Why focusing on payroll is important and 7 ways to improve it

Payroll is a critical activity in every business. Payroll experts have the responsibility of maintaining accurate records, making salary/wage payments on time as well as ensuring organizational compliance with central government rules. The current business environment is complex, rapid changes are constant and companies must focus on many aspects for a smooth payroll process.

How does payroll contribute to organizational goals?

Payroll plays a crucial role in an organization as the salaries of employees are processed regularly by the HR/Payroll department. Payroll is a big part of every company’s annual budget. To perform their tasks, payroll specialists require software tools and set processes to work effectively. Payroll/HR personnel must also track HR policy changes along with tax-related work. Tracking each employee’s benefits and changes thereto is a time-consuming process.

Payroll managers must collect, collate and maintain crucial employee information, reconcile, initiate reports and send reports as needed. What can derail a streamlined process is the need to re-enter employee data. Experts recommend reviewing payroll activities and processes to identify problems and correct them on a regular basis.

Some ways to enhance payroll productivity are listed below:

  1. Self-service: Having a self-service interface is the first step in reducing mistakes in the information. It lets employees take the responsibility of entering personal information and hours worked on their own. This frees up the payroll team to focus on essential tasks such as benefits and deductions calculations.
  1. Simplification of policies: Policies and software programs related to attendance, reimbursement of expenses, and paid vacation should be as straightforward as possible. If these look complicated during the review process, they should be changed but contain all the pertinent information. Also, these policies should be the same for all employees regardless of their classification. This will make it easier for payroll managers to manage paychecks and tax payments.
  2. Electronic notification of salary deposits: Switching to sending salary deposits electronically will save payroll processors a lot of time. Technology has made it easier to automate many rote tasks and save important information in relatively little space, compared to paper versions.
  3. Direct salary deposits: This task has become standard with 80% of companies and more are adopting this practice and going green. Banks offer reduced rates for electronic processing of such tasks and help companies save time and money by eliminating paper. On the off chance that an employee does not have a bank account, one payment method to consider would be debit/credit cards with the salary pre-loaded.
  4. Setting up an annual payroll calendar: If payroll operations are done in-house, setting up a calendar listing all the important payroll cycle and tax dates helps a lot. If inputs for processing are also listed, it makes the job easier for the payroll team to carry out.
  5. Managing overtime: Overtime policies can vary from country to country, between companies and even between departments. Managing overtime can be cumbersome and is one area with more mistakes than usual. This can be managed by simplifying rules or using software that can automate calculation and payment of overtime.
  6. Payroll outsourcing: This is an option available to companies of all sizes and many choose to go this route. Outsourcing is a great time-saver and cost-effective too as it lets professionals handle deadlines and so on. This is particularly helpful for small businesses that don’t have the bandwidth to hire one or more HR professionals. It also frees up companies to focus on other essential business activities.

Since payroll is a critical element in a business process, fixing issues will help other departments streamline their activities, if it is needed. This is important as an efficient workplace supports a healthy and profitable business model. Efficient systems help employees become more productive and with higher accuracy. Fine-tuning systems on a regular basis offer chances to simplify, integrate and streamline processes across departments. If any new technology is introduced, training programs will help users to incorporate tools and carry out tasks efficiently.


Taking steps to change processes is good for every organization and requires a bit of patience. Such implementation, especially in the payroll department, will help it to become a strategic partner in an organization and create great opportunities. Companies that are able to tackle challenges head-on stand a better chance of weathering cyclical market changes.

Author Bio:

Lingappa is the General Manager of Payroll Operations at Paybooks. He has been working in the payroll industry for over 13 years gaining unparalleled experience in managing payroll, payroll outsourcing and payroll implementation.

Leave a Comment