5 signs your business needs an integrated payroll and HR system

Payroll and HR are among the most important cogs in your back-office machine. These processes (and the systems they run on) are crucial not only for keeping your business on track but also for keeping your people happy.

If you’ve grown your business, added new employees, and updated your HR policies over time, then you’re clearly doing something right. But has your payroll and HR system been keeping up?

When it’s “business as usual”, it can be tricky to know whether you’ve outgrown your payroll and HR systems. In this article, we’ll take a look at some of the benefits of using an integrated payroll and HR system and some signs that it’s time to upgrade.

What is an integrated payroll and HR system?

Business software comes in all shapes and sizes, from standalone apps that perform a single function to interconnected cloud-based systems designed to give a centralised view of your business.

Integrated payroll and HR systems bring together two incredibly important parts of your operations. And it makes sense since HR and payroll are often highly interwoven, with many areas of policy overlap.

After all, why would you keep the information about what leave an employee is entitled to in a separate application from the one that pays them out?

An integrated payroll and HR system is essentially a software solution that combines human resources management and payroll processing functions in a single platform.

Integrating these operations means you can streamline various aspects of employee management, from hiring and onboarding to time tracking, payroll calculation, and benefits administration.

With an integrated system, your HR and payroll data is hosted in one place, giving you a better overview of your financial and human resources and getting rid of the need to flick back and forth between two separate pieces of software.

There are a lot of integrated systems out there to choose from, each with its own features. But typically, an integrated payroll and HR system will deal with:

• Core HR processes like hosting employee records, benefits administration, time and attendance tracking, and performance management
• Payroll processes like salary calculations, tax withholding, deductions, and direct deposits
• Recruitment and onboarding tasks like job postings, applicant tracking, and new hire orientation
• Time and attendance processes like time clock management, overtime calculations, and leave approvals
• Benefits administration, including health insurance, retirement plans, and other employee benefits

Top benefits of using an integrated payroll and HR system

Using an integrated payroll and HR system offers a lot of advantages over using two separate solutions.

Allows you to make better use of your data

Having all your employee information stored in a single, centralised database is not only more efficient, but it also reduces the risk of errors, inconsistencies and other hiccups that can occur when data is managed in and often manually transferred between multiple systems.

Centralising data also means you can see updates and changes in real-time, ensuring data accuracy and eliminating the need for manual data entry. Your system is always up-to-date, information is consistent, and there’s no confusion over different information being shown in different systems.

This amalgamation of data gives you a much better overview of your HR and payroll operations too, allowing you to produce more accurate, comprehensive reports with less manual effort and learn useful insights about your business.

Helps you work smarter and faster

With a single system handling multiple HR functions, you and your team can reduce the amount of time and resources spent on admin. Plus, only having one system to work from cuts the potential for data entry errors and other issues in half.

You may even be able to automate certain tasks completely. Integrated HR and payroll software is often cloud-based and equipped with modern functionality that can save you a lot of time.

Many systems allow you to automate jobs like processing holiday requests, making payroll calculations, and onboarding new staff, leaving you more time to do other things and getting important tasks like making sure your employees are paid correctly done faster.

Supports better decision-making

Bringing all your invaluable people and payroll data together means you get a lot more from your analytics. With better data flow, you can easily access a wealth of data and make more informed decisions based on accurate information and trends.

This enhanced data flow means you can glean additional insights that help you get ahead. When your Payroll team is able to access people-related data from Sage HR, for instance, they can get a better view into things like cash flow forecasting.

Offers improved data security and compliance

When it comes to sensitive personal data, the way your software handles it could be an issue.

By limiting the number of physical locations where sensitive data is stored and ensuring digital access is secure, you reduce the risk that it might be unlawfully accessed or stolen in a data breach. It is essential to choose a system with an impeccable security track record to ensure that any cloud or software-stored data is handled with cutting-edge care.

The concentration of your data also makes it easier to audit for compliance purposes. Centralised records are, by their nature, more likely to meet regulatory requirements than data that’s spread across multiple systems. Integrated systems can help boost your compliance with employment regulations further by automating tasks like tax calculations, tracked consent, managing subject access requests, and reporting.

Cuts costs

As well as the money that can be saved by having just one software license rather than two, an integrated system can also cut costs by reducing administrative spending. Through the automating of tasks and streamlining of processes, you can save time and the ensuing costs associated with managing your workforce.

In the long run, the improved productivity and better employee experience that integrated software helps you deliver can also add up to cost savings through factors like reduced staff turnover.

Delivers better employee experiences

As well as delivering accurate and timely compensation and benefits for your employees, an integrated solution can reduce errors and cut down on the need to manually input data—all of which your employees will surely be grateful for.

By automating certain processes, your integrated payroll and HR system can lead to faster response times for employee enquiries and requests too. Many integrated solutions include employee self-service portals, where employees can access their information, submit requests, and manage their benefits themselves through a single interface, helping them get things done more quickly and improving their overall experience even more.

Gives you scalability as your business grows

Thanks to their flexibility and cloud-based nature, integrated payroll and HR software can scale with you easily as your business grows, giving you access to new features and greater capacity without the need to change systems or implement time-consuming upgrades.

5 signs that your business has outgrown its current system

Often, when business owners start their entrepreneurship journey, they have a small number of employees and little need for more sophisticated, feature-rich software. So, they use simple payroll and HR software systems designed for small organisations.

These solutions might serve your business perfectly well for years, ticking all the boxes and executing simple processes that get employees paid. But as the business grows and teams get larger, these systems might struggle to keep up and deliver the additional functionality that it needs. When you’re focused on your growing company, upgrading your software might not be at the top of your to-do list.

But if your teams have grown and your HR policies have become more complex, then your current system may be lagging and unable to deliver the kind of speed, cohesiveness, and functionality that you need for growth.

Here are a few signs to look out for if you think you might be outgrowing your payroll and HR systems.

You spend a lot of time doing manual, repetitive tasks

We all know how time-consuming data entry can be, and that goes double when you’re using multiple for all of your HR and your payroll processes.

If you’re spending a significant amount of your valuable time on manual data entry, payroll calculations, or HR paperwork—or you’re frequently finding errors or inconsistencies in payroll or HR data—it’s a sign that integrated software and automation could improve efficiency.

You find yourself bumping up against limitations

If your current system can’t handle an increasing volume of data or the implementation of new processes to cope with growth, it may be time for an upgrade.

As your headcount increases, so does the complexity of your HR operations. New staff members bring with them additional needs and entitlements that require extra software features; what do you do the first time an employee needs to claim expenses and your system doesn’t have the functionality to deal with it?

If you find yourself in need of new HR or payroll capabilities, like time and attendance tracking or shift scheduling, and your current system can’t accommodate them, then you’re going to require a more robust solution.

Outdated or insufficient systems can create frustration on the employee side too. Without easy access to important HR information, such as benefits, policies, or company news, employees can end up feeling confused and unsupported. They may also miss out on benefits or opportunities because of this limited information, which could hurt them and your business.

You struggle to keep up with compliance

The bigger your business, the more labour laws, data regulations, and privacy standards you’ll need to adhere to. If your current system doesn’t have the features or updated information to help you meet compliance requirements, your business may be subject to fines or rebuke from the tax authorities.

Operating multiple systems can make it extra challenging to maintain proper audit trails, especially if these small-scale systems don’t log all the information you need to present for audits or inspections.

Having multiple disparate systems also increases your risk of security breaches.

Your employees aren’t happy

The way you operate HR and payroll has a massive impact on your employees. Slow service and lengthy approval processes, late payments, and lack of self-service can put a dent in employee morale, which can lead to high turnover and a poor employer brand.

If you can’t ensure your employees are paid accurately and on time, every time, then you definitely have a problem. If inadequate software is causing incorrect pay cheques, delayed payroll processing, tax errors, or difficulty getting time off approved, then it’s not fit for purpose. These things can cause your people a lot of stress and hardship and should be addressed immediately.

Your costs keep mounting

Software that’s not up to the job is a lot like an old car; you often spend more trying to keep it on the road than is cost-effective.

You may find yourself forking out as a result of its inefficiency: penalties for late payroll submissions, fees for manual data entry, and even fines for non-compliance or failure to meet data handling regulations. Then there’s the cost of ongoing maintenance and the upgrades, extra licenses or additional data storage costs required to help make the software suitable for your business.

Final thoughts

Sometimes, less is more. Consolidating your payroll and HR processes into a single, integrated platform gives you access to more functionality, time-saving features like automation, richer data and insights into your business, and an overall smarter way of doing things that benefits both your business and your employees.

If you’re tired of juggling disparate HR and payroll systems and getting poor results, it may be time to see what an integrated system can bring to your business.