Some people think payroll is a function of the finance department. Maybe it’s because payroll is often the biggest, or one of the biggest, expenses in any business. Or maybe it’s because calculating how much money is owed to each employee or contractor, how much money to deduct for benefits, etc. seems like a task more suitable to an accounting person than a people person. Let’s explore why payroll belongs with the personnel department.
Every department has expenses. Since the personnel department is responsible for all people-related activities such as hiring, training, benefits, and separation, it makes sense that the task of paying all those people for their time also belongs with the personnel department. We don’t move an expense to another department just because it’s big.
Making sure that people are paid the correct amount, on time, is a big responsibility of the personnel department. People tend to leave companies or organizations that fail to pay them correctly and in a timely manner, because those people have bills to pay and if you don’t get payroll right, they’ll find another employer who does. The staff of the personnel department are most familiar with the cost of losing good people because they are involved in that separation plus the work of hiring and training replacements. They are the most motivated to ensure that people are paid correctly and also have all the information necessary to calculate and deliver the right amounts to the right place.
The personnel department can coordinate with the accounting department to ensure the money will be available in the company’s accounts for the next payroll period and to provide the payroll expense report, just like any other department with expenses.
Compass
See more about personnel activities and finance activities.