HR and payroll: 12 benefits of an integrated system

Integrating HR and payroll can benefit companies in various ways, including avoiding entry duplication and reducing costs. Learn more about how using one system can help.

Company leaders are often looking for opportunities to save money and streamline processes. One way to achieve this goal is to implement a system that offers both HR and payroll services.

The HR department's needs can be different than those of a payroll team. However, the significant overlap means one software system integrating HR and payroll can provide a myriad of benefits for the company, even if two different leaders oversee HR and payroll.

Here are 12 benefits of using an integrated HR and payroll system to consider.

1. Maintaining one system instead of two

Using one system for both teams saves time because IT staff only needs to manage security access, implement new features, and add and remove items from picklists for one system.

For example, if a company adds a new department or location, the IT team only needs to make updates once, avoiding concerns about timing the changes in order to update two systems simultaneously.

2. Avoiding delays

Keeping data in sync is a common issue for companies using more than one system. For example, HR staff may add a new hire as soon as they accept the offer. Yet, the new employee may not appear in the payroll system right away.

If a company uses one system, the system automatically pushes all HR changes to payroll without delay.

3. Avoiding duplication of entry

Many payroll teams re-key data after the HR team has already entered it. Doing so is a waste of time and leads to data entry errors. Using two systems also requires that users track the changes made in one system to ensure the second system matches them.

One system addresses these common tech challenges in HR management.

4. Lack of interface issues

When companies use one system for HR and one for payroll, leaders may decide to implement an interface so data from the HR system is automatically pushed to payroll on a regular basis.

Using an interface can remove the need to re-key most data, but interfaces are often not perfect. They may not push all the data that is required in the payroll system, creating more errors for IT staff to fix before HR and payroll teams can complete their work successfully.

5. Saving employees time

Employees and managers benefit from only having to use one system.

If their company uses one system for HR and payroll, employees can update their personal data, complete vacation requests, as well as check pay and tax information in one place.

6. Faster payroll processing

Integrating HR and payroll saves time for payroll staff.

The payroll team can focus on other tasks instead of having to reenter data and verify that all employee changes are reflected in the payroll application.

7. Better compliance

Tracking employee changes and auditing employee data are critical tasks to ensure company compliance.

Using one system for confidential employee data reduces the risk of compliance issues and saves employees time since auditors only have to check one system and its related processes.

8. Improved HR-payroll communication

Using an integrated HR and payroll system improves collaboration between the two teams because they need to work closely together to communicate about any system changes, define processes and make sure that the system is configured in a way that suits both teams.

This closer collaboration can benefit the company overall, as HR and payroll are more likely to discuss any other potential problems if they're already collaborating on software.

9. Processes span multiple departments

Using one system for HR and payroll enables the system administrator to configure workflows and approvals that span departments and benefit both the HR and payroll teams.

For example, employee changes may require approval before users commit them to the system. Once approved, the system can send the approval notification to HR and payroll. Approvals affecting other teams within the company, such as IT or facilities, may also benefit from the workflows configured in the integrated system.

10. More comprehensive reporting

Putting all employee data in one system enables more comprehensive reporting for HR, payroll and finance.

For example, HR data often records an employee's annual base salary or hourly rate, but users put the actual amount paid to an employee in the payroll system. Using one system for HR and payroll enables the incorporation of HR-related data in payroll reports and vice versa.

11. Reduced licensing costs

A company's annual licensing usually costs a significant amount of money. Since an HR and a payroll system hold much of the same employee data and have similar functionality, integrating the two can reduce licensing costs considerably. Namely, a company using an integrated HR and payroll system only pays annual licensing costs to one vendor.

12. Reduced need for training

Employee training is an ongoing expense for any company. Using one system for both HR and payroll simplifies the training process and reduces the number of hours spent developing and maintaining training material.

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