It wasn’t so long ago that payroll was functional and utilitarian in nature: human-led, paper-based processes that ensured that everyone within a business got paid – but no more than that.
But as these processes have become increasingly digitized, businesses have come to realize that there is a gold mine of useful data within payroll functions. So much so that payroll can be a vital source of strategic insights that can benefit an organization far beyond the world of pay.
Initially, gaining those insights came through the generation of reports that crunch the numbers of payroll, diving into employee absence rates, payroll cycle performance, and other key metrics. However, as payroll continues to pivot towards being part of a wider, more modern pay experience, in-depth analysis of data is proving more and more important to a number of key business functions. This blog explores four of them in detail.
How payroll dataadds value
By putting payroll data to better use throughout an organization, it can become much easier to:
Recruit and retain the best talent
Thanks to increasing globalization and trends like the Great Resignation, keeping hold of (and attracting) the best staff around is now harder than ever. Payroll data can make this a more achievable task in a number of different ways.
For example, payroll data can inform a business of the conditions, costs, and risks of hiring an employee in a particular country, including taking any cultural specifics into account. This information can be used to decide whether now is the best time to hire, and also whether it would be best to hire a permanent employee or a contractor.
It can also be used to highlight areas where the employee experience can be improved. Employees increasingly value the other benefits and packages that their employers can offer, and what they will generally prefer will vary from one country to another. Data within payroll can guide the structuring of benefits packages that will best appeal to talented staff and candidates, as well as help with retention.
Make wider business strategy decisions
Analyzing payroll data and performance is critical to helping businesses make more informed decisions on their future activities, both in the short-term and the long-term.
For example, imagine a business where there has been a rise in absenteeism and a drop in productivity. Going through the payroll data using analytical tools uncovers a pattern, where these trends are most apparent in the last few days before payday. This suggests that many employees are suffering financial (and possibly emotional stress) as they run short of funds, with the cost of living crisis making this even tougher. As a result of discovering this trend, the business can take appropriate mitigating action, such as small pay rises, or introducing more flexible pay solutions such as Earned Wage Access.
These insights can also be used in more strategic business decisions, such as staffing levels for future years, whether to expand into a new territory, and generating more accurate budget forecasts.
Cut out payroll errors
In many organizations, payroll represents its biggest single cost, and can often account for as much as 70 percent of its overheads. This means that any recurring errors in payroll processing – even small ones – can have huge ramifications across the business. Analysis of payroll data can spot these errors so that they can be ironed out, to make improvements and savings.
As an example of how this can work, payroll data may uncover that there are a large number of supplemental, off-cycle payroll runs being made. This may highlight that there are data collection errors during normal cycles that potentially could be ironed out with extra training for the payroll team.
Our recent PEI report has found that data input issues have continued to decrease over the last few years, as has the rate of issues per 1000 payslips. This demonstrates that many businesses are actively exploring ways to improve the consistency of their payroll processes, most likely by utilizing payroll employee data to do so.
See the bigger, global picture
Payroll and its data have a major part to play in helping businesses move toward a more integrated, global, and data-driven future. With payroll processes that are fully digitized, and coordinated with other areas such as payments and HCM, organizations can move towards a ‘one data’ model, where data can be collected once, and can be accessed and analyzed even throughout a multinational business.
It is also a powerful tool for maintaining compliance, which can be an arduous task given increasing levels of regulation, and variation in pay and employment laws between different countries. Data and analysis are vital for spotting any problems as soon as they arise (or even before they arise) and taking action to resolve them, especially as this information can be presented in digestible, easy-to-read dashboards that aid fast, effective decision-making as needed.
The key to unlocking all the potential within payroll data that’s demonstrated here is to unify payroll systems, payroll software, and payroll processes. This is best achieved through a modern pay experience that brings together payroll, payments and HR, using consistent and high-quality data to drive insights and efficiencies in several different areas simultaneously. That way, it’s possible to make better decisions, maintain global payroll compliance, improve employee experiences, and maximize payroll performance – all thanks to payroll data.
Explore the difference that payroll data is making in the wider business world in CloudPay’s latest Payroll Efficiency Index report, then learn more about the modern pay experience from our Global Payroll Experts.