Payroll and HRM systems are separate in many companies because integration was generally not feasible using early data processing technology. Also, different events generate data and two different professions were interested in using the data. As a result, many companies (and their employees) became accustomed to having payroll data processed by the accounting function and personnel data processed by the human relations function. Now that modern information technology makes integration more feasible, employees in some companies are still likely to resist suggestions for change because they are comfortable with the old way of doing things. In addition, employees within the accounting and personnel functions probably feel some degree of “ownership” of “their” data, and this is taken away when control of these data is transferred to a centralized data base function.
Reasons for integrating the personnel and HRM systems include the following:
- Integration will improve decision-making by providing access to more of the relevant data needed for monitoring employee development.
- It is logical, since both systems are organized around the same entity: the employee.
- By eliminating the perception that a specific organizational function has ownership of a particular set of data, it should provide improved data access.
- It should facilitate the retrieval and utilization of employee data when the data required would otherwise have to be obtained from both data bases.
- It should facilitate the process of updating employee data, since a single update process would replace two separate updating processes.
- It should simplify the development and implementation of more complex compensation schemes, such as flexible benefits or incentive pay.
- Centralizing the administration of employee data under the control of data base management software should enhance data security.
- It should minimize or eliminate the cost of storing identical data in two different databases.
- It should minimize or eliminate the confusion that might otherwise arise when two different databases use different data definitions, or report different values, for the same data item.
- A hash total of employee wage rates should be maintained by the personnel department, and checked against the total on the payroll master file after each update of that file. Also, a reasonableness test of wage rate changes during data entry could detect this type of error if the dollar amount was large.
- Access controls should be used to limit the ability to add new records to the payroll master file to only the HR department. A report of all changes to the payroll master file should be regularly run and all changes should be verified.
- A limit check should be used during the data entry process to check the hours-worked field for each employee transaction record.
- The computer operator’s password should not allow access to the payroll master file, and a compatibility test should be performed on all transactions entered to verify that the operator’s password indicates that he/she has the appropriate access and modification authority. A backup control would be a batch total of all salaries maintained by the personnel department and checked against a corresponding total generated during each payroll run.
- Paychecks should be distributed by the payroll department, not the employee’s supervisor.
- Job time data prepared or approved by factory supervisors, or captured using automated data collection equipment, should be reconciled with employee clock cards prior to payroll processing. Observation of time clock use might also uncover punching other people’s cards. The use of biometric controls to record time in and time out would also prevent this type of problem.
- There should be control over access to payroll and other current master files, in the form of a file library function that restricts access to files to those who have appropriate authority. As in part (d), a backup control would be a batch total of all salaries maintained by the personnel department and checked against a corresponding total generated during each payroll run.
- A record count of job time records could be prepared before the records are submitted for processing, and checked subsequent to data entry against the number of paychecks prepared. In addition, reconciliation of job time records to employee clock cards should detect this. Also, a report, such as the payroll register, should be printed along with paychecks. The total number of employees listed on the payroll register should match the number of employees in the payroll master file – any discrepancies should be promptly investigated.
- All active files should have internal file labels identifying their contents and expiration date, and all programs should check the file labels prior to processing. In addition, backup copies of all current files should be maintained.
