Building an effective HR and payroll partnership

By Brian Kreissl

Last year, my colleague Annie Chong and I presented a session at the Canadian Payroll Association (CPA) annual conference and tradeshow in Calgary entitled “Effective Payroll and HR Partnerships.” Judging by the large number of registrants, it appears this was a topic near and dear to the hearts of many payroll and HR practitioners.

Because Annie is a payroll practitioner and I have an HR background, we were able to provide different perspectives to the discussion. While there is often “fault” on both sides, because I write primarily for an HR audience this post focuses mainly on what HR needs to know about the payroll function and how HR practitioners can get along better with their counterparts in the payroll function.

Not speaking the same language

There’s no question that payroll and HR don’t always speak the same language. That is the case in spite of the fact there is a tremendous overlap in terms of the body of knowledge for both professions, and payroll and HR often have to work very closely with one another on various projects and programs.

HR also frequently has strategic oversight over the payroll function, and many payroll and HR practitioners — particularly in smaller organizations — are increasingly having to wear multiple hats. But where HR and payroll are separate, there is sometimes a tendency to think of payroll as a highly administrative or transactional function.

While HR has struggled over the years to get the respect it deserves and obtain the proverbial “seat at the table,” payroll suffers even more from a lack of understanding from the rest of the business about the complexity of the function and the fact it is a profession in its own right. But as soon as employees don’t get paid accurately, on time or even at all, people all of a sudden start realizing just how important the payroll function is to the organization.

With all of the complexities surrounding payroll compliance with respect to income tax, employment insurance (EI), the Canada Pension Plan/Quebec Pension Plan (CPP/QPP) and workers’ compensation and employment standards legislation, as well as deductions, remittances, taxable and non-taxable benefits, year-end calculations and statements, reporting, bonuses, base pay increases, overtime, vacation pay, terminations, payroll outsourcing and technology concerns, there is far more to payroll than many HR practitioners realize.

HR not understanding payroll

Some of the problems associated with HR not having an adequate appreciation or understanding of payroll are as follows:

• HR doesn’t always consult with payroll or understand the impact of HR and business decisions on payroll.
• HR programs and initiatives don’t always adequately consider weekly/biweekly/semi-monthly, monthly or annual payroll deadlines.
• Cross-functional project teams don’t always include membership from each of the relevant stakeholder groups (especially payroll).
• HR/executives don’t always fully appreciate payroll compliance requirements (especially in a multijurisdictional environment).
• HR outsourcing doesn’t always consider the needs of payroll.
• New hires are often set up incorrectly without the input of payroll.
• Employee terminations aren’t always processed in a timely manner or communicated to payroll until well after the fact.
• Payroll isn’t always consulted in the development, maintenance and revision of employment policies or employee handbooks;
• Payroll doesn’t always have the context around why certain business decisions were made with regard to HR programs.

Building a more effective partnership

The following are some recommendations for building a more effective HR and payroll partnership:

• Take time to truly understand each others’ perspectives (payroll and HR).
• Have regular meetings; leverage knowledge and expertise found in both functions.
• Implement cross-functional training and knowledge transfer.
• Build consensus through shared decision making and cross-functional project teams/committees.
• Establish mutual respect for one another.
• Encourage open communication, cooperation, new ideas and information sharing; assume positive intentions.
• Create a positive and inclusive work environment.
• Recognize each individual’s unique contributions.
• Document agreed upon policies, procedures and processes in manuals and process documentation.
• Provide context and rationale as to why things are done a certain way (i.e., organizational strategies, business rules and legislation).
• Document compliance requirements for each jurisdiction; maintain awareness of trends, best practices and new and emerging legal and regulatory requirements.
• Keep everyone apprised of trends, best practices, legislative changes and case law.
• Consider taking one or more payroll courses or obtaining payroll certification through the CPA.

Annie and I will again be attending and speaking at this year’s CPA conference and trade show in Niagara Falls, Ont., June 13 to 16.