An effective payroll department is crucial to maintain a high level of employee satisfaction and enhance overall organizational productivity and efficiency. Employees expect their organizations to pay them consistently and on time with the amount stated in their contracts.
A slow, too complicated, or error-prone payroll system can result in a strained relationship between employees and the employer and squander the HR team’s time.
So, how to structure the payroll system to achieve efficiency, be compliant and ensure timely payment?
Deciding on the payroll system's structure is an important part of every organization’s payroll solution strategy – irrespective of whether it operates globally or just in its home country. The structure mainly depends on two things – how concentrated the payroll solutions activities are and what should be the level of payroll activities outsourced vs. in-house. Let us walk you through these two considerations in the succeeding sections.
Degree of Concentration of Payroll Activities
As an organization starts expanding across states, provinces or country boundaries, the number of employees increases, and the workforce becomes diversified. And in turn, the payroll system becomes more complex because of varying regulations and laws applicable in different regions.
Initially, a company’s tendency may be to have different payroll departments for every business unit or location, which usually results in non-standard processes, redundancies, and inefficiencies.
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