The Most Important Part of HR is Payroll

payroll human resources fistful of talent

The most important part of Human Resources isn’t talent management or talent acquisition. It doesn’t matter if you hire for culture or competency. And nobody cares about your learning management systems or your diversity and inclusion programs.

The most important part of Human Resources is your payroll department.

  • Do you pay people on time?
  • Do you have an accurate time and attendance solution that is integrated into your payroll process?
  • Are taxes and miscellaneous deductions handled properly?
  • When there are errors, can you fix it quickly?

Lots of people belittle the administrative nature of Human Resources; however, the flawless delivery of personnel-related services is noble. It’s important. And it is what sets you free to do other cool stuff. You can’t be trusted with complex issues like engagement and culture if you can’t get the paychecks right.

I have one other HR secret for you: the operational and administrative aspects of Human Resources have a bigger impact on the balance sheet than your wellness program and employer branding initiative. You won’t be a credible company who can attract and retain talented people if you can’t pay them.

I don’t know about you, but I am ready for HR professionals to stop apologizing for being administrators and start chanting, “We’re here! We do payroll! Get used to it!”

I’ll get the clapboards and the picket signs.

FOT Background Check

Laurie Ruettimann
Laurie Ruettimann is a former HR leader and an influential speaker, writer and marketing advisor. Her work has appeared in many mainstream print publications and major news media outlets. You can find her on twitter at @Lruettimann.

20 Comments

  1. Craig Bryant says:

    I couldn’t agree more. Of all the places I’ve experienced HR first hand, it’s low-hanging fruit like payroll which companies screw up the most. And most companies do screw it up. It sucks the life out of a new hire’s experience, and bodes ill for the more aspirational efforts in HR at a company. It’s administrative work, you got that right, and completely noble and necessary. One observation I’ve made over the years is that, while the mechanics of these processes are often lacking in quality, it’s the communication breakdown which puts the biggest hurt on HR. That’s one of the things we’re trying to help small companies out with here at Kin. Linking administrative elements of HR up with an efficient channel of communication between HR and the employees themselves. Thanks for the read 🙂

    Reply
    • Laurie Ruettimann
      Laurie Ruettimann says:

      I think you’re right about the communication breakdown. Thanks for the comment!

      Reply
  2. Rory Trotter says:

    Interesting thoughts, Laurie.

    My personal take on payroll is that – as you said – it’s enormously value added, but I have no interest in doing it. HR as the function can tackle payroll if it chooses – I want to work on the strategic (visible) stuff.

    With that said, I view the world though comp tinted lenses (people are paid for what they know, what they do with what they know, and what the first two things impact). As such, span of control, job scope, visibility and complexity are what I look for in my roles (which is how you raise your compensation).

    Again though, I agree with you that the administrative/transactional stuff matters and needs to be done (and I have an enormous amount of respect for the HR pros who do it well).

    Thanks for sharing (and as always keep writing).

    Best,

    Rory

    Reply
  3. Ed says:

    Laurie, generally love and agree with most your posts. But this one, you’re joking right? That’s like saying that an offensive tackle is the most important position on an NFL roster. Blocking, that’s the real value. If he doesn’t block that blitzing linebacker then nothing else matters. While that might be generally true, the difference makers in football games aren’t offensive tackles … they are QBs, running backs and wide receivers. In our HR worlds Payroll is the 300 pound behemoth of a tackle. Impressive, but not even close to the most important. Insteady, it’s Talent Acquisition in my opinion. Hiring a rainmaker is the equivalent of 40 yard TD pass that fills each of the 80k seats in NFL stadiums all across the land. It’s not the pancake block that set it all up.

    Reply
  4. Fred says:

    Many companies have decided that Payroll is not a part of HR at all, so they avoid the discussion if it is more important to get people paid or to recruit, deploy and develop them. Look, who the payroll departments report to nowadays. It’s operations, business service lines etc. Not just a few companies have even outsourced this “most important” topic to the cheapest available provider.

    Reply
    • Steve in PA says:

      Being part of HR in a large academic medical center in PA, Payroll is not a part of HR. I could see how this debate could last for a while since there are many offices within HR holding importance.

      Reply
      • sue says:

        I prefer to work with a payroll team uner the Accounting Department rather than under an HR Department, why because payrolling works more with numbers which is more related with Accounting. Payrolling being a precise and exact process is more on calculations of the monetary value of the benefits and policies as set up by the by the HR Team of the company. Per my experience, sometimes the payroll policies are more leaning to the employees’ side even if it is not in accordance with how the policies should be applied and pay and it is so hard to explain the debits and credits in preparing the payrolling to HR people.

        Reply
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  13. Good reminder to pay attention to the basics. The HR Analytics needed for great strategic decisions is based on solid, reliable data. Accurate and timely payroll data is part of that.

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  14. Gail says:

    My comment comes as a Canadian point of view. Our payroll tax laws are far more complex than in the US. I know because I have taken courses in both and there are 6 text books in Canadian Fundamental payroll compared to 1 text book in US Fudamentals. Most companies do not combine HR and payroll. Payroll is usually found in the Finance department as the tax laws are more in line with finance than HR. Our system is complex and requires trained professionals. I have found that HR departments know very little about payroll and really don’t want to be part of it. There is also the issue of segregation of duties, and certain aspect of payroll should not be done by the same people who setup employee information, such as banking information, tax credit allocation, and garnishment privacy which should only be between the employee and the payroll professional. HR should not have any access to this information, as payroll should not have access to certain HR information. Leave the two departments separate, there are good reasons to do so.

    Reply
    • Maria Ortiz says:

      Excellent point of view. Payroll is found under the Accounting or Finance Department. The information that every department requires (HR and Payroll) is confidential in some cases.

      Reply

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