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The relationship between HR and payroll is evolving & prescient, let's dive in.
Recently, a Senior HR Director made a post on LinkedIn about this very issue – clearly, it’s on the minds of senior stakeholders in business functions with oversight of payroll.
The dawning of the age of integrated cloud-based HRIS & Payroll platforms in AUS & ANZ payroll functions is not a new phenomenon. But with the increased presence of global platforms such as Workday & Dayforce, has intimately connected the various technical verticals that flow across the employee life cycle.
53% under Finance
38% under HR
8% under Other
What is Nirvana for payroll?
Nirvana is that payroll can achieve parity with the critical functions of HR and not be viewed as a transactional, “push button” exercise, or syphoned off to Finance as it’s viewed as technical & numerical, not people-driven. Or just when it gets all too hard.
Surely the boomerang reporting line that payroll faces between HR & Finance should be in the rear-view mirror: The internal department hot potato. However, in innovative organisations that value payroll, that’s not the case.
With the challenges in terms of governance & compliance the payroll industry is facing, it’s imperative to move away from this adversarial, “us & them” culture, between HR & Payroll.
And I work with highly technical, progressive Senior HR Leaders, who intrinsically value payroll; who understand the commercial & business insights afforded through payroll data analysis.
The HR Director in question had taken a secondment as a Payroll Officer for 6 months. To literally walk a mile in a payroll person’s shoes.
I also spoke to a senior HR client who had learned to run an end-to-end payroll – and no, the fact that you once ran an autopay, does not give you deep insight into the life of a payroll professional.
Burying your head in the sand, won’t help you.
As of July 2024, the companies who have avoided compliance issues, remediation projects - an enforceable undertaking - is a diminishing list of Fair Work’s most wanted.
That was facetious but not a call out. Australian payroll rules are not complex but overcomplicated. Imagine being in a payroll function that has over a hundred Enterprise Agreements, with multiple variations.
In a recent survey by the Australian Payroll Association, 2,084 respondents were asked what the biggest challenges they were currently facing in payroll and 31% stated certainty of payroll compliance as a major challenge. Respondents also stated payroll technology and processes (37%) and poor integration between systems (37.3%) were large challenges.
The vast majority of companies want to do the right thing; but have assumed that what they are doing is right, despite changes to regulatory & legislative frameworks that are constant & can feel overwhelming.
The end of life of Australia’s most widely used system, Preceda in early 2026, coinciding with Pay Day Super, are like two harbingers of the apocalypse. But we can’t bury our heads in the sand.
Payroll should be included
"41.1% of employers expect to review their payroll technology in the next 12 months." - Australian Payroll Association
It is concerning that payroll are disenfranchised when decisions about holistic HR & Payroll systems are made. Data integrity & integration are key, especially for some of my clients who have multiple hosted systems for HRIS, time/rostering, & payroll.
The delivery of a best-in-class payroll function is driven by the employee experience. The purpose of automation is to de-risk the payroll process, while it is essential to consistently interrogate the source of truth.
We need to focus on cohesion; to focus on what connects us, rather than what divides us. To focus on the humanity of paying people correctly. And that in this landscape of intricate rules & fine print complexity, to appreciate how challenging payroll is. But somehow the professionals in this industry I respect & admire, do it tirelessly every day.
Any decision about systems that are oversold as the silver bullet to cure issues of accuracy & efficiency needs to be scrutinised; no one mentions the elephant in the room - long service leave! Any enhancement of analytics that offers holistic benefits for running your business, these bright & shiny, yet untested systems - need to be underpinned by rigorous audit controls & governance.
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In Summary
The relationship between HR and payroll is evolving, driven by technology and the need for better integration. By valuing and integrating these functions, organisations can achieve better outcomes for everyone involved. It's time to move beyond the "us vs. them" mentality and embrace a collaborative approach for the benefit of our organisations and, most importantly, our employees.