A Tug of War?
Pay Magazine, March 2005

The relationship between payroll and HR is strained at times. Zoe Cacanas finds out why, and how amends can be made

..According to Fitzpatrick, integrated systems have thrown up issues around data ownership, fuelling what could be perceived as a power struggle. "Payroll is starting to report up through HR instead of finance and in the view of some payroll people, they’ve been marginalised," she says.
"I’ve got more payroll experience than HR and I still think that HR should own the data, largely because it needs to align itself to the raft of European legislation like the Freedom of information Act. The power struggle has been won and lost," Fitzpatrick adds.

Other commentators are not so sure. Sunley says that the ruler of the roost varies from company to company, explaining that if you have a strong HR director, HR will be stronger than finance; if you have a strong finance department, payroll will be in the ascendant.
Snowdrop’s payroll consultant, Tony Price, agrees: "It doesn’t have to be a power struggle - you just have to decide who does what. ’Payroll’s about rewarding people', say some companies and put it within HR. Others say it’s about spending money and put it in finance."

...The future spelt out by software providers is, perhaps predictably, more integration. Not so much in terms of the degree of integration between HR and payroll - products are as integrated as they can be, says Price ’ but in terms of number of companies choosing to fuse their functions.

There are organisations that aren’t keen yet. They may be unreceptive to the benefits of outsourcing because they feel they're too small - the perceived benefits may be difficult to grasp. Or too big, with vast HR and payroll departments that simply never meet, sometimes divided between different parts of the company. This is no bar to outsourcing, says Price, with integrated solutions able to run across different divisions.

There will also be greater scope for employee data ownership within integrated packages over the next five years, freeing up low-value time for payroll staff. This may mean that payroll departments may not grow in numbers, but that they too will see the career development for which HR has long been ambitious.
"This will mean a different type of career development for payroll, who can turn from their keyboard to operational and strategic roles", says Price.