Who do you think owns payroll in an organization? Is HR, given that the payroll department is responsible for employees' compensation – the most sensitive aspect of an employee's engagement with the company? Is it finance, given that it controls a company's most important resource – Finance? Or should it be the legal & compliance division, given that this department also plays a vital role in protecting the company's reputation by ensuring compliance with various local payroll activities, adhering to the country's tax obligations, and complying with employment legislation?
There is significant overlap amongst functions in administering global payroll. Both finance professionals and compliance lawyers handle taxation. Similarly, labor relations are dealt with both by HR professionals and compliance lawyers. Stakeholders execute global payroll as a process from HR, Finance, and Compliance functions, and it is pivotal that they are trained in understanding taxable benefits and employment standards legislation.
Human Resources (HR), Finance, and Compliance each play critical roles in the employer-employee statutory/legal relationship. The responsibility of the HR function is restricted to supporting the employees in their core constituencies – mostly around employee relations. The finance function is interested in payroll more like a line item in general ledger (GL) entries and controls the company's financial resources. The compliance team would mainly operate on the "no news is good news" mode apart from running internal audits.
Global Payroll as an HR Function
Employees only naturally get upset if they aren't paid accurately or on time. Employee compensation and employee relations pretty much go hand-in-hand. The sensitivity associated with payroll can easily be considered the most critical process within the employee lifecycle. HR is really at the start of the global payroll value chain. The input data for the worldwide payroll flows in from the HR function. Garbage in is garbage out. Many payroll activities are tied to core HR functions, including new employee setup, changes in compensation, payment of bonuses, leaves of absence, deduction of benefits, time and attendance-related data points, pay equity, and employee termination. The human resource is truly the champion of employee relations and is, therefore, one of the keys, if not the critical stakeholder of payroll data. HR faces an employee's wrath should issues arise with their payslip. Payroll and HR functions must work closely to ensure data integrity and accuracy are sacrosanct. In general, payroll is also considered a sub-function of HR because it pays and deals with employees at large. The HR side is that the company must preserve the employee's rights and abide by federal and state anti-discrimination and maternity laws.
Global Payroll as a Finance Function
Employee compensation is many organizations' most significant expense. The core aspect of global payroll lies in managing payroll data and depositing and managing taxes in its local jurisdictions. Payroll is number-driven and calls for knowledge of tax laws & accounting, and therefore, it is often parked under the finance function.
Global Payroll as a Compliance Function
According to E&Y, the focus on compliance among organizations has intensified. Payroll reporting and tax withholding ranked as the number one global compensation challenge. One of the biggest problems in managing global payroll compliance is that the goalposts keep moving, which is often stressful for payroll managers. It's hard to stay on top of things when legislation is constantly changing, and new cases are found to impact the existing status quo. Given the implication of managing compliance in global payroll, employers are held accountable for global payroll's legal and regulatory compliance side.
While the function that has the highest leverage on global payroll is a matter of contention, the relationship with HR, Finance, and compliance remains strong due to the underlying need for collaboration between the three functions to ensure payroll's success. Eliminating the gaps between HR, Finance, and Compliance in global payroll takes more than just technology – it calls for re-imagining payroll – it calls for exponential innovation and brilliant simplification.
An intelligent global payroll technology and solution mostly pays for itself. If you are looking for a solution that goes beyond
– Addressing core HR requirements of the HR function – input preparation, helpdesk, and employee experience,
– Core finance requirements – of comprehensive integration and reporting with preconfigured global/ local reports,
– Compliance requirements – compliance monitoring and tracking across 150+ countries
Then reach out to Neeyamo for more information on its PayNComp-based global-payroll solution – a comprehensive, integrated, and universal payroll system.
