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Kate Wadia

Phase 3 Consulting

Managing Director

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Payroll versus HR: why we need to value our differences


In my previous article I hoped to convince as to why I’m not about to click any magic button to run a payroll.

The comment “Payroll is just a click of a button” might for you conjure images of wry smiles or gritted teeth, but it deserves some defence. The implication of the line is unfortunate, often inflammatory and worse still divisive but I’d suggest there is something in it. 

My answer is that the expression serves to offer not a denial of all that is complex and key about payroll but rather a comment as to the role that the payroll function has to play within organisational choice. Set aside specifics and ask some fundamental questions:

Who decides? Who decides what? Who owns policy? Who owns data? Who makes choices? Which choices?

Payroll versus HR

The payroll profession I argue should not arbitrate, but advise. If to put strategic direction – or even policy – into practice inevitably means button-clicking, then there is your clue.

Strategy and direction in payroll is hard to identify; but the key point is that we should concede a differing but equal importance to the custodianship, control and risk management that the profession implies.

HR counterparts may feel a responsibility to set direction. We may feel that our work bears the brunt of less tangible nuance (people and politics!) and we steer a wobbly course between strategy delivered upwards and direction delivered down or sideways.

From this perspective, the payroll function is the Nike “just do it”.

The influence of payroll

To engage financial minds with an example, let’s imagine a debit and credit to an at-work feel-good account balance:

In a positivity credit scenario, the organisation may wish to celebrate the launch of fabulous new benefits offers. Someone decides what to offer, why and to what aim. What will fit? What will achieve buy-in?

These choices are all made before we touch the desks in payroll. But refer to the payroll profession and please, please listen up. How does this have to be done? Is there a cost impact meaning adjust is needed, because of salary sacrifice rules, P11D reporting or tax and NI bills?

If optimism is in a debit scenario then imagine terminations are afoot. Aside from cost-modelling, it is not within the payroll team that the decisions are going to be made nor those affected consulted and looked after and these are not happy professional shoes to be in.

…it is essential that verdicts are informed by payroll expertise.

Decisions about voluntary settlement arrangements, statutory entitlements, notice and timing of outcomes are not for the payroll team to question. But it is essential that verdicts are informed by payroll expertise. Again listen up on the appropriate treatment of outcomes and therefore the impact of the choices made.

I’ll stress a point previously made about complexity we can take for granted by noting here that in payroll even the concepts of debit and credit may not be so easy to grasp. A credit is a balance in someone's favour, acknowledging payment; debits go out, or acknowledge sums owing. But in payroll the logic is ambiguous; credits are payments that employees receive, such as net pay. This is balanced by the associated debits, such as gross pay and the deductions made from it.

Respect and appreciation

So much for strategy versus custodianship. In the everyday, the limitation of remit is even more apparent; HR operations and transactions involve deriving choices and arriving at answers, often based on policy combined with people management.

Day-to-day decisions are made about recruits, salaries, job moves, benefits offers or managing life changes. These translate into an impact on the payslip, which is for that associated function to enable.

Payroll are not positioned to question decisions, but they are to safeguard and advise

I support the view that payroll are not positioned then to question those decisions, but they are very much in a position to safeguard and advise. Expect to take seriously the checking process of payroll reconciliation and respect professional advice offered about achieving consistency in the numbers or on the treatment of tax, for example.

My argument is that the relationship between different disciplines must be one of dialogue and of an appreciation of roles that each has to serve.

Accepting our differences

There are positive and healthy relations that play to respective strengths. And there are times when the stress of each results in a sense that the grass is greener on the other side and those are times when it’s best not to be too hasty with words.

It is fair enough that the suppliers of HR and Payroll technology use the “click of a button” phrase if we accept that they’d really quite like to sell their system. Within the organisation, perhaps the meaning of the click of a button is that we really hope those practising payroll do their jobs well, so that we can do ours.

Catch up on Kate’s previous article Pressing the Button in Payroll: why I won’t”.

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Kate Wadia

Managing Director

Read more from Kate Wadia

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