The Importance of Tying Payroll to HCM


Every business and organisation has a solution for payroll. Even the smallest companies will outsource payroll to a processing service so as not to bother with the time it takes to ensure its accurate and compliant with today’s complicated tax systems.

Though payroll-processing services help the back office, they also impact the front office. Employees are hired to help sustain and grow your business, and of course they want to get paid.

But there’s more to it than that. Employees want to be sure they’re paid correctly, to understand what taxes are applied, how much their benefits cost them, the details around leave time, sick days, and much more. Whatever the case, employees are going to come into direct contact with your payroll system, either online or through enquiries to HR.

But still they want more. So how do you get your employees more engaged with the business? 


The case for unified payroll and HCM

It starts with connecting payroll with a Human Capital Management (HCM) solution. Since payroll is the basis for employee information about pay, benefits, time tracking, etc. it only makes sense that everything else to do with employee engagement within the organisation is part of the same solution.

So how does HCM better engage and meet the expectations of today’s employees?

Categorisation and definitions of HCM have varied over the years as new ideas have come on to the market. But if you were to bucket list all the current definitions, there are three key areas that make up HCM:

1. People Administration
HCM provides an array of human resource functions that help manage core employee data, employee teams, and to connect employees with HR staff. It can include the ability to manage your teams’ organisational structures, while helping to improve compensation consistency. It also can help inspire managers and to build the best structure in order to maximise employee productivity. On the administrative side, it will keep accurate records of employee attendance, help improve morale, avoid confusion, and save time. Built-in workflow help make it easy to quickly initiate, approve, and track time off across your entire organisation. There are more, but these are the most common functions.  

2. Talent Management
Another set of HCM functions relate to employeeing, hiring, developing, compensating, and future planning. These elements can be a critical part of employee engagement and participation and help to communicate expectations on raising productivity. Talent management can also be tied to job marketplaces to help reach prospective employees in hiring, and to ensure that the best candidates are hired for each position. A powerful solution does all this easily and privately for all your teams in one place.  

3. Payroll & Time Tracking
Payroll must be enabled to support multi-phase payment and must also be localised for each region and country, in order to deliver accurate and timely pay to the global workforce. It includes support on adherence to variations in rules, regional laws, and local requirements. It also interfaces with benefits, pensions and absence tracking. Additionally, and on a more regular basis, some employees or contractors will need to enter their daily or weekly time. Easy to use and engaging time track solutions help enhance employee service as they are more responsive, intuitive, and flexible as they anticipate daily tracking time needs.



Bringing unified payroll to HCM life

Of course all these functions across the HCM spectrum should be social and mobile enabled, so that employees can interact with their data quickly and easily. HR groups will want to make sure that all these functions are also localised for various countries, and they’ll need the ability to report and analyse the data for making sound business decisions.

The most interesting point is that payroll is a category, or you might say that payroll is one of many HCM functions. But it is not something that should continue to be separate or distinct. The tighter the connect between payroll and the rest of the HCM solution the better; after all, each employee has only one system of record, so it should be shared across the entire HCM spectrum.

There are a number of approaches to connect payroll with HCM. Here are the pros and cons:

1. Separated
You could run payroll separately from HCM. They could be two separate products possibly from two separate vendors. The connection between them would have to be managed manually or by using complicated tools to ensure that common employee data is consistent in both systems. The other problem with two systems is that the disconnect for employees who have access to them can create possible confusion and a poor experience.
2. Data Integrated
You could alternatively integrate both systems at the data level. In other words, you still have two applications but they share the same database. This solves a data integrity issue for HR, but it doesn’t necessarily solve the poor user experience aspect. It also means that workflow between payroll and other HCM functions are disconnected.
3. Unified
Ideally, you could have a system that is part of one unified system. This means that all HCM functions come from the same vendor, and designed as a single coherent solution. Not only is the data then fully shared across the solution, but the workflow are common, improving productivity, reducing mistakes, and ensuring that employee expectations and engagement are the focus.

People have changed. Today’s employees are more social and connected, and expect more services than they used to. As society has become more connected, so has the employee. Businesses today that don’t accommodate them will see their organisational index plummet. And those that do will see the reverse. It’s simple.

ADP® iHCM 2  is a solution that unifies payroll with HCM – working better together.



Download the ADP® iHCM 2 Brochure

Easier | Smarter | Better HCM


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