What makes a good payroll manager?

Payroll managers oversee a business’s payroll operations and coordinate the payroll team. They are in charge of all things payroll and are therefore key players when it comes to making sure employees receive their wages and salaries on time.

The level of responsibility that comes with the position demands different qualifications and skills. Additionally, working in payroll requires individuals to possess certain qualities and attributes.

What are the most important skills, qualifications, and characteristics payroll managers need to perform well in their role? In short, what makes a good payroll manager?

The main responsibility of a payroll manager is to make sure that employees are paid correctly and on time, while ensuring payroll compliance throughout the payroll cycle. In order to achieve this, they need to carry out a range of different tasks. 

The tasks involved in payroll management can be divided into the three different payroll processing stages: pre-payroll, actual payroll run, and post-payroll. Activities in these three stages include:

• Pre-payroll activities: payroll system implementation, employer registration with social security and tax authorities, data input collection and validation, and more;

• Actual payroll process: gross-to-net calculations, payroll tax deduction, payroll results validation, payment processing, and more;

• Post-payroll activities: payslip distribution, payroll tax reporting and payment, payroll record keeping, and more.

The number of tasks a payroll manager has to fulfill increases when operations move from a single-country to a multi-country payroll. Additional tasks global payroll managers have to fulfill include global payroll reporting, payroll vendor management, global payroll cost analysis, global payroll implementation, and many more.

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Being a payroll manager comes with a high level of responsibility. In order to perform well in their role, they need a range of different qualifications, expertise and knowledge in several fields that relate to payroll. This includes: 

• Good understanding of data and its importance: Payroll data holds incredible value for an organization. Since payroll managers own the data that is generated with each payroll run, they also need to be able to interpret this data with the help of payroll analytics. Payroll managers can then transform this data into useful insights for the leadership team.

• Experience using payroll software and platforms: Payroll software has become almost indispensable for processing and managing payroll. A good payroll manager is proficient at using different types of software.

• Technical expertise: Additional technical expertise is a real plus for payroll managers. This includes a basic understanding of other software types, such as ERP systems, as well as a good understanding of the impact technological advances like payroll automation and blockchain will have on payroll in the future.

• Payroll processing experience: Managing payroll requires an in-depth understanding of how payroll works, and every payroll professional who is striving to become a payroll manager needs a high level of experience in actual payroll processing.

• Basic understanding of business economics: Payroll plays a fundamental role when it comes to achieving company goals. Since it is closely linked to other business functions such as HR and accounting, payroll leaders need to understand how the different business functions operate and how they work together.

• Tax knowledge: Tax and everything surrounding it is an essential part of payroll. Payroll managers need to be familiar with the different payroll taxes that need to be deducted from employee salary and know the ins and outs of applicable tax benefits. They also have to know how and when to report and submit withheld taxes to the authorities.

• Compliance expertise: Managing payroll compliance is one of a payroll manager’s ongoing tasks. Since payroll compliance encompasses many different aspects (from tax compliance to compliance with compensation laws and data protection regulations like GDPR), payroll managers need a considerable level of expertise in this field to succeed.

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With all the complex calculations that need to be carried out and the vast sets of data that need to be checked and validated, it’s no secret that payroll is all about numbers. Strong numeracy skills and a natural inclination towards mathematics are therefore essential for every payroll manager.

Additionally, payroll managers need good people skills. They have to communicate and collaborate with different stakeholders and team members because payroll usually isn’t a one-person job. Good presentation skills are also required, for instance when presenting the latest payroll numbers to the CFO.

Another vital skill payroll specialists should possess is the ability to think on their feet and solve problems quickly. Problems in payroll need to be solved as soon as they arise in order to prevent major disruptions. For example, payroll errors that are spotted in the course of a payroll audit need to be fixed in the shortest delay possible.

Last but not least, a payroll manager needs strong leadership skills. In order to successfully lead the payroll team, they need to be able to clearly communicate goals and outline how these goals ought to be achieved.

In addition to the different qualifications and skills, payroll managers need to have certain qualities and attributes in order to be successful at what they do. These attributes include:

• Proactivity: Problems with payroll could lead to disruptions in the salary payment process, which is why they must be avoided at all costs. A good payroll manager is proactive and takes action before small slip-ups can turn into serious problems. The same goes for legal changes that affect payroll. Legal changes should be on a payroll manager’s radar before they enter into force.

• Tenacity: Running and managing payroll can be pretty tough. Especially during busy periods, payroll managers need to have tenacity to keep the payroll wheels turning.

• Calmness: A good payroll manager doesn’t get rattled in stressful situations. No matter what problem the payroll team faces, he or she needs to remain calm, professional and methodical to keep things under control.

• Discretion: Payroll specialists have access to large sets of highly confidential data, including employee personal information and salary data, which is why confidentiality and discretion are two non-negotiable traits of a successful payroll manager.

• Responsibility: There are few processes in an organization that are as crucial as payroll. A company that regularly fails to pay its employees on time will quickly lose critical talent and be out of business. One of the most important qualities of a good payroll manager therefore is a high degree of responsibility.

• Self-motivation: Payroll managers who want to stay on top of their game need an intrinsic motivation to constantly develop their skills and acquire new knowledge.

• Accountability: Personal accountability is an important trait payroll managers need to possess. Taking responsibility for their actions and decisions and being able to give a satisfactory reason for them is essential in a position that comes with so many responsibilities as is the case in payroll.

• Dependability: When it comes to payroll, the stakes are extremely high. There is little to no margin for error, and late (or missed) salary payments are unacceptable. That’s why payroll managers must be extremely reliable. Throwing in the towel when things get tough isn’t an option in payroll.

As more businesses embrace remote work and start working with global teams, payroll managers are under pressure to develop their skills and learn how to manage payroll for multiple countries. Moving up to global payroll management is a big step and requires additional skills, competencies and knowledge. Here is an overview of what it takes to become a global payroll leader.

• Cultural competency: Since global payroll managers oversee an international team of payroll specialists, intercultural competency is a key success factor.

• Knowledge of local and international tax laws: Global payroll managers are responsible for payroll operations in different countries, meaning that they need to be familiar with both local and international taxation laws and concepts.

• Global perspective: Global payroll leaders need to be able to keep track of the company’s global payroll operations as a whole—instead of getting lost in tiny details and in-country processes. Only then can they perform well in their role.

• Multi-vendor management: Running and managing a multi-country payroll often involves a variety of different payroll vendors. The ability to effectively coordinate and manage payroll activities and data sets across different vendor systems is one of the key skills global payroll managers need.

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Successful payroll managers need to be good with both people and numbers. They require a wide range of qualifications and skills, ranging from software and problem-solving skills to presentation and organizational skills.

The importance of leadership skills in payroll management positions shouldn’t be underestimated either. The ability to communicate and collaborate effectively with team members is as important as extensive expertise in payroll processing, tax administration, and compliance management.

On top of these skills, a good payroll manager should possess certain character traits that help them thrive in the challenging work environment that is payroll. Key qualities include tenacity, dependability, responsibility, and accountability. Payroll professionals that possess both the skills and the inherent qualities demanded of successful payroll managers are well-prepared for the role.