By Scott Bowen
At many organizations, the question of what business unit should oversee the payroll function will produce the following answer: “Accounting, of course.”
Then human resources will enter the conversation, with good reason. Rules governing employee compensation and status have a direct impact on payroll.
But what if HR and accounting could work together to jointly manage employee matters, to maximally efficient effect?
That sort of integration is possible now, in this era of cloud-based global human capital management (HCM) systems. Such systems not only simplify cross-border workforce management, but they can also be used to combine HR and accounting data and intelligence, helping organizations better navigate increasingly complex regulatory, hiring and compensation matters.
This approach can boost payroll efficiency while also helping organizations improve operations — and, in turn, their performance and productivity.
The Data-Driven Symbiosis Of HR And Accounting
“The need for cloud-based data sharing and communication between HR and accounting is rising,” said auditing and accounting expert Nina Chmura, a partner, effective July 1, with audit and tax advisory WithumSmith+Brown.
Government regulations around minimum wage, overtime, benefits and other labor rules have recently been driving policy-focused interactions between HR and accounting. Organizations are now looking beyond how they hire, keep and pay talent to find data that helps make operational adjustments to boost employee performance and productivity, Chmura said.
“The advent of cloud-based computing and real-time data has allowed for a lot more flexibility to make real-time decisions, as opposed to just looking at what’s happened in the past quarter or the past year,” Chmura said.
“You can figure out which employees are working the most or the least and come up with the median information needed to set policies and help the C-suite make the labor decisions they need to make,” she added.
How Data-Sharing Changes Policy
When an employee leaves, an organization loses a lot of value, including the time and money it invested in training that person.
Competitive compensation and benefits are considered the best way to attract and retain employees. But policies must evolve to keep pace with what workers want and need in today’s highly mobile workforce. That requires combined thinking and strategizing between HR and accounting.
Chmura uses an example of a cloud-based paid time off (PTO) bank that both departments and employees can use.
“Accounting says to HR, ‘Hey, employees are leaving and they earned all this vacation time, so we’re having a significant payout,’” Chmura said. “And HR replies, ‘We need to create a PTO bank that’s easy to manage, and that also helps people facilitate their lives better.”
It’s a win-win: Refining policies in this way can save an organization money and give employees more flexibility in managing their PTO.
Hurdles Between Company And Cloud
Cloud data-sharing can bring its own challenges, of course. For one thing, both the HR and accounting sides can resist sharing information, given that so much of what they handle is confidential.
Integrating the tech stacks of two different departments can also create hurdles, not least of which are security concerns. And although resistance to cloud tech is vanishing quickly from the corporate landscape, you can still find pockets of it, particularly at organizations where decision-makers are set in older ways of working.
“They may view cloud-based data-sharing as a very big disruption in day-to-day activity,” Chmura said.
They’re right, in a narrow sense. Switching to the cloud will inevitably necessitate some disruptions. That said, larger organizations and those with a growing number of younger, more tech-savvy employees have become accustomed to handling real-time data, Chmura said.
The cloud software as a service (SaaS) model is driving all other models before it.
Getting Used To An All-In Cloud World
Indeed, the 2016-2017 Sierra-Cedar HR Systems Survey found that organizations using HR applications in the cloud are at least twice as likely to report that their overall business needs are met. Sierra-Cedar also said that over the next 12 months its survey respondents (1,528 organizations, for a total workforce of 20.6 million employees and contingent workers) expect to increase their SaaS/cloud payroll adoption by 11 percent.
Gartner said in September that by 2025, “55 percent of large enterprises will successfully implement an all-in cloud SaaS strategy.”
And as this revolution continues to occur, it will inevitably affect employee behavior and how business functions work, with accounting and HR being no exceptions. Part of adapting to an all-in cloud world will require new thinking about proactive, strategic roles for all business units, which will have to be ready to address the unforeseen.
“The biggest winners will be able to chip away at the mindset that HR functions and accounting functions are back-office functions,” Chmura said. “Changing that mindset can have a big impact on profitability.”
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Scott Bowen is a freelance writer who has written for True/Slant.com, ForbesTraveler.com and Fortune Small Business. His fiction has been anthologized in “Tight Lines: Ten Years of the Yale Anglers’ Journal.”