Payroll systems come in many forms and varying complexities, even with the same vendor's range of application systems...
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and services. Employee data from your HRIS needs to be replicated to your payroll system on time, without error and in the right format to ensure one of your important processes can run on time.
The human resource information system is the data source for most -- if not all -- of the data needed by your payroll system to process payroll. In some cases, some payroll information (e.g., tax data, benefits, garnishments, specific deductions, etc.) is entered directly into the payroll system. Typically, integration is only one direction -- from the HRIS to the payroll system, although there may be other integrations out of your payroll system to other systems after payroll has been processed.
Payroll integration critical for employee engagement
There is no business process more important than paying employees. Even minor mistakes can be taken badly by employees and major problems in payroll can have huge ramifications for your business-as-usual operations. It is not unknown for workers to strike or cause other inconveniences to their employer when they are not paid as expected. Therefore, you need to get payroll right -- whether implementing it or integrating it.
Additionally, payroll is not the last stop for HR-related data. Typically, payroll data also gets replicated to other systems inside and outside of your company, such as your finance system, benefits system, pension system, analytics and reporting system and more.
Overview of replicating data from HRIS to payroll
Integrating payroll focuses on replicating employee data, compensation data and compensation component data from the HRIS. Different payroll systems require data in different formats, but typically, all payroll systems need the basic employee minimaster of data (e.g., name, address, date of birth, etc.) and their different compensation components (e.g., basic pay, bonus, car allowance, etc.). Some systems want amounts in both the amount paid as well as an annualized amount. In some cases, the compensation component objects also need to be replicated.
Quite often, the payroll system also wants other pay-related information such as grade or pay range. In the case where your HRIS is used to capture time, absence or benefits data, then this may also need to be replicated. Time recording data may need to be replicated in its captured form or post-evaluation, depending on the payroll system's needs.
Data transformation is typically an important part of payroll integration. Specific values need to be in certain formats in the payroll systems and the payroll system may want, for example, blank values to be a specific value (e.g., "N/A" or "NULL"). All of this mapping needs to be defined prior to any integration build.
Localizations are an integral part of payroll. Each country has its own regulations that often need to be catered for in an HR system and your integration will need to be able to handle these fields. In cases where there is payroll-specific data, that will often be entered directly into the payroll system.
Significant testing is required to ensure that a payroll run performed after integration runs as expected and with the correct output. The payroll run after integration should run as per the payroll run prior to the integration, with exception to any differences in data replicated (e.g., a different salary amount or different bonuses).
Challenges of payroll integration
Payroll integration is not always challenging, but does it have to be done right to avoid some of the consequences mentioned earlier -- that is, mistakes that will contribute to employee unhappiness. Some payroll systems need a full file each time, while others can accept a delta file of just the changes since the last run. Sending a full file each time can be resource-heavy and often have a long run time. This can impact the delivery of data into the payroll system that might have an impact on data validation and payroll runs. In some cases, if your HRIS doesn't handle effective dates, then it wouldn't be possible to pull out a delta file, because your HRIS won't know what changes have occurred since the last run. Likewise, if your middleware isn't capable of storing the date of the last integration execution, then it won't be able to query the HRIS for the records that have changed since the last integration execution date.
A number of payroll systems don't accept web services and, in worst-case scenarios, a report has to be sent to the vendor to input manually. In these situations, there is little that can be done other than export a comma-separated values (CSV) file or build a report to provide the vendor. However, those scenarios at least are easier to manage than with web service integration, albeit, much less secure.
Middleware, web services and more
If both your HRIS and your payroll system accept web services, you can use an integration middleware to manage your integration. The middleware can be used to pull the data from your HRIS, perform the data transformation and then push this data out to the payroll system. Even if your payroll system doesn't accept web services, many middleware platforms can export the data onto a File Transfer Protocol (FTP) in a common flat-file format like a CSV file. Some cloud-based HRISes have functionality to transform data and export a flat file onto an FTP on a scheduled basis so that no middleware is required. Usually, this functionality is designed for the more straightforward integrations.
Integrated payroll software
One recommendation would be to consider using a vendor that can provide both HRIS and payroll capabilities as an integrated product. This reduces the complexity of payroll integration with your HRIS, because common data models, point-to-point replication or shared employee data tables in a single system can mean simplified effort in ensuring that payroll can run as you need it, when you need it.
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