Payroll vs. Benefits - A Competitive Partnership

man and woman arm wrestling

Payroll people are unique. They often work within the finance or accounting department of an organization, but operate somewhat independently. This arrangement is not that different from how benefits people fit into many human resources departments. You would think that given their unique and similar status that payroll departments and benefits departments would work seamlessly. And sometimes they do which is good because they share not only organizational similarities but also information and tasks. But sometimes the payroll and benefit functions do not work well together. When this happens, the benefits function is the loser because it cannot execute many of its tasks without cooperation from Payroll.

But why would Payroll withhold (no pun intended) its cooperation with Benefits? Well, I can think of a few reasons why including: control, competition, and recognition.


Employee benefits professionals work closely with payroll to deduct plan employee payments; process premium payments to insurers, and create reports for plan testing and compliance. They also work together to setup and maintain human resource information systems (HRIS). Additionally, they cooperate in establishing and enforcing related policies and practices. But Payroll does not need Benefits to perform what they may see as their primary task, which is processing the company’s payroll.

The payroll department dictates the schedule for entering benefit elections into the HRIS system, paying premium statements, and generating reports for plan testing. A professional, cooperative payroll staff will make exceptions to deadlines and work with the benefits department for the sake of employees. However, a not so professional payroll department will take advantage of their advantage and only do things on their own terms. They will ignore written policies because they may require modifications to their practices or systems, they may disallow last minute plan deductions, and may stand in the way of needed HRIS system upgrades because they don’t like change.

Competition and Recognition

In a quest for senior management attention, payroll and benefits department heads may downplay each other’s role in joint projects and the others’ technical abilities.

Both payroll and benefits are behind the scenes functions. They are important to employees but do not get too much attention from upper management except occasionally. Payroll gets management attention when it comes to bonuses or other compensation-related exceptions. Benefits on the other hand gets regular attention because of its role in big money items like retirement plan administration and insurance negotiation and renewal. In addition, there's more legislative tampering with employee benefits than with payroll, which requires a lot more interaction and strategizing with management.

Payroll may have the upper hand in the control department in comparison to the benefits function. Benefit pros can accomplish very little without Payroll's cooperation. They control the data Benefits needs to perform required plan testing and other compliance duties. They also have exclusive capability of processing benefit functions such as plan deductions. When it comes to who has the best technical skills and who gets the most recognition, well that is anyone's game.

Most payroll and benefits departments work extremely well together, but sometimes they do not. It could be a matter of one or two individuals from either or both departments who are trying to control or compete with one another. These situations are never good but can be combatted with strong leadership from both departments and a knowledgeable staff who can put their work and the organization's employees above their own insecurities.

How well does your Payroll and Benefits department work together? Are you flexible and understanding of each other's needs?
blog comments powered by Disqus