How to choose the right payroll professional: Essential qualities to consider
Hiring the right payroll professional is crucial for any business, whether it’s a small start-up or a large multinational corporation. A skilled payroll professional ensures employees are paid accurately and on time, maintains compliance with tax regulations and secures efficient payroll processes. The role of a payroll professional is more than just calculating wages; it involves meticulous attention to detail, understanding complex regulations and ensuring the company’s payroll operations are both efficient and legally compliant. More recently, payroll functions have taken on responsibility for areas traditionally not in their remit, such as benefits and salary benchmarking.
Selecting the right candidate for this role requires careful consideration of various essential qualities, competencies and the specific needs of your business. This article talks through what to look for when hiring a payroll professional and provides insights into how a payroll specialist can add value to your organisation.
Understanding the role of a payroll professional
What does a payroll professional do?
At its core, payroll is the process of compensating employees for their work. However, the responsibilities of a payroll professional extend far beyond calculating and issuing wages. Key duties often include:
- Calculating gross wages: Payroll professionals determine the gross earnings of employees based on hours worked or salaries.
- Managing deductions: This includes calculating and processing deductions for taxes, benefits and other withholdings.
- Ensuring compliance: Staying up to date with tax laws and employment regulations to ensure all payroll practices are compliant.
- Maintaining records: Keeping accurate records of employee earnings, hours worked and tax withholdings is essential for audits and tax filings.
- Handling payroll inquiries: Addressing employee questions and concerns regarding pay, deductions and benefits promptly and professionally.
Payroll professionals are also increasingly expanding their role as a business partner, looking at benefits, salary benchmarking and more.
The evolving nature of payroll
The evolution of technology has significantly impacted payroll systems, making them more efficient but also more complex. Cloud-based payroll solutions, automation and integrated HR systems have transformed how businesses handle payroll. As a result, payroll professionals must adapt, which means that technical proficiency is a critical skill.
Essential qualities to look for when hiring a payroll professional
When hiring a payroll specialist, it’s important to look beyond their work experience and consider the qualities that will enable them to excel in their role. Here are some essential traits to look for:
1. Attention to detail
Payroll involves handling large amounts of data, and even a small mistake can lead to significant issues such as incorrect payments, penalties and legal complications. A strong payroll professional must have an eye for detail, ensuring accuracy in every calculation and entry.
2. Integrity and confidentiality
Payroll professionals have access to sensitive employee information, including bank account details and salary data. It is therefore crucial to hire someone who demonstrates a high level of integrity and understands the importance of maintaining confidentiality.
3. Problem-solving skills
Payroll processing can be complex, with numerous variables affecting each payroll run. Discrepancies in hours worked, changes in tax laws or errors in data entry can all create challenges. A competent payroll specialist should have strong problem-solving skills to quickly identify and resolve issues, ensuring smooth payroll operations.
4. Strong communication skills
Effective communication is key in payroll. Payroll professionals must be able to explain complex information in simple terms to employees, answer payroll-related queries and collaborate with other departments such as human resources (HR) and finance. Clear communication helps prevent misunderstandings and ensures an efficient payroll process.
5. Organisation skills
Payroll is a deadline-driven process, and any delay can result in serious consequences, such as fines or employee dissatisfaction. A successful payroll professional should have excellent organisational skills to manage multiple tasks simultaneously and meet strict deadlines consistently.
Top competencies required for success in a payroll position
Beyond essential qualities, there are specific competencies that a payroll professional must possess to succeed in their role. These include:
1. Technical proficiency
Payroll professionals must be adept at using payroll software and tools. Familiarity with systems such as ADP, Workday, SAP SuccessFactors and QuickBooks is often required. Additionally, a good understanding of Excel and other spreadsheet software is essential for managing and analysing payroll data effectively. As payroll systems become more automated and integrated, technical skills are increasingly important.
2. Knowledge of payroll laws and regulations
A thorough understanding of payroll laws and regulations is crucial. This includes knowledge of tax laws, employment laws and compliance requirements to avoid compliance issues. Payroll professionals must stay up to date with changes in legislation to ensure the company adheres to all legal standards. This knowledge helps prevent costly penalties and ensures employees are paid correctly.
3. Time management
Payroll involves strict deadlines, particularly when it comes to submitting tax filings and processing payroll runs. Effective time management is essential for a payroll professional to ensure all tasks are completed on time without compromising accuracy. Prioritising tasks, managing workflows and anticipating potential delays are key aspects of successful time management in payroll.
4. Analytical skills
Payroll specialists must analyse data to identify trends, discrepancies and opportunities for improvement. Analytical skills are essential for reviewing payroll reports, spotting errors and making data-driven decisions. This skill also helps in forecasting payroll expenses and budgeting for future needs.
Certifications: do they matter?
While certifications are not always mandatory, they can be a strong indicator of a candidate’s expertise and commitment to the profession. Certifications demonstrate that a payroll professional has undergone rigorous training and possesses the necessary knowledge to perform their job. Here are some of the most recognised payroll certifications:
United Kingdom
- Chartered Institute of Payroll Professionals (CIPP): Foundation degree in Payroll Management
Provides comprehensive training for beginners on payroll topics such as statutory payments and employment law.
CIPP Website - Payroll Alliance: Certificate in Payroll Practice (CPP)
An entry-level certification covering the basics of payroll processing, statutory regulations and manual calculations.
Payroll Alliance Website
Europe
- European Payroll Association (EPA): European Payroll Manager certification (EPM)
Designed for payroll professionals managing multi-country payrolls, focusing on compliance across European nations.
European Payroll Association Website - European Payroll Association (EPA): Certified European Payroll Specialist (CEPS)
A certification for payroll professionals working with European payrolls, covering compliance and best practices.
European Payroll Association Website
United States
- American Payroll Association (APA): Certified Payroll Professional (CPP)
Aimed at experienced payroll professionals, covering advanced payroll functions and regulatory compliance in the US.
American Payroll Association Website - American Payroll Association (APA): Fundamental Payroll Certification (FPC)
An entry-level certification for those new to payroll, focusing on basic payroll principles and compliance.
American Payroll Association Website - Global Payroll Management Institute (GPMI): Global Payroll Management Certificate (GPMC)
Focuses on managing global payroll operations and ensuring compliance with international payroll regulations.
Global Payroll Management Institute Website
The importance of payroll for small businesses
Does your small business need a payroll professional?
For small businesses, managing payroll can often seem like an unnecessary expense. However, even small businesses can greatly benefit from having a dedicated payroll professional. Here’s why:
- Accuracy and compliance: Small businesses are not exempt from payroll regulations. A payroll professional ensures that your business complies with all relevant tax laws and employment regulations, reducing the risk of fines or penalties.
- Time savings: Managing payroll can be time-consuming, especially as your business grows. A payroll professional can handle this process efficiently, allowing you to focus on other aspects of your business, such as growth and customer service.
- Employee satisfaction: Timely and accurate payroll is essential for maintaining employee satisfaction. By ensuring that employees are paid correctly and on time, you help foster a positive work environment and build trust with your team.
- Cost efficiency: While hiring a payroll professional involves an upfront cost, it can save your business money in the long run by avoiding costly payroll errors, penalties and potential legal fees associated with non-compliance.
If you’re not sure whether you want a payroll professional in-house, you could opt to hire an interim payroll specialist as a way of trialling suitability.
Choosing between in-house payroll and outsourcing
When deciding on payroll solutions, businesses have two main options: hiring an in-house payroll professional or outsourcing payroll to a third-party provider. Each option has its advantages and disadvantages.
In-House payroll
Advantages:
- Control: With an in-house payroll professional, you have direct control over payroll processes and can easily make adjustments as needed.
- Customisation: In-house payroll allows for greater customisation of payroll processes and reports to meet specific business needs.
- Integration: An in-house payroll professional can work closely with other departments, such as HR and finance, to ensure seamless integration of payroll and other business functions.
Disadvantages:
- Responsibility: The business is responsible for ensuring compliance with all payroll regulations, which can be challenging without the right expertise. However, we’d expect all payroll professionals to have this knowledge.
Outsourcing Payroll
Advantages:
- Expertise: Outsourcing to a payroll service provider gives you access to a team of experts who are up to date with the latest payroll laws and regulations.
- Cost savings: Outsourcing can sometimes be more cost-effective for small businesses, as it means that you don’t have a full-time payroll employee.
Disadvantages:
- Less control: Outsourcing means relinquishing some control over payroll processes, which may not be ideal for businesses that require a high level of customisation.
- Communication: Working with an external provider can sometimes lead to communication challenges, especially if there are discrepancies or urgent issues that need to be addressed.
How to assess a payroll professional during the hiring process
Finding the right payroll professional involves more than just reviewing work history. Here are some tips for assessing candidates during the hiring process:
1. Conduct thorough interviews
Ask candidates about their experience with specific payroll software and their knowledge of payroll laws and regulations. Ask about how they handle complex payroll scenarios and resolve discrepancies. Understanding their problem-solving approach and attention to detail will help you gauge their suitability for the role.
2. Test their technical skills
If possible, include a practical test as part of the hiring process to evaluate the candidate’s technical skills. This could involve tasks such as using payroll software to process a mock payroll or identifying errors in a sample payroll report.
3. Check references
Contacting references from previous employers can provide valuable insights into the candidate’s work ethic, reliability and ability to handle payroll tasks accurately and efficiently. If you’re recruiting through Frazer Jones, we’ll handle this for you.
4. Evaluate certifications and training
Review any certifications and training the candidate has completed. Certifications indicate a commitment to the profession and a strong foundation in payroll principles and practices.
Conclusion
Choosing the right payroll professional is a critical decision for any business. By considering essential qualities such as attention to detail, integrity, problem-solving skills and communication skills, as well as key competencies like technical proficiency and knowledge of payroll laws, you can find a candidate who will excel in the role.
Ensuring your payroll processes are accurate, compliant and efficient is vital to the success of your business. With the right payroll professional in place, you can rest assured that your payroll operations are in good hands, allowing you to focus on growing your business and supporting your employees.
If you’d like to hire a payroll professional into your team, please get in touch using the form below or, alternatively, contact one of our specialist payroll recruitment consultants.
