Payroll responsibility passed between finance and HR

The responsibility of payroll has become a game of hot potato, with a quarter of finance professionals preferring it was a function of HR, and almost just as many HR managers believing it should remain in finance, a study has found.

More than 750 HR and finance professionals in charge of payroll were questioned in a study by ADP Employer Services.

“There seems to be a lot of disagreement over who should take overall responsibility and a lack of best practice as to how the two departments should work together,” said Don McGuire, managing director at ADP. “The fact that so many HR and finance professionals feel that it shouldn’t sit in their department highlights that neither see it as part of their core job role.”

Results also showed that half the time (49%) payroll is under finance, more than HR (40%).

A third of those in charge of payroll said they would not examine payroll expenditure when looking to cut costs in the business, an area where many respondents felt costs could be made up through administration (52%) and minimising areas (43%).

“The wage bill accounts for 50-80% of an organisation’s expenditure and the costs of preparing payroll can be significant,” said McGuire.

“In light of the current economic climate, businesses should be looking at areas where they can increase efficiency and cut costs. Payroll is one area often neglected.”

The survey found that less than half those polled had efficiency measures in place. Finance professionals actually fared worse with only 39% measuring efficiency compared to 49% in the HR department.

Nearly two-thirds of employers keep the payroll function in-house, with security concerns (80%), apathy (84%) and a desire to keep control of data (86%) as the main reasons.

Finance professionals are more likely to outsource due to the cost savings, with nearly nine in 10 agreeing this was a factor, compared to only 66% of HR professionals.

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