How Organizational Communication Affects Payroll and Benefits

Effective communication is one of the keys to success in business. Every team member within a company must communicate with others to one degree or another, and management has to be able to effectively communicate across all levels of production and management. It is no easy task. Unfortunately, breakdowns in organizational communication can have a profound effect on payroll and benefits.

Payroll and benefits are essentially processes of business rather than functions thereof. In other words, unless the core service a company provides is actually payroll and benefits administration, payroll and benefits functions are merely part of doing business rather than the business itself. Those functions also happen to be among the most complex things companies have to deal with.

AS payroll and benefits are so complex, it is imperative that internal communications are both effective and accurate. Ineffective communications too easily lead to misunderstandings, mistakes, failed objectives, and so on. There is no room for miscommunication in that making payroll and benefits mistakes can harm employees and cause problems with government taxing authorities.

Organizational Communication Structures

The concept of streamlining business processes introduced several decades ago led academics to determine that informal, horizontal communication was bad for business. They theorized that a more formal approach to organizational communication was necessary for increased efficiency. Thus, the top down, pyramid approach to communication was adopted.

The communication pyramid has a CEO at the top, followed by additional senior executives including the CFO and COO. Underneath is another level of senior management followed by middle management, lower management, and then workers themselves. The system works just fine for vertical communications, but it does not work for horizontal. This is a big problem in the arena of payroll and benefits.

It is all well and good for HR to communicate with the CFO regarding benefits programs, but what if HR and payroll are not talking? Likewise, the head of the payroll department might have very good communications established with the CFO and CEO. But if no communication occurs with HR, problems are likely to arise.

The issues presented by a top down, pyramid approach to organizational communication do not apply just to in-house payroll and benefits administration. Similar problems occur even when companies outsource payroll functions. According to Dallas-based BenefitMall, such breakdowns in communication can be exacerbated when dealing with third-party vendors.

A Better Way to Communicate

Businesses are slowly waking up to the fact that formal, top-down communication is not as effective as once thought. They are integrating new ways of communicating that employ both formal and informal channels facilitating communication both vertically and horizontally.

Simply put, HR and payroll are still communicating formally with senior management, but they are also communicating informally with one another. The horizontal communication enables the two departments to keep one another abreast of what is going on while still communicating vertically with the CFO and CEO. More importantly, it improves communication between companies and their third-party payroll providers.

Effectiveness Is Most Important

BenefitMall says that not all companies are embracing this new way of communicating despite ongoing problems with the way they currently do things. It’s hard to understand why. Effectiveness is the most important aspect of communication, not the organizational structure under which it occurs. When company’s focus too much attention on organizational structure at the expense of effectiveness and productivity, they only harm themselves.

Payroll and benefits represent two of the most complex areas of modern business. In order to maximize efficiency and minimize problems, companies need to adopt better ways of communicating across the full spectrum of payroll and benefits administration.