October 3, 2018

The Role of Payroll in Company Culture

Written by
Jessica Barrett Halcom

Many who have ever worked in human resources would probably describe the payroll team as the unsung heroes of the department. Working tirelessly behind the scenes, these professionals make sure that each pay period goes off without a hitch, but it can be easy to forget how absolutely critical the payroll function is to the very foundation of a company’s culture.

We tend to think of the payroll function as a more tactical role, but we forget the enormity of the job they handle each day. It’s not simply that pay is the one of the highest expenses a business has, it also plays a foundational role in shaping how the company operates. As we think about the fundamental aspects of corporate culture, we need to look at what builds that culture. Once we start to unpack that, we’ll see the important role payroll actually plays.

Reputation

There’s so much more to “getting payroll out” than we may understand. Not only are there the obvious direct deposits to make, but payroll activities include compliance with tax obligations and employment legislation. Making sure that the company upholds these laws correctly and and on time could mean the difference between staying in business or not.

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What’s more, a regulated payroll and compliance department establishes your company as a stable employer. Stability isn’t just good for your reputation, it elevates your brand as an employer of choice where you’ll be sure to attract and retain the right talent.

Morale

Something that may not be obvious is payroll’s effect on employee morale. Especially within small to mid-sized companies where employees tend to think more about the financial stability of the business, payroll is one of the best indicators of how the organization is doing.

If payroll is late, it causes employees to begin questioning the financial integrity of the company and their position. Once employees begin to have doubts about the stability of their jobs, they feel insecure. Insecurity breeds an environment wherein performance begins to slip, people begin to speak negatively about the business, and talent starts looking elsewhere.

Performance

The truth is that no one works simply for the joy of it. An employee’s net worth within an organization is tied to their salary, but more than that, employees want to know that they’re being paid fairly for their role within the market and the industry. They want fair compensation for their performance.

Payroll plays a critical role in compensation expertise and analysis and provides insight into how performance evaluations are tied to salary increases. Companies that integrate performance management, business intelligence, and project management software with their payroll tool now use data to better understand performance across employees and industry benchmarks to ensure they meet or exceed industry standards. Staying competitive with pay is one of the most important ways to improve performance and retain your best employees.

Transparency

By now, most companies have made the move to a human resources information system (HRIS), and conduct all of their HR functions, including payroll, from that system. Perhaps somewhat inadvertently, this has created a new opportunity for payroll. Because HRIS systems allow employees to manage and view their personal information themselves, things that used to be hidden are now common knowledge. Creating this type of transparency has begun to foster a culture of trust. Employees don’t feel that things need to be hidden, or are being hidden. This breeds confidence, improves morale, and creates a friendlier, more open culture.

Through the use of more robust HRIS systems, and the role that recruiting and employee data is playing as it relates to talent management, we’re continuing to see human resources evolve from a tactical function into a valuable strategic partner within businesses. As organizations continue to make a concerted effort to become more transparent, we can expect to become increasingly aware of the valuable role payroll plays within company culture and its important effect on an organization’s reputation and morale.

Jessica Barrett Halcom is a writer for TechnologyAdvice.com, with specializations in human resources, healthcare, and transportation. She holds a bachelor’s degree from the University of Wisconsin, Green Bay and currently lives in Nashville, TN.