HR and Payroll Management


what is HRM?

We often hear the term Human Resource Management, Employee Relations and Personnel Management used in the popular press as well as by Industry experts. Whenever we hear these terms, we conjure images of efficient managers busily going about their work in glitzy offices.
We look at the question “what is HRM?” by giving a broad overview of the topic and introducing the readers to the practice of HRM in contemporary organizations. Though as with all popular perceptions, the above imagery has some validity, the fact remains that there is much more to the field of HRM and despite popular depictions of the same, the “art and science” of HRM is indeed complex. We have chosen the term “art and science” as HRM is both the art of managing people by recourse to creative and innovative approaches; it is a science as well because of the precision and rigorous application of theory that is required.

hr and payroll services

The second definition of HRM encompasses the management of people in organizations from a macro perspective i.e. managing people in the form of a collective relationship between management and employees. This approach focuses on the objectives and outcomes of the HRM function. What this means is that the HR function in contemporary organizations is concerned with the notions of people enabling, people development and a focus on making the “employment relationship” fulfilling for both the management and employees.



These definitions emphasize the difference between Personnel Management as defined in the second paragraph and human resource management as described in the third paragraph. To put it in one sentence, personnel management is essentially “workforce” centered whereas human resource management is “resource” centered. The key difference is HRM in recent times is about fulfilling management objectives of providing and deploying people and a greater emphasis on planning, monitoring and controlling.

Whatever the definition we use the answer to the question as to “what is HRM?” is that it is all about people in organizations. No wonder that some MNC’s (Multinationals) call the HR managers as People Managers, People Enablers and the practice as people management. In the 21st century organizations, the HR manager or the people manager is no longer seen as someone who takes care of the activities described in the traditional way. In fact, most organizations have different departments dealing with Staffing, Payroll, and Retention etc. Instead, the HR manager is responsible for managing employee expectations vis-à-vis the management objectives and reconciling both to ensure employee fulfillment and realization of management objectives.

Why do you need an HR or payroll system?

  • HR compliance
  • Sage keeps track of the Affordable Care Act, state laws, and other federal laws to help you avoid risk and fines. We also keep up with taxes, too.

  • Talent management
  • With Sage you can do more than just pay employees and track benefits. Our recruiting software and knowledge management systems keep them engaged.

  • Increased productivity
  • Provide more sophisticated self-service ways to track time, PTO, professional development, and employee reviews.

  • Business planning
  • From payroll options to determining employee backfill needs, we help you plan your business and recruiting strategy.

What Are the Functions of Payroll vs. Human Resource?

While payroll deals with compensating employees, human resources takes care of employee relations. Although the two departments have distinct roles in an organization, they also share functions that are crucial for the organization’s success. As a business owner, you need to recognize the difference in terms of their functions but also harmonize the tasks of the two areas. Integrating human resources and payroll can reduce paperwork, allows automatic updating and reduce difficulty in providing consolidated reports.


Payroll refers to the process by which employees receive their salary. Functions involve balancing and reconciling payroll data and depositing and reporting taxes. The payroll department takes care of wage deductions, record keeping and verifying the reliability of pay data. The payroll department delivers payroll checks, maintains compliance with tax laws, records paperwork for new hires and edits existing employee files. Payroll professionals are also responsible for calculating reimbursements, bonuses, overtime and holiday pay.


Managing people within the organization, the human resources department aims to bring out the best in employees, thus contributing to the success of the organization. The primary responsibility of the human resources department is to hire new employees, and this involves attracting the right candidates for available positions. After they bring on new employees, HR professionals must make sure the employees deliver according to expectations. The HR department is responsible for motivating employees, and to this end, they reward employees by developing compensation packages that may include holiday or midyear bonus awards and salary increments. HR also develops training programs and ensures that employees follow a general direction by reminding them of the organization’s goals.


Many payroll activities are related to HR issues, so the payroll and human resources departments must coordinate shared functions. This includes recruitment, salary increases, bonus payments, benefit deductions, vacation leaves and firing employees. The human resources department must be sensitive to the time devoted to payroll processing because as the champion of employee relations, they’ll face issues directly if paychecks aren’t processed correctly and on time. The payroll and HR departments are privy to confidential employee data, including financial information, social security numbers and home addresses. The two departments must work together to ensure that this information doesn’t fall prey to unauthorized individuals or companies.


Payroll functions are covered by either the finance department or human resources department in most organizations. Deloitte’s 2011 Payroll Operations Survey revealed that 42 percent of the companies surveyed reported that payroll was a function of their finance departments, and 40 percent said that payroll was a function of their HR departments. Essentially, payroll is number-driven and calls for knowledge of tax laws and accounting. Thus, many respondents believe it should be positioned with the finance department. At the same time, payroll is also considered a function of HR because it pays and deals with people. Take, for example, maternity pay. The HR side is that the company must preserve the employee’s rights and abide by federal and state anti-discrimination and maternity laws. At the same time, the employee must receive compensation, a finance function, in accordance with the company’s policies.


What are the benefits of outsourcing HR and payroll services?

  • Free Up Your Time
  • Payroll processing by hand is a time-consuming process. Outsourcing payroll can free up staff time to pursue more important value-added and revenue-generating activities. Inc. magazine recently identified the task for small business to outsource is payroll, along with most accounting tasks.

  • Reduce Costs
  • The direct costs of processing payroll can be greatly reduced by working with a payroll provider. Our research indicates that a small business with 10 employees will typically spend $2,600 per year in direct labor costs.

  • Avoid IRS Penalties
  • According to the IRS, 40 percent of small businesses pay an average penalty of $845 per year for late or incorrect filings and payments. Most national payroll services provide a tax guarantee, ensuring that customers will incur no penalties because the providers take responsibility for penalties when they do occur. In many instances, this cost-saving immediately justifies outsourcing payroll.

  • Alleviate Pain
  • Manual payroll is a headache in the best case and a nightmare in the worst case. Business owners who outsource payroll eliminate a tiresome source of personal pain.

  • Offer Direct Deposit
  • Providing direct deposit is difficult if a company doesn't use an outside payroll service. Increasingly, small businesses recognize that employees want direct deposit. Not having to make a trip to the bank is an important convenience for them. More importantly for business owners, direct deposit eliminates time-consuming and error-prone paper handling and the need to reconcile individual payroll checks every month.

  • Avoid Technology Headaches
  • A constant question for small business owners is whether they have the latest version of their payroll software and the most recent tax tables installed on their computer. Using the wrong tax tables can result in stiff penalties. Outsourcing payroll removes those headaches and keeps payroll running smoothly.

  • Leverage Outside Payroll Expertise
  • Most business owners and controllers don't have time to keep up with constantly changing regulations, withholding rates, and government forms. By outsourcing payroll, a small business can take advantage of expertise that was previously available only to big companies.

  • Avoid Payroll Knowledge walking Out the Door
  • If your bookkeeper or controller gets a new job, they will walk out the door with their knowledge of the payroll process and how you do it. Using an outside service eliminates that business risk.