The Difference Between Payroll And HR
Payroll and Human Resources are two very distinct functions within your business. However, for many they tend to overlap, or the responsibilities of both tasks are even performed by the same person. While this might look like a good exercise on paper (it means fewer staff to pay and a more integrated approach to the workplace), it can cause a number of problems. The fact is that while payroll and HR are separate roles, they often need to work hand in hand. As a business owner you need to recognise the differences in their terminology and functions, but also how they can work together in harmony to produce better results from employees and a more efficient work environment.
The main responsibility of your HR, or human resources, person or department is the management of the people within your organisation. Their job is to bring out the best in your employees, help find the right new hires for the business and deal with any grievances or issues employees may have or you have with them. Your HR department is also responsible for motivating employees and encouraging them to perform at their best. This may mean working out a reward system or developing an employee scheme that might include compensation, commission, extra holiday incentives or bonuses. HR also takes on the responsibility of developing training programmes for both new hires and existing staff plus ensuring all employees follow a general direction in line with the organisations goals. They also tend to get the ‘fun’ jobs like planning company events, team building and Christmas parties. In short if it involves people management, HR are the people you turn to.
Payroll’s responsibilities pretty much are what it says on the tin. The term ‘payroll’ refers to the process by which employee receive their weekly pay packet or monthly salary. The payroll department is responsible for processing, balancing and reconciling payroll data with the accounting systems, as well as processing any NI or tax properly. They will calculate any reimbursements (like expenses), bonuses, holiday pay and overtime due on a weekly, monthly and yearly basis. They handle any wage reductions, record keeping and verification of pay data before processing. Once pay has been processed they will print and deliver payslips and should meticulously keep up to date records of pay and tax for all employees.
We are already starting to see ways in which payroll and HR will need to work together. For example, if HR has developed a commission scheme for the sales department, payroll need to be informed and kept in the loop regarding performance in order to know what commission is due on payday. Many payroll issues are related to HR issues, including recruitment, salary increases, bonus payments, deductions, holiday and sick leave and much more. The HR and payroll departments are also both privy to highly sensitive information regarding the company and all its employees, so the departments must work closely to ensure no confidential data is inadvertently made available to the wrong person or made more widely made public.
The Great Divide
The biggest difference between HR and payroll exists in the type of people you hire for these roles, as each job requires very different skill sets. Payroll is a finance based role driven by a thorough understanding of numbers and a detailed knowledge of tax laws and accounting processes. So for your payroll department you should be looking for highly logical and mathematically inclined individuals. By contrast your HR department’s main focus is on people management and organisation, so you will need staff with good communication skills, so individuals that are very organised and enjoy a people focussed role are best suited to this.
At eBOS we provide outsourced services for both HR and payroll disciplines within your business, with specialist teams that can work with you to ensure your staff are happy, are being paid on time and you are working within the regulations. For more information about outsourced HR or payroll for your business, get in touch with one of the eBOS team today.