In the US it is most common from my experience that payroll reports to Finance and HR is a separate department.
Now, for the most part an HR process is going to have an impact on payroll. So when we design HR processes even for an HR shared services environment, we know that there's going to be a hand-over to payroll somewhere in these processes. This often results in problems with data not being complete by the time payroll is executed. This in turn leads to a strained relationship between payroll and HR. Payroll feels HR doesn't doesn't understand that they need to get the data in soon enough for the payroll run; HR feels payroll doesn't understand how much data they're dealing with. systematicHR also wrote about this recently.
I'm noticing that this is now being recognized as an issue that can be resolved by consolidating payroll and HR resources into teams. It seems that organizations are beginning to follow this approach. These organizations are using teams consisting of both HR and payroll resources to maintain the data for a particular employee from start to finish. A different payroll resource will still execute payroll to properly segregate duties. But the number of process handovers are reduced and employees feel they get better service.
It's not simple to get to this point, though. One has to be careful in advising this approach - one danger is that it could result in a turf war between HR and Payroll.
In addition, this raises an interesting question: does an organization take it one step further and try and assign specific employees to the various HR & Payroll teams ? I would imagine that this could resolve a lot of employee frustration, especially if one adds benefits resources to the teams also. However, it does require a method for assigning employees to specific teams, a process for notifying employees of team changes, a process for users to identify which team has been assigned to a specific employee and so on. Fortunately these processes can readily be accommodated, at least in SAP HCM.
So this is to say that in the area of transactional processes there is still room for improvement, even though the focus today is on the value-adding processes of talent management. I hope we'll see stronger willingness to take a process-and-team approach in the HCM space in the future.
