining employees is a top priority for many organisations. If your payroll process is irregular & your HR department poorly communicates Salary pay out information or does not comply to government taxation rules, it would probably be difficult to retain tour employees. Whenever an employee resigns from his current role, it is the responsibility of the HR to intervene immediately to find out the reasons which prompted the employee to resign. It is the duty of the HR to sit with the employee and discuss the various issues face to face and hear the employees’ side of the story.
A crucial role for hr is to try to provide a solution to his problem and that is possible thru salary negotiations as a retention strategy. If the employee feels his salary is not justified, the HR team negotiates and tries to match the salary upto the expectations.
- Help strategize organization goals
Both departments work to protect vital employee & company interests. They are super aligned and focussed to the Company vison, mission, and goals. They aim to achieve this balance in a variety of ways, but primarily, they strive to keep sensitive data secure. HR improves the company’s bottom line thru HCM (human capital Management), with the knowledge of how human capital affects organizational success. Leaders with expertise in HR strategic management participate in
corporate decision-making that underlies current staffing assessments and projections for future workforce needs based on business demand.
- Budget Control
The HR department develops methods for trimming costs associated with workforce management. This helps the payroll team to curbing excessive spending and helping to save the company money in the long run. These methods may include negotiating rates for employee benefits such as health, medical & Life insurance. In addition, the HR department studies and analyses employment trends, the labour market and salaries based on job functions to ensure the company’s wages are competitive and realistic in nature. Since most Small to medium size
organisations have strict budgets to which they must adhere, this function of the HR department is particularly helpful. HR plays and important role and that is to Structure the Compensation & Benefits of every employee in the organisation. For payroll to disburse salaries the C&B team needs to plan the salary budget decided by the management.
- Smooth Functioning thru distributed ownership of duties
At times there is an overlap of ownership. Many payroll activities are related to HR issues so the payroll & HR Team must coordinate shared functions.
This includes functions like:
Recruitment- Salary Increments
- Bonus Pay-outs
- Benefit Deductions
- Vacation & Leaves
- Exit formalities
The HR Department must be sensitive to the time devoted to payroll processing because they’ll face issues directly if Salaries aren’t processed correctly and on time.
The payroll and HR department has access to confidential employee data, including financial information and home addresses. The two departments must work together to ensure that this information doesn’t fall prey to unauthorized individuals or companies.
A company is only as good as its people; and the HR team oversees building & maintaining a strong dedicated team. A good HR team with the right resources will help your organisation get the most out of your employees.
Trust amongst the team is very crucial and one of the most important functions of HR team is to build trust. They are custodian of confidential information and its important for the HR & Payroll team to maintain confidentiality. In addition, the HR team has to protect sensitive employee information. They must maintain confidentiality about management information that is not available to nonmanagement employees or outsiders. Such information could include changing business strategies & processes, layoffs & business proprietary data.
While HR & payroll may have different functions, they are deeply linked through their organization’s people.
By working with each other to understand each other’s roles & by leveraging the right tools, HR & payroll teams can work better together, build a stronger partnership, and create more efficient & accurate processes that, ultimately, will have a positive impact on their organization & their employee experience.
Likewise , HR Consulting services & Outsourcing has always been a key method for organisations to reduce operating costs, streamline internal processes, and help them focus on core business operations. Multi Recruit , Being an Expert in HR consulting & outsourcing with more than 7 years of experience has specialised in creating, managing & implementing HR processes & Policies. We have the knowledge, technology, and best practices to support you in all aspects of human resources and employment administration.
Our HR solutions are designed to provide companies with a Dedicated Resources to managing and support all HR and employment processes, thus allowing you to focus on the key business areas.