Benefits and Process of Payroll and HCM Integration

August 24, 2022
6 mins read
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Human Capital Management (HCM) covers a broad area of important business activity. Payroll Management is an integral component of HCM, because it is necessary for ensuring that employees are compensated fairly and accurately. As companies grow and expand, they have more HCM-related data to manage, and can easily get stuck with slow and inefficient HCM and payroll systems.

Our research suggests that less than 15% of businesses are operating with truly integrated HCM and payroll. This undoubtedly causes substantial risk for their global payroll process, as data is lost, misused, or damaged.

Businesses that complete a tight global payroll integration with HCM, enjoy streamlined management of all their employee information. This helps them pay employees correctly, ensuring compliance, visibility, and cooperation with all other areas of HCM.

Digital payroll processing, in an integrated system, is the only way for companies to meet today’s global payroll challenges.

HCM in 2022

The HCM market is vast and growing. It is expected to grow by $12.16 billion between 2021 and 2025. The reason for this growth is that HCM applications can help tackle multiple challenges at once.

In 2022, HCM includes many different domains:

  • Core HR is what most people think of when they think of HCM. It includes organization management, personnel administration, movers and leavers, benefits administration, and travel and expense management.
  • Recruitment involves requisition management, sourcing, candidate management, selections and offers, and employee onboarding.
  • Talent Management involves compensation management, performance and goal management, succession planning, career planning, and training administration.
  • Workforce Management involves schedule management, time entry, project time booking, absence management, and paid time off.

HCM types split into 4 categories

Ideally, payroll processing involves gross and net pay calculations, country-specific compliance, employment compliance, financial integration, and retroactive and part-time pay. While the reality often comes up far short of this, only a truly global solution can deliver on this promise.

Success in each of these domains is crucial for modern-day HCM. Payroll affects all of them, and payroll data is relevant to every domain. World-class HCM needs a world-class Global Managed Payroll Solution.

Why integrating HCMs and payroll help organizations

Payroll is at the core of HCM because that is the primary medium of exchange for employees. Employees define the value of their work by how much and when they are paid.

Immedis is a global payroll solution platform that solves the payroll aspects of HCM in six ways:

  • Automating payroll processes.
  • Providing confidence in compliance.
  • Delivering a later cut-off date for payroll close.
  • Improving the accuracy of information.
  • Reducing payroll processing effort.
  • Reducing the volume of payroll queries due to inaccuracies.

Integrating global payroll data with HCM is a sound business strategy because it solves the clerical problems associated with non-integrated information.

In particular, an integrated payroll system can transform your business activities in these ways:

  • from information stored in disparate systems to a single source of truth.
  • from repetitive data entry to value-added tasks.
  • from manual data uploads to an automated flow of global payroll info.
  • from reporting and data inconsistency to reliable and accurate oversight.
  • from the risk of non-compliance to compliance embedded in processes.
  • from unconnected global payroll integration to applications servicing multiple countries.

These transformations streamline your payroll process and reduce the risk of errors along the way.

What true integration looks like

True integration is the seamless flow of information through all business processes, regardless of the source of truth. It creates a unified user experience throughout the system. This means a tight integration of both information systems and employees. In particular, cross-departmental communication is key. Payroll and HR managers need to engage with their technology and finance teams to handle all employee data.

Payroll managers can carry out detailed models of how payroll staff carry out their work. This ensures consistency and reliability, as well as a source of accountability for when things go wrong. Ultimately, integration should support the entire business process outcome.

Many businesses do not know what true integration looks like because businesses lie at different levels of integrational maturity.

In particular, we identify six levels:

  • Level 0: No integration. Based on segregated systems. Little to no communication between disparate sets of data. Passing information around is manual and error prone.
  • Level 1: Manual Uploads. Some prescriptive data uploads can be achieved manually, but the system is still error prone
  • Level 2: Flat File Exchange. Rigid data structures are hard to manage and update, difficult to change, and highly prescribed. Businesses tend to get stuck here because their entire system is ossified and resistant to updates.
  • Level 3: Structured Data. More resilient data integrity, but with basic exchange protocols.
  • Level 4: Automated. Based on scheduled and repeatable processes. Self-operating, but requires administration and monitoring. This is the first level that can be considered maturely integrated. 
  • Level 5: Business Process Integration. Based on intelligent automation. Real-time data exchange is self-healing and self-correcting on demand. This is the gold standard for HCM integration.

Survey reports indicate that less than 15% of businesses have seamless HCM and Payroll integration. In particular, a full 36% do not have any integration at all. This is a threat to data security as well as data integrity.

*Source: Immedis partnered with Global Payroll Association.

The 3 Building Blocks of True Integration

There are many ways to integrate your HCM and payroll information, but any good system will contain these three building blocks at a minimum:

  • Intelligent APIs. These help move data between systems. They handle errors intelligently, make decisions based on business events, and can handle high volumes and frequency.
  • Good data at source. Good data in equals good data out. This includes payroll inputs, core records, and non-core records, such as bank details and country-specific information.
  • Certification and Verification. Important for quality, collaboration, continuous improvement, and local fluency.

The quickest and safest way to integrate Payroll with HCM

Integrating HCM and payroll produces enormous benefits for businesses. It streamlines global processes, reducing errors and maintaining employee satisfaction. While most organizations are not in a state of mature integration, all businesses can reach that level by using intelligent APIs, good data, and certification and verification.

The fastest and most efficient connection between the payroll and HCM is with an integrated global payroll system. Immedis offers a global payroll application that helps systematically manage all the payroll details of global business.

Our system brings businesses to the highest level of integration with regard to HCM and payroll. It is self-operating and self-correcting, allowing users to submit and access data in real time across domains. Unlike outdated systems that rest on manual data entry or rigid data structures, we provide a flexible global payroll system that lets users manage payments to multiple countries with a single, centralized platform. 

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