Integrating HR and Payroll Systems Doesn't Have to Be Painful

Integrating HR Software

Integrating HR software with payroll systems can make for a more efficient workflow.

For companies that operate all over the world — many of which have thousands of employees to manage — keeping track of internal business can be a challenge in and of itself. One big reason is the way human capital management (HCM) services have evolved, with different areas of employee management entrusted to different arms of the company, each with different goals and ideal workflows. The upshot is that many companies suffer from an efficiency bottleneck where their HR software meets their payroll pipeline — two areas of employee management that seem intrinsically linked, but which generally use different systems regardless.

More and more businesses are opting to integrate HR and payroll structures, hoping to see major gains in efficiency in return. The rewards for streamlining the business's HR software pipeline can be great, but only if the change is implemented properly by management that knows exactly what they want to get out of the transition.

Key Considerations for Multinational Corporations

This sort of software integration presents an abundance of concerns for multinationals, from the cost of the transition itself to possible regulatory problems arising from the application of a new, single payroll pipeline in a wide variety of legal contexts. Elena Redlich, ADP's VP of Strategic Advisory Services and Research Institute®, says that the problem for multinational businesses is complex; however, those who invest now will reap major benefits.

The first consideration, according to Redlich, is the technology itself. "Will the investment in technology deliver what is promised ... and enable what it should?" she asks. To answer those questions, a business needs well-thought-out goals and targets for their HR systems. Technology that delivers merely decent improvements might not be worth the effort if it's extremely expensive in its own right, or if it can't handle the many different jurisdictional issues faced by a modern global business.

Another consideration has to do with the ability of large-scale transitions like this to drive away existing talent. Moving away from traditional HR strategies in no way means that a business has shed its need for traditional HR professionals, making it extremely important to complete the integration process without seeming to de-emphasize their role within the company. Remember to always help employees imagine what a rebuilt organization will look like, and what their role within this new structure is likely to be.

Similarly, businesses must take care to alleviate the concerns of company lawyers; prove that streamlining processes will mitigate legal and procedural risk, and you'll suddenly find your idea has an army of boosters working straight out of the legal department.

Streamlined Systems Keep Data Working for You

Redlich believes there are basically two defining themes of HR-payroll integration. First is the idea that source systems should update secondary systems, or that the system must be designed so that data is only input once, and that all other processes downstream of the input take their data from there and there alone. That way, when a piece of data inevitably changes, the system only needs to be updated once, and many disparate applications of the same information can be kept in agreement.

"If there are multiple points of input and a reliance on manual processes, the source system data integrity will be compromised and will not represent the single source of truth," Redlich says.

The second point is that technology standardization should always be enabled, so no update to hardware or software in one area of a business can lead to clashes with legacy systems still used in another. As with standardization in data input procedures, this is essential if you're going to hook up two complex systems, both of which use a wide variety of networked technologies. This whole project is about improving the efficiency and output of HR and HR-adjacent departments, so any change has to integrate smoothly all the way down the pipeline or undo its own good work.

Integrated Systems Are Most Visible on the Bottom Line

Beyond reductions in staffing and other overhead concerns, a streamlined approach can act as a major force multiplier for Big Data. HR data analytics are becoming more crucial than ever to agile business, but only if these new tools are supported by systems that have been well maintained. As Redlich puts it, integrated HR systems will help enable "the ability to view and measure data without manually needing to consolidate it."

"This measurement will promote a correlation between cost and performance," she predicts.

Attempts to streamline the HR and payroll pipeline require that businesses maintain well-curated databases of employee information — and those databases, once built and networked as they should be, quickly become an end unto themselves. That's the real power of a fully integrated HR software and payroll system: it doesn't just reduce costs right away, but offers all new insights about how to increase revenue in the future.

Discover more ways that integrated HCM systems can help you build your business agility in this interactive research from the CEO of Aptitude Research Partners.