Chapter 2

REVIEW OF RELATED LITERATURE AND STUDIES

This chapter contains the related literature and studies gathered from the internet

and the books which guided the proponents in proper data collection related to the

Human Resource Management and Payroll Practices.

RELATED LITERATURE

Foreign Literature

Human Resource Management (HRM) is the management of an organization's

workforce or human resources. It is responsible for the attraction, selection, training,

assessment, and rewarding of employees, while also supervising organizational

leadership and culture and ensuring compliance with employment and labour laws

(Ulrich, [Link]. 2011). First and foremost, people in work organizations endowed with a

range of abilities, talents and attitudes influence productivity, quality and profitability.

People set overall strategies and goals, design work systems, produce goods and

services, monitor quality, allocate financial resources, and market the products and

services. Individuals, therefore, become ‘human resources’ by virtue of the roles they

assume in the work organization. Employment roles are defined and described in a

manner designed to maximize particular employees’ contributions to achieving

organizational objectives (Zaria, 2007).

Human Resources Management is defined as a system of activities and

strategies that focus on successful management of employees and working staff inside
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the organization to achieve the goals of the organizations (Bayar, [Link]. 2006). The HRM

is “That part of the management process that specializes in the management of people

in work organizations” (Bratton, [Link]. 1999). HRM emphasizes that employees are

critical to achieving sustainable competitive advantage, that human resources practices

need to be integrated with the corporate strategy, and that human resource specialists

help organizational controllers to meet both efficiency and equity objectives. ”Some

scholars claim that HRM can lead to specifically measurable business outcomes

(Huselid, 1995). Equally, HRM has its critics (Sisson, [Link]. 1994) both of whom view

HRM as a symbolic excuse to enhance managerial legitimacy where the management

of individuals has been intensified within an enterprise culture (Keenoy, et. al. 1992).

According to the Pakistan Business Review (January 2012) Human Resource is

the most important asset for any organization and it is the source of achieving

competitive advantage. Managing human resources is very challenging as compared to

managing technology or capital and for its effective management, organization requires

effective HRM system. HRM system should be backed up by sound HRM practices.

HRM practices refer to organizational activities directed at managing the pool of human

resources and ensuring that the resources are employed towards the fulfilment of

organizational goals.

According to Khatri (1999), people are one of the most important factors

providing flexibility and adaptability to organizations. Due to hyper-competition,

organizations need to be responsive and flexible. Providing adequate managerial

activities to employees should be sufficient for it is a competitive tool for a strategic

human resource management. Poor handling of employee’s actions will reflect one’s
 9

organization. HR methodology or absence of it influences the HR capacity's vertical and

even fits; these variables all impact the redistributing of HR exercises.

Firms may have access to valuable human capital, but either through the poor

design of work or the mismanagement of people, may not adequately deploy it to

achieve strategic impact. Effective systems for managing people evolve through unique

historical paths and maintain interdependence among the components that competitors

cannot easily imitate. (Dunford, Snell, Wright, et. al, 2001). The significant part of these

frameworks is that they are the methods through which the firm keeps on producing

advantage after some time as the genuine representative’s stream in and out and the

necessary practices change due to changing natural and key possibilities.

The effective management of human resources requires sound Human Resource

Management systems. Storey (1995) defines HRM as a distinctive approach to

employment management which seeks to obtain competitive advantage through the

deployment of a highly committed and skilled workforce, using an array of techniques.

HRM can help firms improve organizational behaviour in such areas as staff

commitment, competency and flexibility, which in turn leads to improved staff

performance (Koch, et. al. 1996).

Payroll is unique from other basic accounting topics because payroll involves

many federal (and state) payroll tax and income tax withholding laws, and pay rate

calculation rules. Each of these legal rules imposes different requirements. So, to

understand the payroll process, you will find yourself learning more than just how to

properly analyze and record transactions. (Mostyn, et. al. 2008). Given the regulations

mandated from the government or any organizations, it must be followed and calculate
 10

thoroughly. Identifying what activities employee has made inside the company must be

recorded to deliver accuracy of information for generating necessary reports and

documents needed for any future transaction.

Payroll is the total amount of wages paid by a company to its employees and

other workers (freelancers and contractors). From payroll taxes and wage policies to

remitting to the IRS, the process is not as simple as it seems. Things can quickly get

complicated. To ensure accuracy, the payroll process can’t be rushed. This study

concludes that before processing a payroll, it is important to collect and verify timecard

information. It is also beneficial to consider factors that are necessary for the process;

Gross wages, benefits, social security and medicare and tax withholdings. It is said that

paying employees consistently and on time demonstrates company’s financial stability.

It also impacts employee morale, safeguarding their trust in your business. In case

you're giving checks filled with mistakes, for instance, workers will discover them.

Planning how to moderate future slip-ups like transaction errors would be sufficient.

Local Literature

Infonetics Inc. Payroll System

According to windsoresther (2013), a payroll system is worn to sustain listings of

employees’ profiles and transactions that are used for the calculation and generation of

payroll checks. Employees’ hours are recorded and disseminated to appropriate

department offices. Annualized tax tables are then used to mechanically total the

deductions ahead of before the check is printed on bank stock. Monthly and quarterly

reports are also used to prepare tax filings, and provide analytical information.
 11

This system gives an overview how to create an effective system that will cater

areas of Human Resource to properly manage employees. It also provides basic

computation for taxes and hourly rates. Payroll compensation codes were also indicated

for overtime, leaves and also tax tables used for annualized computations.

Orange HRM

This software was released in March 2006, comprised features such as PIM,

ESS, and reports modules, while also enabling administrative users and ESS users to

have different authority levels to the data in the application. Tracking of attendance,

leaves, recruiting & onboarding (including Applicant Tracking System (ATS), Travel &

Expense Tracker, Insurance Benefits and Document Manager were well-designed

interface built for a friendly user interface for administrators and other user roles. They

also acquire Orange App developed to create value-added applications tailored exactly

to your specific business requirements for enhanced efficiency, functionality and value

addition.

Employees play a vital role to an organization. Modernized way of recording

information implies that an organization is growing, thus the more reliable systems that

were able to keep and generate employee reports would retain more employees and

more growth to the organization or company.

RELATED STUDIES

Foreign Studies
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Human Resource Management defines automated personnel systems which are

more than simply a combination of computer terminals, screens, printers and software.

Today a typical automated system also requires a complex infrastructure consisting of

specialized staff, agreements to provide servicing and spare parts, traditional paper

records, etc. For the foreseeable future we will continue to have both paper and

electronic records in the same office (Cain, 1996). Mostly, personnel records have

linkages to other important record systems, such as payroll, pensions, national

insurance schemes (the ‘social safety net’) and of course the files of other government

departments. Thoughtless tampering with the personnel records system can have

unforeseen ramifications for many other important systems. This study highlights the

importance of every information and having a reliable storage for keeping files. Good

records management practice has a role to play in supporting all of these objectives.

Personnel records are no exception because this encompasses the capability of

knowing an individual competency skill in the industry. Overviews the realities on a

working organization, mostly on illegal works.

The JFMIP Human Resources & Payroll Systems Requirements document

provides agencies with high-level functional requirements for human resources and

payroll systems that will provide the capability for financial managers and others to

control and account for human resources and payroll salaries and expenses as defined

in government wide and agency-specific statutes, regulations, and guidelines.

Human resources and payroll management functional requirements presented are

those required to initiate and maintain the compensation of employees. The full range of

HR and payroll management functions would incorporate arranging, strategy,

programming, planning; bookkeeping, activities, and controls. Generates complete,

accurate, and prompt payment of pay and deductions; and timely access to complete,

accurate, and prompt generation and maintenance of human resources and payroll

records and transactions.

Payroll in India gives the idea of time keeping and gives adequate internal

controls to ensure that human resource and payroll systems are as operating as

intended. Step by step procedure needed must be followed, imagine what if the salary is

not paid accurately or there is a delay in releasing salary. Such irregularities can take a

toll on the morale of the employees and ultimately affect the business productivity.

Determining each employee's deductions, keep payroll records and adjust to mistakes.

Giving exact information indicated on a payslip is essential for employee retention.

Local Studies

Payroll System for PMO-AGNO Flood Control System

The group of Velasco [Link]. of Pangasinan State University (May 2011) proposed

a thesis entitled The Payroll System of the PMO-AGNO Flood Control System is

accountable for among other services, the maintenance of records associated with

payroll preparation and processing. This system is capable of managing the employees’

records that is necessary for the generation of payroll reports. Provides a well accurate

and fast way of calculating salaries and as well as generation of payroll and having the

security in accessing the system.

Online Human Resource Management System

Online Human Resource Management System that is developed for the

personnel of Pangasinan State University. An online system that focuses on recording

and tracking of employee’s profile, the capability of storing one’s personnel’s record by

means of uploading and downloading files letting the employees of Pangasinan State

University to view their information online. By this means the employees can make

access his/her profile even when he’s on work or on a leave. (Salonatin, [Link]. 2011).

Cagayan de Oro City Computerized Payroll System

City Accounting Department has presented a redesigned automated finance

framework for permanent employees in an offer to improve its administrations and boost

assets. As they have said, it had been acquired to improve their services particularly in

the processing of payrolls for permanent employees. Dealing with innovation would

increase productivity and capable to deliver efficient and accurate data.

Instead of dealing with paper works from daily basis, this system gives the convenience

and peace of mind that employee’s time and energy exerted at their work were recorded

correctly. Unlike the manual reports that results to inaccurate data, computerized payroll

delivers fast and reliable documents. Generation of processed payroll is done once a

month, unlike twice per month generation which is way too time consuming.

Researchers ( Alvarez, Aldrine, Gecolea) of Krizalen enterprises (2014) uses a

biometrics with online data analytics dashboard to give the organization an efficient

payroll system that can automatically monitor the attendance and trip tickets of the

employees, drivers and helpers with the technology that would help them with the

employee information, management attendance and monitoring payroll processes. Data

redundancy is no longer be applicable, as the system identifies unique data to perform

efficient processes like payroll analysis and helped them with data security and

accuracy of company’s payroll and information.

Web Based Payroll System (Las Pinas City Hall)

As per Daclison, Cardenas, et. Al. A web-based payroll system provides accurate

accounting of the funds provided paid to employees for work or services performed.

Without this system the establishment would have difficulty in accounting for payments

for services or work performed by employees. One benefit of payroll system is in the

tracking of employee productivity in the work environment. This makes it easier to

determine who is performing at their fullest and those who are failing in productivity.

This study focused on avoiding trouble in dealing with staff records and detachment of

data when required, deceitfulness regarding utilizing every day time record, manual

procedure of liquidation of financial summary and it requires some investment to

produce report.

Contributions of the Reviewed Related Studies to the Present Study

Using the studies mentioned above as a starting foundering, the proponents

were able to expand the ideas that had contributed a big help in developing the project

entitled Bayambang Municipal Payroll System. The success of the said HRM solutions

is the proof that gave the proponents additional ideas for the current completion of the

proposed project.

Infonetics Inc. Payroll System gave a plan in relation to the organizing of

files/records and how the practice of deduction is calculated as well as the reports used

in preparing tax filings. It also provided better idea for what appropriate reports can a

payroll system could generate like post and edit transaction records, payroll analysis.
 16

Learning compensation codes is beneficial for calculating over-times, leaves and lcal

deductions. [Link]

Payroll System for PMO-AGNO Flood Control System (Lucerna, 2013) settles

with the employee maintenance and the generation of payroll. Moreover, offered well

again suggestion for what proper reports be able for the construction of payroll

generation.

Online Human Resource Management System (Salonatin et. al. 2011) deals

with the management of the employee files by their own selves in online processes.

Helped the proponent to come up and have the idea to acquire the techniques in

designing a manageable human resource system for the users to easily adapt and

supervise their information without having interventions.

Records as a Basis for Human Resource Management served as a great basis of

human resource management study, it overviews the effective management of

organization, the importance of a computerized system for recording of files, the

solutions how to overcome illegal issues regarding to the compilation of files,

manipulations and confidential of relevant files.

Orange HRM is a great solution to Human Resource Management related

problems. They contained features that were capable for managing human capital

efficiently. They also provided easy access features which allow administrative access

through the internet. [Link]

The official Human Resource Management site of the Provincial Government of

Bulacan offers variety of solutions in handling human resources especially for

government offices. It also has features suited for automating processes involved in
 17

human capital management that gave the proponents the techniques regarding on

reaching effective employee managing, the flexibility of the system that is being used on

the past researches used by the proponents.

Web‐Based Information Management System for Construction Projects

concludes that having enough information before project must perform. Profiling

workers would likewise assist with knowing their yearly gross. Producing reports should

consistently be precise, for any error, it will prompt poor picture of an association.

Cagayan de Oro City Computerized Payroll System (PIA, 2012) minimized the

workload of personnel that handles everyday manual computation. Creating a user-

friendly interface would result to an effective and efficient way of keeping track of hours,

calculating wages, withholding taxes and other deductions, printing and delivering

checks and paying employment taxes to the government.

Paymedia: Payroll Processing is an overview of how to put beneficial effort on

how to simplify and to get back to the work that matters like running

business/organization instead of putting effort of manually generating and inputting data .

By reducing the time, the employees spend on tedious administrative tasks, it will

significantly boost productivity. Reducing errors will lead to saving of time. Manually

processing payroll is not only time-consuming but also prone to human error. When you

have to account for overtime, vacation, benefits, tax withholdings, and salary structures,

payroll processing gets complicated. Fixing mistakes can be time-consuming, costly,

and stressful for the employees. [Link]

when-why-how
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Web based payroll system (Las Pinas City Hall) is designed for improving man power

services quality. The proponents wanted to also develop a framework that can compute

exchanges effectively and outline all the deducted contribution of the employees. Fixing

errors by entering information manually will reduce to maintain company’s capacity to

handle effectively their own human resource. By implementing the system, this will give

satisfaction from personnel to do their work in a timely manner but in a calculated way

of generating payroll reports.

[Link]

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of_Science_in_Information_Technology_Members