Why payroll is not an HR problem.

Published: 27 August 2026
Author: Lee-ann Kilroy, Head of Payroll, Preos

Why Payroll is not a HR Problem

Payroll has no settled home: industry surveys split it between HR, Finance and shared services, with no majority anywhere.

That is because payroll is not a sub-department of any of them. It coordinates HR, Finance, Operations, Legal, IT and external providers to an immovable deadline, and most failures start upstream of payroll itself.

With regulation putting more weight on payroll data, the question boards cannot keep dodging is a simple one: who owns payroll?

Ahead of our white paper to be released later this year, Lee-ann Kilroy, Head of Payroll at Preos, explains why the usual honest answer (everyone and no one) is becoming harder to defend.

Lee-ann Kilroy, Head of Payroll, Preos
Lee-ann Kilroy is Head of Payroll at Preos, leading the group’s global payroll practice. With more than 20 years’ experience in global payroll, she has implemented, managed and improved payroll services for complex international workforces.

Where does payroll report in your organisation?

The answer depends on who you ask. Deloitte’s 2020 Global Payroll Benchmarking Survey found payroll reporting to HR in 38% of organisations, Finance in 36%, shared services in 24% and elsewhere in 2%. More recent surveys shuffle the percentages depending on how they classify the functions, but none finds a majority. There is no settled organisational home, because payroll cuts across them all.

That is not a quirk of survey design. It reflects something structural: payroll is different from the functions it supports, and the market has never quite worked out where to put it.

Two different jobs

Here is the version I have heard used for years:
 
  • HR sets the intent.
  • Payroll executes it, with accountability.
  • HR defines the employment and reward decisions.
  • Payroll makes sure people are paid correctly, compliantly and on time, in every country the organisation operates in.
Those are different jobs, and treating one as simply part of the other is how organisations end up surprised by their own pay run.
 

What it takes to produce one payroll

Look at what has to come together every cycle:
 
  • Master data from HR
  • One-time payments or deductions from elsewhere in the business
  • Time and attendance from Operations
  • Funding and reconciliation from Finance
  • Compliance from Legal
  • Integrations from IT
  • Delivery, often through several external providers operating across different countries and systems
Payroll pulls all of that together, validates it and stands behind the result before a penny moves.
 
That is not simply an HR process with some numbers attached. It is one of the few operational functions that coordinates almost every major part of the business, working to a deadline that returns every pay cycle whether the organisation is ready or not.
 

Where it goes wrong

Many payroll failures begin long before reaching payroll itself:
 
  • The timesheet approved late
  • The salary change with the wrong effective date
  • The new starter entered incorrectly
  • The leaver processed after cut-off
  • An allowance applied to the wrong employee
Poor upstream data creates the wrong answer unless payroll catches it before money leaves the organisation.

I once worked with an organisation where the HR system had quietly stopped being the master record. Over the years, the local payroll provider’s system had become the most accurate source of employee data.

Nobody had designed it that way. It had simply happened, almost unnoticed. The problem only became visible when the provider was replaced, and years of employee records had to be rebuilt from scratch.

The fix is ownership, not reorganisation

The answer is not another reorganisation. It is ownership. Validate before the payroll run, not afterwards. Reconcile what HR intended, what time and attendance recorded, and what payroll is about to pay. Make sure upstream corrections arrive before cut-off rather than afterwards. When they arrive late, they become managed exceptions that need conscious decisions, not routine administration.
 
None of this is glamorous, and that is precisely why it is often neglected. Processes drift, workarounds become permanent, and controls weaken. By the time the symptoms become visible, the underlying causes have usually been there for months or years.
 

Why the timing matters

Payroll is becoming more visible. Three changes are landing at once:
 
  1. The EU Pay Transparency Directive is now being written into national law across member states, with the first reports due from larger employers in 2027.
  2. The UK has confirmed its intention to make ethnicity and disability pay gap reporting mandatory for employers of 250 or more, with legislation to follow.
  3. From April 2027, most benefits in kind move into mandatory real-time payroll reporting.
Each of these places greater weight on accurate payroll data, alongside reliable HR and workforce information. Organisations will increasingly be expected not just to hold the right data, but to explain and defend it.

The promise underneath

Underneath the regulation sits something much simpler. Payroll is the most visible promise an employer makes to its people every pay cycle.
 
People will forgive a clumsy expenses system or an awkward HR portal. Being paid incorrectly is different because it affects mortgages, rent, childcare and everyday life. Even when mistakes are corrected quickly, they are remembered.

So, who owns payroll?

Which brings us to the question I find boards least prepared to answer. If payroll coordinates HR, Finance, IT, Legal and external providers to do its job, who actually owns it?
 
Not who runs the payroll every month. Who answers for the operational risk, the compliance exposure and the quality of the process?
 
In many organisations, the honest answer is everyone and no one. And that is becoming harder to defend.
 
Over the past few months, we have been looking closely at what effective payroll ownership really means, when it needs a seat at the top table, and when it honestly does not. We’ll be publishing our findings later this year.
 
Until then, try a simple experiment at your next executive meeting. Ask one question: “Who owns payroll here?”
 
If the room takes more than ten seconds to answer, you have probably learned something useful.
 
And if you need Payroll transformation strategy help, contact our Payroll Practice.
 
Contact Preos

Further reading

Case Study: The IFCO Journey with Workday Enhancement Services

How IFCO reduced reliance on AMS support, strengthened internal Workday capability and moved towards a more proactive, self-sufficient support model.
 

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Beyond Feature Releases: Turning Workday updates into business outcomes

How to turn Workday’s twice-yearly releases into real business value by prioritising the right updates, improving adoption and building stronger internal capability.

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A guide to Workday’s new commercial model: Platform Entitlement and Flex Credits explained

Everything you need to know about the model, including the contractual framework, Platform Entitlement and Flex Credits, how they connect, what to do now and what is still undefined.

 Read resource

Sources

  • Deloitte, Global Payroll Benchmarking Survey (2020): payroll reports to HR in 38% of organisations, Finance in 36%, shared services in 24%, elsewhere 2%.
  • PayrollOrg, Getting the World Paid survey (2025), 585 respondents, surveyed 3 February to 3 April 2025: the full report puts 48% reporting into Finance (including Accounting) and 35% into HR; PayrollOrg’s own summary article states 33% Finance and 35% HR, the difference being how respondents are grouped. Either way, no majority. Report: info.payroll.org/pdfs/global/Global-Payroll-Week-2025-survey-results.pdf
  • Directive (EU) 2023/970 on pay transparency: transposition into national law due by 7 June 2026; first reports from employers of 250 or more due by 7 June 2027.
  • UK ethnicity and disability pay gap reporting: government confirmed its intended approach for employers of 250 or more on 25 March 2026 (GOV.UK); legislation and detailed regulations to follow.
  • Mandatory payrolling of benefits in kind: phased from 6 April 2027 (HMRC; ICAEW, June 2026).