This question is both philosophical and practical. Strategically, when planning your people management solutions this becomes an important question. Your response will likely depend on how integrated you consider your data and processes to be.
More importantly, how integrated do you need them to be?
Corporate Systems Planning
In an ideal world, your IT department will have a strategic vision of what your organization's data, processes and software solutions will look like and how they will interface. This provides your organization with a goal to work toward, and should factor into every software purchase.
When participating in strategic systems planning, it is important to remove the “comfortable glasses” with which you view your existing situation and be open to the potential for change. Software is always being improved and enhanced, providing users with more flexibility to meet their business needs. Business directions also change as a response to corporate objectives that change, to align with fluctuating economies, changing business best practices, fickle consumers and generational differences within the employee base.
All of this means that we are working with a moving target. Strategic systems planning is therefore an ongoing exercise for your IT department, and what was satisfactory in the past is never arbitrarily the way it will be in the future.
What does this mean for HR and Payroll?
It is important to be aware of IT's strategic systems plan for the corporation, just as they will likely have consulted you in its preparation. Detailed HR and Payroll business requirements feed upward to the plan, but corporate needs also factor downward into software selection decisions.
For example, there may be corporate consolidated reporting needs that feed top-down in the strategic planning, and would produce a resultant need for interfacing with financial software, or integrating HR and Payroll software. There may also be technical computing platform decisions that factor downward to affect HRIS/Payroll decisions.
Similarly, there may be valid reasons, to not integrate HRIS and Payroll, and this would feed upward to the strategic systems plan.
Back to the Question
How inseparable do you need your HR and Payroll data and processes to be?
One thing is certain –there will always be data that is common to HR and Payroll. And on principle, organizations should be striving to eliminate or reduce duplicate data stores. There is cost and risk associated with redundancy, and it should be avoided. The risk of error is related to duplicate data not being maintained in tandem – potential for discrepancies due to one source not being updated, or risk of typos in the duplicate keying of that data. Then there is also the financial liability that discrepancies could pose.
When Payroll and HR are integrated, then they are part of the same software application which means storing the data in a single software solution. Alternatively, sometimes the decision is made to not eliminate duplicate data stores, and so the solution is to synchronize it - preferably electronically. This involves an interface. For example, it may be possible to set up an automated nightly synchronization of employee data in your HRIS and a performance/talent management system.
Reviewing the Options
If the interface is manual, then you will need to put controls in place to preserve the overall integrity of data that is being passed between the applications, and ensure that your business processes accommodate the increased need for communication between the HR and Payroll departments. If this is an automated interface, then you will need to be vigilant for any changes required to that interface. For example, a change in the data structure in your payroll software may require that you update the interface program so that the HRIS can still interpret the data.
On the opposite track, even when your HRIS and Payroll are integrated into a single solution, you will need to be watchful that your business needs continue to be met functionally, and that you maintain your configuration accordingly. Keep your software vendor abreast of these changing needs so that they can strive to accommodate them.
Suggestions for HR and Payroll
HR and Payroll can be proactive about contributing to the overall “health” of your organization's strategic systems plan:
- As a stakeholder in the development of your strategic systems plan, request of IT a level of participation in its creation/maintenance;
- Communicate your software requirements to IT, and include IT in your software selection process, so that your decisions can comply with the strategic systems plan;
- Establish ongoing communication with departments with whom you share data and/or reporting – in particular between HR and Payroll;
- Involve these stakeholders in major decisions regarding your HRIS or Payroll software solution(s);
- Coordinate business processes between HR and Payroll, and re-engineer as necessary in order to make this as efficient as possible.
Note that most of these points relate to communication. The answer to the question of whether your HRIS and Payroll should be joined at the hip is often reflective of the level of communication that exists between these departments in your organization.
In the big picture that a strategic systems plan represents, there are many ways to achieve the overall solution. You should be aiming for one that will meet changing business needs, minimize overall costs, maximize value, and present minimal risk to the corporation.
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