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payroll systems

Payroll reports to?

Author: Dave Rietsema - Matchr CEO
What you will learn in this article

It’s 8:00 a.m. on Wednesday morning and time for the meeting you’ve been dreading all week. Yes, on today’s meeting agenda you spot a topic called “Payroll Reporting Structure.” Ughh, yes—the never-ending debate on whether payroll should be under HR or Accounting. Will this meeting erupt in World War III?

The payroll reporting structure debate is one that’s not ending soon. Doing a quick web search on the topic reveals several question and answer forums—some with threads lasting over several days with various people chiming in. So who should payroll report to? It seems like a simple question, right? The reason this topic is so widely debated is because there is no “right” answer—it varies depending on the size, culture and politics of the organization.

However, while hotly debated, the general consensus is that payroll makes more sense reporting to the accounting department. Payroll is about money—something best left with the money people. HR should be spending their time attracting and retaining a talented workforce, not worrying about complicated tax reciprocity laws. Payroll is concerned with paying employees timely and accurately. Further, having checks and balances in the organization is important. When only one department is charge of approving pay increases and writing paychecks there could be a control issue—ask any auditor.

However, let’s not trivialize a positive relationship between payroll and HR peeps—the connection is paramount. HR and payroll employees alike will tell you that having a poor relationship between the departments can spell disaster. I think of the two as having a relationship similar to that of ballroom dancers. (Tell me you didn’t just picture HR and payroll dancing salsa at the Christmas party). HR hires someone—payroll pays them a salary, HR helps new hires enroll in benefits—payroll takes the new deductions out of their paychecks, HR approves a termination—payroll makes sure they get their final paycheck timely.

Sure, the connections between payroll and HR are numerous but in companies with good synergy and teamwork it shouldn’t matter whether payroll is under accounting or HR. With modern technology we’re always connected and communication should be free-flowing regardless of the floor we work on or the boss we report to.

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