Administrative vs. Strategic Payroll Functions – is it all smooth sailing?

Welcome back to Payroll Perspectives, where Natalie Lloyd and Nick Day have joined forces to bring you valuable insights and strategies to help you build high-performing payroll teams and drive business success.

Every fortnight, we’ll provide the tools and knowledge you need to strengthen your payroll function and position your payroll team as strategic partners within your organisation.

We all know payroll is crucial to every business, everywhere, but within this function, there are two distinct approaches: administrative and strategic.

Imagine payroll to be a well-oiled machine – all the parts are working flawlessly… for this to happen, we need to understand the difference between administrative and strategic payroll and whether the two types of function can work together as two cogs in one machine.

I’m sure we have all experienced that sinking feeling when things aren’t going right…. But JGA Recruitment Group are here to help you avoid a Titanic-esque situation in your payroll and keep things afloat! ??

Understanding the differences between the two is crucial for optimising your payroll operations and maximising its value to the company.

So... what’s the difference?

Think of administrative payroll as the engine that keeps the machine running.

Administrative payroll functions focus on the core mechanics of ensuring employees are paid accurately and on time. This involves a meticulous adherence to deadlines and regulations.

If you’ve worked your way up in payroll, you’ll know there are key administrative responsibilities involved to keep things above water, including:

• Data Entry and Management: Maintaining accurate and up-to-date employee information, including hours worked, wages, deductions, and tax withholdings.
• Payroll Processing: Calculating gross and net pay, applying deductions and taxes, and generating pay checks or direct deposits.
• Tax Compliance: Filing all necessary federal, state, and local tax forms on time and accurately.
• Garnishment and Deduction Processing: Handling court-ordered garnishments, child support payments, and other authorized deductions.
• Employee Inquiries: Responding to employee questions and concerns regarding their pay.

Like a machine, all these administrative tasks need to run smoothly, remain efficient and work as one to ensure seamless payroll delivery every time.

Of course, like any function, an administrative payroll function comes with its own challenges, including data accuracy and efficiency, compliance complexities, manual processes, security threats and employee enquiries. All of these can be.

Grab the wheel; strategic payroll is here to steer the ship.

Strategic payroll functions go beyond the basic mechanics of processing payments. They use payroll data to provide valuable insights and contribute to the organisation's broader goals, contributing to growth and positively impacting business goals.

Here, we focus on the shift from individual components to a much wider landscape. Strategic payroll focuses on key data and activities, including:

• Workforce Analytics: Using payroll data to identify trends in employee compensation, benefits utilization, and workforce costs.
• Compensation and Benefits Design: Helping HR develop competitive compensation and benefits packages to attract and retain top talent.
• Payroll System Optimisation: Continually evaluating and improving payroll processes for efficiency and cost-effectiveness.
• Regulatory Compliance Strategy: Proactively staying informed about changes in employment laws and tax regulations and ensuring compliance.
• Mergers and Acquisitions Support: Providing guidance and support during mergers and acquisitions, particularly regarding workforce integration and payroll data migration.

Again, strategic payroll functions come with their own complexities – so it’s important to consider issues that can arise with data integration, securing talent with the right data analytics skills, limitations on reporting capabilities, collaboration (or lack of!) between HR, payroll, and finance teams, and of course, any resistance to change.

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Where does your payroll function stand?

There are some key considerations when working out where your organisation stands in the administrative vs strategic landscape – I’ve outlined some key considerations to help:

• How much time and effort are dedicated to data entry and error correction compared to data analysis and strategic planning?
• Does your payroll system provide robust reporting and analytics tools?
• Does your payroll team collaborate with HR and other departments to leverage payroll data for broader organisational goals?
• Are there ongoing efforts to improve the efficiency and accuracy of payroll processing?
• Does your organisation stay ahead of changes in employment laws and tax regulations?

Using these questions, it should be easier to determine whether your payroll function is more strategic or administrative.

Then, we can focus on everyone’s favourite topic: The future of payroll.

It’s no secret that payroll is evolving, growing, and changing every day. HR and payroll professionals are increasingly looking for payroll software that goes beyond basic functionalities and can elevate their payroll service.

I want you all to look away from the screen for a second and imagine your payroll system wish list. What do you love about your current system, and what would you improve?

Now that you have thought about it, I’m pretty sure it will look VERY similar to this:

• Advanced analytics and reporting tools that enable you to analyse workforce trends and identify cost-saving opportunities easily.
• Improved user experience, like intuitive interfaces that simplify payroll processes for both HR staff and employees.
• Enhanced security features to protect sensitive employee data.
• AI and automation for repetitive tasks and to improve data accuracy.
• Seamless integration with other HR systems for a unified view of the workforce.

Going back to the idea of payroll as a well-oiled machine… the payroll system is the oil!

It exists to ensure a smooth operation on the administrative side as well as providing the steering wheel for strategic functions. With a clear view of the data generated by the system, HR can make informed decisions that drive the organisation towards its goals.

In conclusion, payroll software is no longer just a tool for processing payments. It's a powerful solution that empowers payroll, drives efficiency, and provides strategic guidance for informed decision-making.

So, by embracing both administrative and strategic approaches to payroll, your organisation can ensure smooth operation, make data-driven decisions and contribute to a positive employee experience. Investing in modern payroll software will be key to achieving this balance.

But it doesn’t stop there…

No payroll function is complete without exceptional payroll professionals!

So, if you are reading this and thinking, “I have the system, I know how our function operates, but I just don’t have the team behind me to make it happen!” Then it might be time to discover how JGA Recruitment Group can support you!

We act as strategic partners, working with your HR & Talent teams to elevate your payroll capabilities and contribute to your long-term success.

At JGA , we pride ourselves on providing a world-class client AND candidate experience, meaning we’re dedicated to finding the BEST fit for your requirements, securing a skillset that adds value and contributes to a vibrant and diverse team.

Book in a call today to discuss your specific needs with us. Afterall, every machine needs a great team behind it to run smoothly!

And for more information on how we do it, check out our previous edition of “Payroll Perspectives” which gives insights into our top secrets to securing the best talent, and where you can find a copy of our JGA Blueprint !

Please stay tuned for more valuable content from our new "Payroll Perspectives" newsletter!

Best regards,

Natalie Lloyd and Nick Day

JGA Recruitment Group

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