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  • Writer's pictureDhruv Parikh

Payroll Management Best Practices You Should Know

Updated: Jul 25, 2022

Managing HR operations is easy if done in the right manner. HR operations consist majorly of recruitment, onboarding, payroll management, performance management systems, labour law compliance etc. Given an unstructured HR function, managing these HR functions is a daunting task. But with the right policies, processes, checklists and MIS you can make your payroll service simple. How does this help? You can rely on the process and not the people managing it. This will reduce your dependence on people; you can reduce the salary cost of the HR team by hiring less experienced executives and also maintain the quality of output required.

Payroll Management

In this article we explore some approaches and best practices to manage payroll. Here are some tips to which are good to know while manage payroll for any organization:

Selecting The HRMS

There are dozens of Human Resource Management Softwares available in the market today. They differ in functionality, ease of use, value added services and technical support. Also, there are different pricing plans available. To start the HRMS selection process, you can list down the basic necessary features that you require and the good-to-have features that you could use. Then shortlist HRMS on the basis of their features. Consider the price at the end. For example, if you have field staff and would like to track their activities, you can select a software that has GPS tracking. Other factors you may consider are: cloud-based/local, one-time cost/recurring cost and the reliability of the brand.

Detailed HR Policies

Managers spend a lot of time taking decisions. If there is a framework or ready reckoner document available to them, it will make their lives easier. Some regular decisions that managers have to deal with are- should I accept the leave application of my team member? Should I approve a late-coming request? How should I give increments to the team? A strong set of HR policies can help remove this ambiguity. It makes it easier for the employees to know their boundaries as well. Even the HR team members know how to treat the leaves, working hours etc.

Strong Processes

Quality of work is maintained if there are strong and well-defined processes. This may relate to onboarding of employees, leave applications, exit formalities etc. Further, if you have standard documents for offer letters, appointment letters, salary structures etc. the HR executives can refer to these processes and manage their daily tasks with the least amount of supervision. It also reduces dependency on people for executing a task. When processes are mature and people dependency is low, organizations grow faster.

Standard Salary Structures

If you have defined a standard structure for salaries of all the employees, it has multiple benefits. You can negotiate with a new employee, you can reduce dissatisfaction by comparison, you can avoid increasing salary costs which were not accounted for. It also helps employees know the break-up of the CTC (cost-to-company) and the take home salary. You can also ensure compliance of Labour Laws like Provident Fund (PF), Employee State Insurance Corporation (ESIC), Professional Tax (PT) etc.

Regular HR Audit

In the daily operations, it is common to lose attention to some laws, policies and best practices. Getting a HR audit done from a professional is a good way to have an outside perspective of an expert. It could help prevent large liabilities of non-compliance of labour laws. Further, there are multiple government benefits given to the employers and employees. The external experts know the best about how to go about managing the risks and encashing the opportunities.

Maintaining Checklists

The best way to ensure all the policies, processes and regulations are followed, you can create checklists for the HR executive to refer to. This can be for onboarding employees, labour law compliance, payroll finalization, full and final settlement etc. This will reduce the chances of errors. Further, in case of any new information, the list can be updated. So a mistake made once and added to the list, would never happen again in the organization.

Monthly Review MIS

The key KPIs of the HR department should be tracked on a regular basis. It could be the number of new joinees, attrition rate, working days, hiring costs, employee grievances etc. A well designed monthly MIS can help track the important factors and take corrective actions where required.

To ensure the HR and the payroll functions run smoothly, all these best practices need to be implemented rigorously. It will not only help improve the business process and reduce HR costs but will also ensure a great experience for all your employees.

Alternatively, you can choose to partner with a payroll outsourcing service provider.


At Tamãrõ HR we partner with firms to help them manage their HR functions in the right way. The team at Tamãrõ HR has experienced professionals to help you with all your HR needs from Consulting, Recruitment to HR Operations. To know more contact mail to -


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