Overview

• Understand the HR Management and Payroll Cycle

• Considers the strategic implications of HR Management
and Payroll Cycle
Objectives
After studying this chapter, you should be able to:
• Describe the key objectives and strategic implications of the HR
Management and Payroll Cycle
• Identify common technologies underpinning the HR Management
and Payroll Cycle
• Describe HR Management and Payroll Cycle data and the key
expenditure business decisions
• Identify and document the primary activities in the HR
Management and Payroll Cycle and the data produced by these
activities
• Develop metrics to monitor HR Management and Payroll Cycle
performance
Contents
• HR Management and Payroll Cycle overview and key objectives
• Technologies underpinning the HR Management and Payroll Cycle
• Data and decisions in the HR Management and Payroll Cycle
• Identify and document the primary activities in the HR
Management and Payroll Cycle
• Measuring HR Management and Payroll Cycle performance
The HR Management and Payroll
Cycle
Lesson Overview
• Human resource management and payroll activities are
essential for an organization that includes recruitment-related
activities up to employee retention
• This cycle begins when an organization recruits a new
employee and ends when the employee's contract has expired
• Throughout the cycle, it is important to recruit employees with
appropriate and accurate and timely capabilities / skills
• All legislative requirements covering employee liability such as
income tax payments, pensions and salaries, contracts and
rewards must be made
• A regular review of performance (performance review) should
be done and when the employee contract has expired, the
employee who will quit the company must be well-managed
and conscientious
Lesson Objectives
After studying this lesson, you should be able:
• To describes the purpose and involvement of the HR Management
and Payroll Cycle within the organization
• To identify supportive technologies in the HR Management and
Payroll Cycle
• To describe the HR Management and Payroll Cycle data and key
business decisions related to expenditure
• To identify and document key activities in the HR Management
and Payroll Cycle and how data is generated in HR Management
and Payroll Cycle activities
• To develop measurement metrics to monitor HR Management and
Payroll Cycles
HR Management and Payroll
Cycle overview and Key
Objectives
1. HR Management and Payroll Cycle
Overview and Key Objectives
• Human resources are assets that are important to the
organization and salaries & wage fees have a large share
in almost all total expenditures of an organization
• Human resources activities have the responsibility to
recruit and retain all employees within an organization
• Although the value of human resources in an organization
is rarely considered in the financial statements and kept
secret, the area also has systematic problems and
shortcomings
• Failure to attract the right applicant to an empty position
limits the capabilities available to an organization,
whereas the failure to retain existing employees can lead
the company to expensive and annoying employee
placements
1. HR Management and Payroll Cycle
Overview and Key objectives
• Implementing a fair and open performance review can contribute
to the organization's ongoing success on multiple dimensions
• High performing employees must be identified and rewarded
Low-performance employees should be recognized and addressed
immediately
• Payroll functions are also important to the success of an
organization, in terms of ensuring employees are paid on time and
accurately
• Enhance the spirit and self-confidence for employees, even
including the fulfillment of legislative needs as well as wage
control and wage costs
• The human resources and payroll cycle is usually divided into two
main elements:
• Human Resource Management
• Payroll
Stages of Human Resource Management Activities

Employee
Employee
Performance
Recruitment
Review

Layoffs
1. HR Management and Payroll Cycle Overview
and Key Objectives
• Human Resource Management
• This stage includes employee recruitment, performance review
management as well as management of employee dismissal
• The objective of the human resource function is to hire the
appropriate employees effectively, efficiently and objectively,
manage performance reviews regularly and manage the exit of
employees when the contract period has ended profitably
• Human resource staff is responsible for the quality of the
employees employed by the organization
• They must hire the right people, ensure that they are performing
at the right standards, and manage the employees' cessation
appropriately
• To achieve this goal, recruitment must be well thought out and
controlled
• Performance management must be orderly and effective, then the
cessation of employees should be controlled and managed so that
it can get the same benefits for the organization if possible
1. HR Management and Payroll Cycle Overview
and Key Objectives

Determination of
Recruiting Total
Salary Rates and
Employee Hours
Employee Wages

Calculation and
Payment of Salaries
Stages of Payroll Activity And Wages In Time
Employees
1. HR Management and Payroll Cycle Overview
and Key objectives
• Payroll
• The purpose of the payroll phase: to calculate and issue
all salary and wage payments to employees properly
• This includes ensuring that:
• Working hours are timely and accurate
determination of employee salary and wage rates
• Ensure that payroll is on time and as per the
employee's wishes
• Payroll payments have a high potential for incurring
payment fraud incidents, so strong and effective controls
for all payroll and salary payments are very important
• It is also important to ensure that the deduction of wages
for the purpose of payment of income tax, pension with
correct calculation and sent to third parties in a timely
manner
 1. HR Management and Payroll Cycle Overview and
Key Objectives
• Payroll (continued ...)
• The payroll function also controls the recording of the
correct leave
• Activities that include the registration of leave
entitlements not only affect the individual employee, but
also an important obligation contained in the balance
sheet (balance sheet)
• Misinformation and disclosure of employee leave
entitlements can have serious consequences Failure to
pay employee salaries accurately and accurately can
thwart all the good work that has been done and can lead
to an increased employment dismissal
 Documents Decriptions
Employee Personal Documents used to store employee information, such as: name, age, gender,
Details address, phone number and others.
Employee Documents used to store employee recruitment information, such as:
Employment Details accepted work dates, basic salaries, employment award schemes and
employee leave entitlements.
Selection Criteria Documents used to store job description details and job-related selection
criteria.

Job Application Documents used to store job applications received to fill vacant positions

Termination Letter Documents used to apply for resignation of employees (their contents include:
the date of resignation and the reasons for withdrawal)

Employee Documents used by management to review employee performance

Performance Review
Timesheet Documents used to display detailed information on the number of hours
worked and hourly salary / wage rates of each employee
Payroll Documents used to display employee payroll, such as: total working hours,
hourly rate, income tax withholding and amount of salary paid to each
employee
Strategic Implications of HR Management and Payroll
Cycle

• Strategically, the human resources and payroll cycles are very

important
• Human resources in most organizations even determine
whether the organization will succeed or fail
• Costs associated with wages and salaries have a substantial
portion of total expenditure on many organizations
• In order to survive and grow, an organization should not just
hire high-performing individuals, but must also be able to
maintain their services for as long as they need
• Choosing the wrong type of human resources or hiring / hiring
too many human resources can result in uncontrolled salary
and wage expenses
Strategic Implications of HR Management and Payroll
Cycle

• A controlled cycle of human resources and payroll can result in

a competitive advantage through cost control and superior
employee provision at all levels within the organization that
will ultimately impact every activity and process within the
organization
• The most important issue is being able to adjust the human
resource and payroll cycle to the organization's vision, culture,
goals and strategy, which should protect and direct all
recruitment and retention activities
2. Technology that Supports HR Management and
Payroll Cycle
• For some specific interests, this technology is used to help
record hours of employees and make payments to employees.
• Enterprise Resource Planning (ERP) System
• Used to integrate human resource management cycle with
payroll.
• The human resources and payroll cycle relate to different
areas of the organization, so the ERP system used is linked
to the various relevant modules, such as: revenue,
production and general ledger
• The technology used by this cycle can record the hours of
work of each employee
• Employees are paid their salary based on working hours
and are calculated on an hourly wage basis, so it is
important to record the hours of the employees concerned
as wages are paid per hour
2. Technology that Supports HR Management and
Payroll Cycle
• Time Clock
• Recording employees' hours and hours of return per workday
• Data recording with time clock scanners or swipe cards
technology will help data collection work more efficiently and
accurately (although in some cases, biometric scanning is
also used, such as fingerprint system)
• Helps record the number of hours worked in the interest of
calculating overtime pay
• Online payment facilities are a cost-effective way for
organizations to make payments to employees and third
parties as representatives of the organization to make
payments
• Not only cost-effective, it even increases transparency and
reconciliation of a transaction other than security and less
cash handling
3. Data and Decision HR Management and Payroll Cycle
• Data in human resource management cycle and payroll:
• Employee data
• It is the first data to be created when a new employee is recruited and
updated constantly throughout their lifetime reflecting the level of
payments they will make to them and their overall performance
• This data is created by employees in the human resources department
responsible for identifying and authorizing new employees. However,
they are not involved in payroll activities.
• Payroll data / Pay slip
• Payroll activity generates a breakdown of all payments made to
employees and made by payroll staff within a certain period of time
• Involves the use of an employee salary form detailing the payment
amount per employee calculated including:
• Gross wages (based on their payroll contract or the number of hours
worked multiplied by the wage rate)
• Reductions made to gross wages for external parts of the organization
such as taxes and pensions (old age benefits) as well as other data such
as leave (sick, annual, etc.)
3. Data and Decision HR Management and Payroll Cycle
• Job vacancy data
• Job vacancy data by the company to meet certain vacant
positions
• Status of this data:
• Open, if there is no prospective employee applying
• Close, if the position has been filled by a new employee
• Position Description / Position Description data
• It is the data that details each role that is contained within the
organization
• Data descriptions of data are made by higher level employees
in the human resources department by working closely with
managers and operational supervisors
• Income Tax Data
• Payroll functions also require access to data that identifies tax
rates for employees and approved salaries and wages at
various positions that are generally updated each year to
conform to government regulations
3. Data and Decision HR Management and Payroll Cycle
• Decisions taken at the strategic level must be in line with the
overall business strategy. The decisions include:
• Strategic level decisions:
• Creation of new position
• Requires an understanding of the skills and experience
required as well as the needs of the business unit of the
prospective employee to be assigned
• A common understanding of the environment and
organizational culture is also important to consider
• Whether to fill existing vacancy
• Includes predictions of future needs related to the resources
involved and also includes consideration of whether to
concentrate on finding internal members of the company or
applicants from external parties
• Employee payment policies and procedures
• Requires knowledge of applicable employee regulations,
industry standards and legal requirements
3. Data and Decision HR Management and Payroll Cycle
• In addition to strategic level decisions, operational level
decisions include:
• Identifying and handling with underperforming staff
• Requires consideration of the employee's history with the
organization and a clear understanding of appropriate
targets and goals for the employee
• In addition, it is important to identify appropriate
measurements to measure performance, to find out
whether the target has been adequately addressed to
employees and to have documentary proof for past
performance of concern
• Calculation of payroll amounts
• Requires knowledge of the conditions of employment
contracts, hours of work, salary and wage rates that can be
paid and the amount of leave available
4. System
Flowchart:
Employee
Recruitment
System Flowchart
• The operations department informed recruitment staff of the need
to hire new employees
• Recruitment staff input job descriptions that include the type and
role of employees to the computer
• Computers look for relevant job descriptions to the datastore
position description
• A job description request is shown to the recruitment staff to be
used for job posting
• Subsequently the job announcement was given to the operations
department by the recruitment staff
• Then after the operational department approves the contents of the
vacancy announcement, it will be given back to the recruitment
staff
• Then the recruitment staff will deliver the job advertisement to the
selected advertising media
• Then the recruitment staff will enter job vacancy advertisement to
computer as job vacancy details and stored in datastore open
positions
System Flowchart
• If there are interested applicants, then can enter the application
via email and inputted to the computer and then saved again
data store open positions
• Upon closing of the job vacancy, all incoming applications will be
reapplied to the recruitment staff, and the data is taken from the
data store open positions
• Then the recruitment staff will check the file of the incoming
applicants and then will provide to the operational department
• Then the operational department will notify the results of the
selection to the recruitment staff to be inputted to the computer
and its data is updated back to the data store open positions
• Then the computer will send notification to applicants who did
not pass the selection
• Then the recruitment staff will inform the staff of the employee's
acceptance of the information of the applicant who passed the
selection
System Flowchart
• Then the employee reception staff will notify applicants
who pass the selection and notify the decision whether the
applicant accepts or does not bid the company
• Then the employee reception staff will input the details of
the new employee data to the computer and stored in the
data store employee
• Then the employee reception staff will notify the payroll
cycle to then end of the month can be processed employee
salary data
5. Monitoring the Cycle Performance of HR
Management and Payroll Cycle
• Performance processes need to be measured to determine
the extent to which the process is implemented to achieve
its overall objectives
• To monitor the performance of this cycle, it can be through
the following KPI (key performance index):
Monitoring the Cycle Performance of HR
Management and Payroll Cycle
Sample of Application View
Lesson Summary
After studying this lesson, you be able:
• To describes the purpose and involvement of the HR Management
and Payroll Cycle within the organization
• To identify supportive technologies in the HR Management and
Payroll Cycle
• To describe the HR Management and Payroll Cycle data and key
business decisions related to expenditure
• To identify and document key activities in the HR Management
and Payroll Cycle and how data is generated in HR Management
and Payroll Cycle activities
• To develop measurement metrics to monitor HR Management and
Payroll Cycles
Unit Summary
After studying this chapter, you be able to:
• Describe the key objectives and strategic implications of the HR
Management and Payroll Cycle
• Identify common technologies underpinning the HR Management
and Payroll Cycle
• Describe HR Management and Payroll Cycle data and the key
expenditure business decisions
• Identify and document key activities in the HR Management and
Payroll Cycle and how data is generated in HR Management and
Payroll Cycle activities
• Develop metrics to monitor HR Management and Payroll Cycle
performance
Question & Answers