What is a payroll cycle?
A payroll cycle is an administrative process of paying employees recurring compensation. As long as companies adhere to government pay regulations and their own policies, they can pay people of different employment statuses–salaried or hourly-wage workers–at different frequencies (bi-monthly, monthly, weekly, or biweekly.)
The payroll cycle involves a series of steps:
- Updating employee information
- Entering the hours worked
- Deducting taxes and benefits from gross income to calculate net income
- Dispensing compensation through direct deposit, check, payroll card, cash, or mobile wallet
- Routinely conducting payroll audits
Why should HR leaders care about payroll cycles?
Within the employee-employer relationship, each party must fulfill its responsibilities. Employers carry out a critical component of their obligations by paying people accurately and on time and contributing to a positive employee experience. A satisfactory payment process is essential for higher retention, engagement, and productivity. If people struggle to acquire their pay, they’re likely to lose trust in their company and look elsewhere for another job.
What can HR leaders do to maintain a functioning payroll cycle?
Here are five ways HR leaders can upkeep a seamlessly operating payroll cycle:
- Constantly communicate with your payroll and finance teams. Payroll may be within finance, HR, or perhaps a completely separate department depending on a company’s structure. Maintaining a triangle of communication, however, is a must. These three departments can prevent critical information from slipping through the cracks through consistent communication, avoiding budget or legal complications down the line.
- Integrate payroll software. A centralized system that securely displays people’s names, bank info, and relevant payment data enables HR, finance, and payroll to access the same information and receive updates simultaneously.
- Assess company payroll policies. Routinely evaluating the policies helps HR ensure that the organization’s bylaws support convenient, consistent, and fair pay. If government compensation or benefits regulations change, the company policy must adapt to accommodate people’s needs.
- Prioritize compensation concerns. People, understandably, often feel emotionally charged about compensation. Treat employees as if they’re customers and listen to their concerns with empathy and patience. If HR and payroll need more time to figure out a problem, thoroughly explain the circumstances to people. This way, they can more easily see that the company appreciates their concerns and is working to find solutions.
- Ensure availability. An AI-powered system enables people to independently answer common questions without having to wait to speak to an HR professional. However, sometimes people want or need to talk to a human, so ensure that someone is available by phone, email, or messaging. Maintaining this accessibility reflects that the company values its people’s needs.
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Why should a payroll cycle be part of the modern HR strategy?
A payroll cycle enables HR professionals to keep track of all the necessary details to pay people correctly and on time. Proper and timely payment is a prerequisite for a better employee experience, a smooth-functioning company, and a positive brand reputation.