Trends, Products, and Best Practices to Help You Create a Work Made Human Experience

How to Integrate Your Payroll With Your HCM System

Felicia Cheek
Product Strategy Director, Payroll

Almost everyone realizes that human capital management (HCM) and payroll systems are most effective when they are integrated. Even when HR and payroll systems are integrated, most do not have a high level of integration with many failing to accommodate the additional fields necessary to calculate gross-to-net in some countries. A common example is Germany’s requirement for a church code, which is often only stored in the payroll system, limiting the ability to perform robust reporting in the HCM.   A comprehensive HCM system has the ability to be the system of record if consideration is give to all elements of pay during the implementation. 

Companies understand that if a truly dynamic and robust integration between the HCM and payroll systems is missing, the latter becomes the system of record for payroll  data. This means that the time and money being spent on a global HCM system are going to waste, as multiple systems need to be accessed to achieve comprehensive employee data.  And, in extreme circumstances, double data entry occurs, limiting productivity. 

LEARN MORE: Unify Finance and HR

As a result, leading  organizations are focusing on the overall data flow and ensuring it is integrated and there is a single source of truth. An integrated solution has the ability to trigger appropriate actions for an employee event across all modules with minimal intervention required for each module.  This allows staff members to focus on more value added activities like reporting and analytics, or other information and activities that leverage payroll information to provide decision support to the broader organization.  

The seamless flow of data from module to module is an absolute necessity for high performing payroll organizations. With this in mind, the vendor market has begun paying much more attention to streamlining and enhancing the data integration process. For example, data aggregators are putting much more emphasis on analytics and reporting capabilities to better enable payroll organizations. This in turn can be used to support decisions enterprise-wide and increase the payroll organization’s value proposition. Vendors are using their capabilities in this area as a competitive differentiator. 

While many believe that payroll and HCM systems should work together, few actually do. Learn the best practices for a successful integration.

In addition, many companies have their own data warehouses. They are trying to use these systems as a source of leading indicators to help management make better business decisions. Many payroll teams have created exports to flow into this type of system to verify and provide key metrics (e.g., overtime hours, total cost per pay slip, total cost per cost center). Vendors, for their part, understand the importance of smooth integration of these systems and are building or introducing links with payroll, including dynamic data exchange capability in their products.

To prepare to address HCM integration issues, payroll leaders should take these steps: 

  1. Create an accurate architectural diagram identifying all ingoing and outgoing connections to payroll systems: In order to ensure a comprehensive diagram, interfaces across all countries should be included. 
  2. Meet with stakeholders who maintain or are involved with these systems to get consensus regarding the importance of integration: It is important that primary integration points are understood and agreed on by all parties. Payroll should present a clear and compelling case to automate data integration regardless of the size and frequency of the data. Alleviation of manual intervention is the goal. Everyone should understand this vision to ensure the expected outcomes are achieved.
  3. Build a plan together around the original build and maintenance (include roles and responsibilities): The best way to gain consensus is to clarify requirements and expectations at the outset, whether the integration is with a third party or an internal partner. 
  4. Issue regular reports on the status of integration efforts to the company’s governance organization to give it visibility and momentum: System integration should be treated like any other project. The appropriate metrics should be used to report progress, as well as information about items needing escalation to the correct governing authority.
  5. Celebrate wins by publishing results and impacts: Unless 100% integration has already been achieved process-wide, this should be an item on the payroll performance scorecard. It is important that everyone is aware of the progress being made and is excited about the expected outcomes when the project is complete. 

Integrate Payroll with Your HCM Solution 

Are you looking to integrate your payroll operation with your HCM solution? Turn to Oracle Global Payroll, where you can support a myriad of requirements across organizations, workers, and industries to enable efficient, compliant, and configurable payroll across the globe—and leverage predefined integrations with your payroll providers, reducing complexity and cost. 

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