Who owns the Reward Strategy; HR, Payroll or both?
Great question; does anyone know the answer because when I speak to my HR colleagues they say it’s them, and if you talk to my Payroll ones, they will say its them too.
So why is this an issue and why isn’t this part of HR’s North Star (1) strategy and settled once and for all. It probably doesn’t help that Payroll doesn’t have a governed owner and sadly it seems to either fall into HR or Finance depending on the company. My own controversial view would be to sit Payroll as a standalone function. Payroll would then be the conduit between HR and Finance. This would further enhance the relevant controls from a compliance perspective and reduce the amount of payroll fraud that’s out there today (that’s for another article and a greater debate). Putting in either camp is wrong in my eyes, as HR data should feed Payroll and, the output of Payroll should feed Finance.
I digress; coming back to the subject at hand; this should be a simple matter to resolve and I can probably kill this question of with one simple answer, it’s HR, right?
Wow that was probably the quickest article I’ve had to write ever….
HOLD YOUR HORSES GLENN; so, does that mean that HR are all knowing when it comes to the implications of the delivery of the reward elements? And here’s where I see payroll coming in. The answer for me in the vein of “keeping it simple stupid” (that’s me by the way and not you) is that the Reward Strategy must be a consultation between HR and Payroll. Let me explain, you have a) a specialist (HR) who is looking at the link between performance or not (that’s another article) and the impact on an employee’s total remuneration and b) the other specialist (Payroll) who will know the statutory in’s and out’s as to whether items would be classed as taxable or not (I’m keeping this simple again) and they will have a view as to where in Finance it should be charged to, and can model the costs of any new initiatives. Makes sense?
From a UK perspective both Institutions almost claim ownership of Performance and Reward (Profession Map) and they are the Chartered Institute of Personnel and Development (CIPD), whilst their counter-part, the Chartered Institute of Payroll Professionals (CIPP) claim items like the obvious Income Tax, Salary Sacrifice, Payrolling Benefits etc.
Of course, the above picture gets even more clouded as you move out of the UK and that’s exactly where you do need Payroll, especially when you start to talk about Double Taxation Agreements, Expats and Shadow Payrolls etc.
Wait there’s more I hear you say so who’s looking at National Minimum Wage; surely that’s HR as they would be monitoring this, or again is this Payroll as they have all the facts and figures?
There are other competing items which seem to be falling in either one camp or the other and you would think that in the 21st Century this would be resolved; however, as you can see it’s not. Isn’t it time that the CIPD and the CIPP sat down and thought this through so the clarity can we sort and the sorts of mistakes that I’ve seen and heard of over the years never happen again e.g. HR independently thinking this will work and Payroll then saying no it won’t because you haven’t considered x, y or z? Think of the credibility lost in the Boardroom and this adding to the perception that HR and Payroll don’t know what they are doing when in reality they do; it’s just they are not talking to each other.
It’s the 21st Century not the dark ages anymore and the CIPD and CIPP have an obligation to resolve this ongoing debate. No, it’s not a disaster but day in day out there are HR and Payroll teams around the world who are not joined-up. After all, isn’t it our duty in HR and Payroll to ensure that employees are not impacted by the left-hand not knowing what the right-hand is doing? Also, isn’t its Payroll’s strategic place to utilize the legislation that they governments around the world bring out to the betterment of our employees by suggesting different reward items which in turn can save companies euros/pounds/dollars. It’s time for a change and it’s time that this was dealt with once and for all.
Note: This article is drawn from the book Human Resources Changes the World by Glenn G Jones.