Global Employers Need to Know the Difference Between Payroll and HR

hr vs payroll

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Introduction

In an automotive, the modules like power-train, engine, and transmission come together as a single assembled unit to form a vehicle. For an automotive maker, each of these components has a separate strategic focus in terms of design and making.

Similarly, HR is a super-set containing recruitment, performance management, and so on until the exit process as its components. Also, each of these has its own importance in the business value chain at different stages. 

Payroll, however, is both strategic and operational because of its linkage to employee satisfaction and also the balance sheet of a global employer. It is distinctly different from other HR functions, because it revolves around the company's compensation strategy and complexities of local regulations in terms of taxation and benefits. Hence, a global employer has to understand the difference between HR and Payroll.

Careful design of payroll strategy and processing is critical for a global employer to ensure their employees across the locations are paid on-time, with right compliance and with precision in terms of regular benefits disbursement.

HR vs Payroll: The distinction

For global employers, it is necessary to internalize the business impact of HR vs payroll. Following is an illustration of the distinct roles of HR and payroll through the employee lifecycle.

Lifecycle stage HR Payroll
Hiring Sourcing, interviewing, compensation structuring, background verification Employee cost analytics, compensation parity checks
Onboarding Company orientation, job orientation, mandatory awareness programs, etc Payroll configuration - compensation, deductions, benefits
Engaging Performance review, training and development, timesheet or productivity monitoring Timesheet data processing, salary processing, salary rise processing, performance bonus disbursement, tax remittance to government/fed
Exit Exit interviews, job handover Full and final settlement, transfer of employer liabilities (social benefits, insurance etc),

At Skuad, we deeply delve into the payroll challenges of global employers and address those challenges through the features in our Employer of Record platform.

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HR vs Payroll - The complexities and gap

Payroll is nearly every company's single largest expenditure. And, because it entails moving funds from business bank accounts, withholding applicable taxes, and calculating financial perks or bonuses, it appears to be a Finance department duty. In these situations, the finance department along with the taxation team deliberate on the compensation policy and its compliance with local regulations.

So, whose accountability is payroll anyway? With no direct and simple answers, the real scenario based on our experience of working with organizations from various industries is, it depends on the employee size. As the organization gets bigger by employee size and global presence, it is the responsibility of finance, and HR to take care of smooth disbursement of salaries.

However, if payroll is manual or runs in a rigid system, the HR may find it difficult to disburse performance-based rewards for the employees. This way, an efficient global payroll should also work in line with changes in rewards policies, to ensure the employer brand is intact.

Hence, the payroll system should pave the way for not only maintaining regularity and precision in payroll processing but also helping the global employer to reward remote employee in any part of the world.

Global Payroll as the solution

Through platforms like Skuad, payroll and HR can be digitally integrated in an automated system. The intuitive analytics will help both payroll and HR functions to have productive dialogues on rewarding employees and hence improve their employee value proposition. The payroll administrator might report to either HR or Finance, and the collaboration between the two departments would be unaffected.

Skuad’s global payroll solution not only offers the wings to expand but also integrated functionalities that bridge the precision of payroll and empathy of HR together. Skuad helps global employers to set up their payroll in more 160 countries with a few clicks, with complete compliance to local regulations and norms.

Final Word

HR and payroll could collaborate through platforms that bring features of a payroll software and global HR analytics together. Also, this is critical for finance departments to oversee how well the employee budget is used and what it takes to optimize the global rewards and benefits.

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