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Why do HRs need to adopt a Payroll?


Human resource (HR) departments all over the world juggle a multitude of HR tasks and responsibilities on a day-to-day basis all year round. These HR roles and responsibilities may include hunting the best talents across lengths and breadths, hiring and onboarding them, engaging them, and preparing their payrolls at the end of each month. Payroll and HR go side by side. 

Running payroll tasks at the end of each month can be overwhelming and tedious for small and big organizations’ HR and accounting departments. This is because one has to take care of CTC, basic pay, house rent allowance, travel allowance, dearness allowance, employee provident fund, income tax and so on, for every employee in the organization. Also, discrepancies in payroll may hinder employee engagement as salary and benefits are most important for employees. 

Now, imagine repeating the entire process for 300-500 employees in various roles and designations every month, every year. It sounds exhausting, right? Here, online payroll software comes to the rescue! 

What Do You Mean by Payroll?

Payroll operations do not simply mean paying salaries to the beneficiaries periodically. It is an elaborate process that involves multiple steps and procedures. At the business unit level, the best payroll software in India performs the following functions:

  • creating robust policies such as pay parity, leave encashment, perks, and benefits, and so on;
  • elaborating basic components in the employee’s payslip such as basic pay, variable pay, joining bonus, travel and internet allowance, and house rent allowance;
  • mentioning other special benefits such as meal allowances, parking allowances, etc.
  • performing calculations involving gross and net salary after statutory and non-statutory deductions; and 
  • releasing employee salaries and uploading payslips on human management systems.

The formula to calculate net pay, i.e., the in-hand compensation credited to the employee’s bank account after all deductions, is given by:

Net Pay = Gross Income – Gross Deduction 


Gross Income/Salary is nothing but the total Cost-To-Company (CTC), barring deductions.

Gross Deduction is all regular or statutory deductions such as home loan EMI, insurance premium, etc. 

The Need to Adopt a Payroll

Running a business is never easy. It is obvious that if it is a big organization, multiple departments, and HR executives will be looking after your business. However, when it comes to small organizations or startups, there is usually just one or two employees looking after a gamut of business activities, ranging from sales tally, people management, and customer support to payroll. 

Though organizations have started outsourcing their payroll activities to third parties or hiring through various recruitment consulting firms, a more simplistic approach would be bringing on board the services of HR payroll software.

Let us look into why investing in a good payroll system may add to your future business prosperity and employee engagement. 

  • Avoids Errors and Omissions

Running payrolls correctly and on time is crucial for employee productivity. This is because employees work hard for their month-end remuneration. Suppose payroll data contains human errors or is delayed for some reason. In that case, the salaries are not disbursed on time, adversely affecting employee morale and productivity in the short run and causing legal problems for your company in the long run. The company’s reputation gets tarnished in the market, and your valuations are hurt.

Payroll software involves very few manual interventions and is accurate in generating payrolls. Once the data set is entered for a particular employee, each month, their account is credited with the same salary amount, neither less nor more.

  • Time-Saver

Payrolls are exhaustive and consume too much time, especially in large organizations. Usually, there is a set period (ranging from a few days to weeks, depending on the company size) before the salary date when the HR department begins calculating monthly payrolls. Sometimes, HR professionals may mistakenly delay payroll calculations owing to any reason or emergency. It might develop confusion and uncertainty among the employees. 

With sophisticated payroll systems, the entire payroll process becomes so smooth that tensions vanish into thin air. The time limit in preparing payrolls is reduced to half and the efficiency faces a boom.

  • Data Security

The salaries of employees vary from role to role in a department. The salary figures of each employee are a personal entity and privy between the employee and the HR department. This is why payroll and all associated data must be secure and discreet to avoid organizational chaos. 

Most e-payroll systems today are cloud-based software with in-built data protection and security tools to avoid any loss of personal or payroll data. They contain a lock feature so no one from within or outside the company can view payroll and associated information.

  • Customizable

Most payroll services today are designed keeping the theory of “one size does not fit all” in mind. They know that with varying sizes of the company, their needs and requirements change as well. Even more so, with time, the requirements of the same company can alter in the future. Payroll automation helps here. 

Every field, column, and menu option on-screen in your payroll system is customizable, ranging from payroll cycles to compensation structures, tax calculations, etc. This eliminates the stress of finding the right payroll software for your company since almost all of them can be tailor-made per your requirements.

  • No Expertise Required

At a cursory glance, operating payroll processes may seem difficult and obscure. However, most payroll systems come with a simple and user-friendly interface. Thus, the need for an expert with years of background knowledge of payroll taxes in operating payrolls has become age-old. 

With just a few days of practical and hands-on training, any inexperienced person can start running payroll quickly. All you need is technological fluency to navigate basic software gestures. Thus, payroll systems minimize additional resources that can be allocated to other functions or tasks.

  • Cost-Effective

Most organizations assume payroll systems are costly, but it is a myth. The cost of the user licences of the payroll system per employee is quite affordable. Transitioning from manual to automated payroll is a cost-effective move that ensures efficient payroll processing. Further, since your employees are happy with on-time salaries, they perform well and bring in more revenue for your company. With a simple move, you can control employee attrition and grow your business year-on-year. 

  • Reliability

Manual interventions are minimal in automated employee payroll systems or cloud payroll software, so operations are authentic and reliable. The monthly reports generated by these systems are well-documented and can be used to analyze key drivers and analytics. With the power of these visual and appealing reports, you can design your business strategies such that the resources spent are minimal, but the profits generated are maximum.

  • Employee Portal Access

Modern payroll systems provide employees with an employee access account and a self-service portal. This means that employees can safely log in to their accounts in these payroll systems and view their CTC structure, deductions, gross and in-hand salary, and so much more. They can also auto-download or request salary slips from their employers through these payroll systems. 

This cements trust between an employer and employee and paves the way for higher business growth and turnover.

  • Ongoing Support

The payroll software features do not end with simply paying a one-time fee or purchasing user licenses. It is a long partnership between your organization and the payroll software company. As long as you are a subscriber, you can access their 24×7 customer support for existing or upcoming features. 

Additionally, some payroll companies even train your payroll teams on how to use their payroll system free of charge once you become a subscriber. This implies that you do not have to spend time or money training new joiners in the payroll department. These savings can be very well utilized in other spheres of your business.

Wrapping Up

Payroll and HR departments are crucial for a company in general and the HR department in particular. Timely disbursal of accurate salary and flexible payroll per the employee’s appointment terms is critical. Thus, the need to invest in sophisticated online payroll software by organizations, big or small, is right now.sumHR offers the best-in-class technology in terms of its payroll management and HR management software. This helps organizations automate payroll processes without needing an expert in the HR department.

Why is a payroll system important?

An efficient payroll system can help organisations run and maintain correct employee payrolls, keeping them satisfied and engaged.

Who is responsible for managing payroll in an organisation?

In almost all organisations, an HR is responsible for managing payrol

What are the types of payroll?

There are broadly four types of payrolls—internally managed, professionally managed, software managed, and payroll system agency managed payroll.

What are the benefits of choosing payroll software?

Payroll software helps you save time, reduce errors, enhance transparency, and address employees' concerns efficiently.
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Picture of <small style="font-weight:400;font-size:16px;">Written by</small><br>Team sumHR
Written by
Team sumHR

SumHR is a flexible and configurable end-to-end HR Software/HRMS which help HR teams automate the HR Processes, and improve the employee's HR experience.

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