Integration of Payroll System with HRIS
Computerization began in the human resource area via the payroll system. Payrolls
are large masses of detailed information which need to be accurately and quickly
updated. This is a fundamental accounting activity, so organizations had little
hesitation in introducing such systems.
Early systems were computer bureaus where data was processed outside the
organization. Initially, it seemed that the promised benefits of computerization had
finally arrived. The army of pay clerks was substantially reduced. However, new
issues relating to input errors and processing delays soon arose. It is important for HR
managers to understand this history because it explains why many early (and even
some contemporary) HRIS have a bias towards payroll activities. Payroll processors
first attempted to introduce Human Resource Information System (HRIS) in the mid1970s when a major vendor offered a HR system with some additional fields of
information that could be manipulated. Although a crude attempt to take advantage of
an emerging need for HR information, the system gained considerable acceptance.
The primary purpose of a Human Resource Information System (HRIS) is to assist
both the HR manager and line managers in decision making. Therefore, an HRIS must
generate information that is accurate, timely and related to the achievement of the
organization’s strategic business objectives. It is important to analyze HRM needs
because each organization will want to use its data in different ways. Some uses of
HRIS include the management of personnel records, HR planning, recruitment and
selection, performance appraisal, training and development, career planning and
development, compensation and benefits, health and safety and industrial relations.
The issue of HR versus payroll systems is still very much alive today. One school of
thought is that they should be integrated to create and maintain a ‘complete’ system
and to prevent unnecessary duplication of effort (because much of the information
kept in HRIS is replicated in payroll systems).
According to one expert,
improvements in computer technology and the increased availability of PC-based HR
and payroll packages ‘means that human resources system integration is becoming
not just a realistic possibility, but an absolute must.’ Given the commonality of
information, there is much to be gained by streamlining data entry procedures. The
input of new hire details into a HRIS, for example, would automatically update both
the superannuation scheme and the payroll, eliminating wasteful re-keying and
potential discrepancies. Similarly, details of employee exits and the like can be
communicated to payroll. This promotes ‘increased operational efficiency and data
consolidation. Furthermore, it is likely that the accuracy of shared information will be
enhanced because payroll normally contains the most accurate and up to date
information in any organization for the simple reason that it is audited each pay
period by every single employee.
The second viewpoint is that payroll and HR are separate activities and should be
treated as such. A payroll system is seen as essentially an accounting function which
processes a large number of transactions, while a HRIS is used for HR planning and
decision making. Payroll and Human Resource Information System (HRIS) also have
other significant differences, for example: HRM transactions are variable and
dynamic, whereas payroll transactions are run in batches and are mainly routine;
HRM is event driven, whereas payroll is cyclical; HRM has history records, whereas
payroll usually maintains details only for the current year; online query capabilities
are needed for HR personnel to do their work, whereas payroll updates records
according to the pay cycle; HRM needs frequent ad hoc reports which range from
simple to complex, whereas payroll reports are usually routine. Finally, HRIS is
specifically used for processing and reporting HR information .
Source: MIS Notes_MGU
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