In working with an HRMS client recently, I broached the issue of how payroll would be included in our project. He laughingly replied, “All I want to know about payroll is that I get paid!” His reaction is not unusual in the HR world.
HR and payroll are like squabbling siblings — close enough to need each other but each preferring their own company. The great debate, over the time I have been in HR, has been the proper reporting structure for the payroll function. Should it report to HR or is it a finance function?
Each company seems to be different. Some companies take the position that close control of the financial aspects of payroll requires a separation of duties between HR and payroll to ensure that someone cannot divert payroll dollars on their own. Others feel that proper audit logs and reconciliation maintain sufficient control and that HR is the natural home of the payroll function.
Ian Turnbull, president of the International Association for Human Resource Information Management (IHRIM), flatly states, “Payroll is simply the operational end of the compensation function in HR. The financial component is minimal and can be addressed in finance.”
Bob Nadeau, retired director of payroll accounting for a large international company and, like Turnbull, an IHRIM board member, firmly agrees payroll must be an integral part of an integrated HR system. He says, however, the operational responsibility of the payroll function is better served within the financial department.
He notes payroll functions extend beyond the boundaries of HR. He sees it as an accounts payable function responsible to pay employees and third parties such as revenue taxation departments, union dues, benefit carriers and credit unions.
In his opinion, “Payroll has an audit responsibility to ensure company HR policies, taxation regulations, payment regulations and schedules are adhered to, and, it is responsible for accounting determinations, accruals, forecasting expenses, reconciliation of payrolls, banking, payments to third parties.”
Ultimately both HR and payroll overlap when it comes to employee information. Each needs some fundamental employee information, such as employee name, address and salary, to enable each department to function. The greater question is: where does the data reside?
In the recent survey, HR Management Systems: Are They Making a Difference?, conducted by Canadian HR Reporter, ARINSO and Affinity Systems, 64 per cent of companies responding to the question “Is Payroll integrated with your HRMS?” answered with a “yes.” The remaining 36 per cent of companies stated that payroll and HR information were not integrated.
We followed with the question, “If payroll is not performed on the HRMS, where is it performed?” This time the results were evenly split between those that outsource payroll to a third party and those operating their own payroll system.
Since Canada’s banking institutions decided to exit the payroll services market, the market in Canada is split between two major services providers, Ceridian and ADP. A few small providers still serve the small business market but the giants seem to have an equal footing in the market with our survey indicating that they split the market with 38.2 per cent of the market each. Three companies did not disclose the name of their payroll provider. Smaller payroll providers were companies such as Packwood Payroll or Exclusively Payroll Inc.
In our survey report we analyzed differences between those that had integrated their payroll services and those that had not. There is no clear trend between those companies having large sophisticated HRMS/payroll capabilities and other systems targeted more at the small- to mid-company market. It is interesting to note that some companies even though they use the ADP and Ceridian systems do not integrate their HRMS and payroll data.
John Johnston is the director of strategic consulting and e-HR Solutions for ARINSO International, a leading Canadian HR systems consulting firm active in the implementation of SAP HR/payroll software and the use of innovative Web-enabled systems for HR areas such as e-recruiting, e-learning and employee portals. He can be reached at [email protected] or visit www.arinso.com. The contributions of Bob Nadeau in the preparation of this article are gratefully acknowledged.
SIDEBAR
Payroll data from our HRMS survey
Conducted during August 2001, the survey HR Management Systems: Are They Making a Difference? represents a partnership between Canadian HR Reporter, ARINSO International and Perceptor Solutions, a division of Affinity Systems Limited. ARINSO, a well-respected Canadian HR technology consultancy, provided both direction and data analysis. Perceptor, a leader in automated surveys, designed the survey questionnaire and tabulated the results.
We received 378 responses from a mix of public- and private-sector organizations, of which 185 have implemented an HRMS. The statistics in the accompanying payroll article represent data from this later group of 185 respondents.
The first installment of results from the survey were reported in Canadian HR Reporter’s Oct. 8 Guide to HR Technology, available at www.hrreporter.com, select “search” and enter Article No. 1448.
A complete report on the survey will soon be available at a cost of $175. To reserve a copy, contact Julie Shreve at (416) 298-5141 ext. 2642 or [email protected].
HR and payroll are like squabbling siblings — close enough to need each other but each preferring their own company. The great debate, over the time I have been in HR, has been the proper reporting structure for the payroll function. Should it report to HR or is it a finance function?
Each company seems to be different. Some companies take the position that close control of the financial aspects of payroll requires a separation of duties between HR and payroll to ensure that someone cannot divert payroll dollars on their own. Others feel that proper audit logs and reconciliation maintain sufficient control and that HR is the natural home of the payroll function.
Ian Turnbull, president of the International Association for Human Resource Information Management (IHRIM), flatly states, “Payroll is simply the operational end of the compensation function in HR. The financial component is minimal and can be addressed in finance.”
Bob Nadeau, retired director of payroll accounting for a large international company and, like Turnbull, an IHRIM board member, firmly agrees payroll must be an integral part of an integrated HR system. He says, however, the operational responsibility of the payroll function is better served within the financial department.
He notes payroll functions extend beyond the boundaries of HR. He sees it as an accounts payable function responsible to pay employees and third parties such as revenue taxation departments, union dues, benefit carriers and credit unions.
In his opinion, “Payroll has an audit responsibility to ensure company HR policies, taxation regulations, payment regulations and schedules are adhered to, and, it is responsible for accounting determinations, accruals, forecasting expenses, reconciliation of payrolls, banking, payments to third parties.”
Ultimately both HR and payroll overlap when it comes to employee information. Each needs some fundamental employee information, such as employee name, address and salary, to enable each department to function. The greater question is: where does the data reside?
In the recent survey, HR Management Systems: Are They Making a Difference?, conducted by Canadian HR Reporter, ARINSO and Affinity Systems, 64 per cent of companies responding to the question “Is Payroll integrated with your HRMS?” answered with a “yes.” The remaining 36 per cent of companies stated that payroll and HR information were not integrated.
We followed with the question, “If payroll is not performed on the HRMS, where is it performed?” This time the results were evenly split between those that outsource payroll to a third party and those operating their own payroll system.
Since Canada’s banking institutions decided to exit the payroll services market, the market in Canada is split between two major services providers, Ceridian and ADP. A few small providers still serve the small business market but the giants seem to have an equal footing in the market with our survey indicating that they split the market with 38.2 per cent of the market each. Three companies did not disclose the name of their payroll provider. Smaller payroll providers were companies such as Packwood Payroll or Exclusively Payroll Inc.
In our survey report we analyzed differences between those that had integrated their payroll services and those that had not. There is no clear trend between those companies having large sophisticated HRMS/payroll capabilities and other systems targeted more at the small- to mid-company market. It is interesting to note that some companies even though they use the ADP and Ceridian systems do not integrate their HRMS and payroll data.
John Johnston is the director of strategic consulting and e-HR Solutions for ARINSO International, a leading Canadian HR systems consulting firm active in the implementation of SAP HR/payroll software and the use of innovative Web-enabled systems for HR areas such as e-recruiting, e-learning and employee portals. He can be reached at [email protected] or visit www.arinso.com. The contributions of Bob Nadeau in the preparation of this article are gratefully acknowledged.
SIDEBAR
Payroll data from our HRMS survey
Conducted during August 2001, the survey HR Management Systems: Are They Making a Difference? represents a partnership between Canadian HR Reporter, ARINSO International and Perceptor Solutions, a division of Affinity Systems Limited. ARINSO, a well-respected Canadian HR technology consultancy, provided both direction and data analysis. Perceptor, a leader in automated surveys, designed the survey questionnaire and tabulated the results.
We received 378 responses from a mix of public- and private-sector organizations, of which 185 have implemented an HRMS. The statistics in the accompanying payroll article represent data from this later group of 185 respondents.
The first installment of results from the survey were reported in Canadian HR Reporter’s Oct. 8 Guide to HR Technology, available at www.hrreporter.com, select “search” and enter Article No. 1448.
A complete report on the survey will soon be available at a cost of $175. To reserve a copy, contact Julie Shreve at (416) 298-5141 ext. 2642 or [email protected].
