FEATURE TOPIC
Critical analysis on costs by the payroll department could highlight anomalies that lead to a change in way of working and cost savings
sacrifice schemes, implementation of systems, analysis of expense claims, overtime or absence or even evaluating the technology solutions. We need to be realistic that payroll functions are not set up to generate profits for the organisation – that is what sales departments do. However, we can be a lot more considered to measure, capture and report the efficiency of the operation and the wider impact perhaps in a yearly report of the function that captures the value-add deliverables. I also think that there are economies of scale on payroll operations, so combining functions or shared services should never be ruled out as a consideration. SJ: If payroll is provided as a service, it can absolutely deliver profit to a business. In some accountancy practices, for example, payroll is labelled as a loss leader, but if done right, this shouldn’t be the case. Understanding the detail behind the cost per payslip enables payroll service providers to react with agility to the client’s size and requirements, while also ensuring that a profit is viable. In-house payroll faces a greater challenge in becoming a profit centre and demonstrating a return on investment through direct income is limited in scope. It’s possible to provide payroll to other businesses. This is often modelled in the public sector across multiple schools or police forces, for example, but in private sector, confidentiality and competition come into play much more heavily, creating barriers to application. However, payroll can demonstrate how it indirectly impacts the bottom line. Critical analysis on costs by the payroll department could highlight anomalies that lead to a change in way of working and cost savings. Payroll could play a lead role in salary negotiations, using its breadth of knowledge and data to help the business make more informed, cost-effective decisions. It’s important that payroll teams track and monitor how they impact these business changes and cost savings, and give themselves the evidence and tools to demonstrate the true impact they have in their business. How can payroll define its seat across hybrid departments, such as tax, HR, finance, project management office, information technology, legal, etc.?
JD: By presenting itself as a value-driven service to the organisation. Delivering exceptional service, demanding a high standard (which involves ensuring inputs to the payroll department are accurately provided, in an efficient manner), reporting accurately and within timeframes required all ensures respect is given to the service provided. Build upon these foundations with great data analysis, and you then create management information that is incredibly powerful. Recognise those departments listed as internal stakeholders and regularly meet to understand their needs and how payroll and pensions data can support decision- making and you can create a series of reports that best serve the needs of the departments and the business, which should also be continually reviewed. Payroll can be informative, supportive, and can lead in areas of the business if those responsible for it are ensuring they are acting on latest information or reviewing trends over periods of time. EG: The knowledge payroll holds about its employees and associated costs is valuable to any business; however, it is usually ignored in favour of HR data. The latter, unless part of an integrated payroll and HR system, is usually the area most out of date. So, when it comes to strategic decision making, your payroll professionals are the ones to consult; they can provide data on cost centres, salaries, oncosts to include employer pension and National Insurance, plus much more. All departments mentioned above need to be made more aware of the payroll data value via internal promotion and awareness. IH: I think payroll needs to ‘big itself up’. We will never forget the objective of getting pay and the associated returns right but the other operations around that have evolved significantly. That is the space others seem to have a better reputation in. I think we need to be better at approaching pieces of work as projects and capturing business cases, delivery plans and post-project assessments,
and lean on senior management to help change the perception of the team and the work they do. I think payroll teams are great at building relationships and are not restricted by having multiple points of influence with other business areas. Building these effective relationships and working partnerships is the first step to being seen as cross-organisational strategic influencers which is where payroll can rightfully position itself. SJ: Payroll is multifaceted, and too much emphasis is given to whether it should sit within a department, or as a department in its own right. This view is very one dimensional. Payroll can be delivered in-house, for a business of one employee, up to more than 100,000 employees. Where payroll sits will depend on the culture and history of the organisation, how its systems are set up, and how its processes are developed and defined. Some businesses have a requirement for payroll to partner more closely with finance or HR, others may have a single department that encompasses all three, some may have a standalone payroll department. In payroll bureaus, there will be similar debates around employment services, or tax departments. Ultimately, the key is for payroll to work collaboratively with their key stakeholders, and if this is the approach, they will always be able to have an impact, regardless of the cost code they sit in. n
Our panel considers whether payroll teams can generate profit for organisations.
| Professional in Payroll, Pensions and Reward | December 2021 – January 2022 | Issue 76 38
Made with FlippingBook - Online magazine maker