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Payroll – Using Analytics To Take Your Regional Payroll Forward

Big data may be nothing new to global businesses today. However, the use of big data in payroll is slowly gaining traction among organisations. Similar to how organisations are embracing the advantages of technology and automation in HR, organisations are also exploring the potential of leveraging on employee and payroll data to drive strategic decisions and predictive forecasting.

While payroll has traditionally been viewed as paper-bound and human-led, today’s leading payroll solutions include automated tools that take a deeper look at payroll data and churning out insights for organisations.

Although these data and insights are helpful, most organisations struggle with leveraging these insights to make strategic and actionable decisions. In a recent report from Deloitte which surveyed more than 10,000 HR and business leaders, 71% of companies view people analytics as high priority. However, only 8% of these organisations say that they have usable data for analysis.

There are many ways in which payroll analytics can help organisations to take their regional payroll forward. Here are 4 key applications of payroll data analysis that can significantly transform the organisation’s business.

Minimize and eliminate errors

Payroll is typically the largest cost category for most organisations. As such, even the smallest error in regional payroll can snowball into bigger problems, which means it is crucial for HR to have full visibility of the payroll processes and outcomes. This is where payroll analytics can be highly beneficial. The ability to easily view where and how often payroll errors are occurring and to track payroll trends over time helps organisations to identify areas for improvement and minimize problem areas.

For instance, if a particular location is consistently requiring supplemental payroll runs, this could signal that additional training is required for the payroll team, issues with certain payroll items or even internal workflows relating to staffing. If payroll errors tend to spike at certain times of the year, this may be attributed to certain holiday schedules. Analysing these trends can help to minimize and eliminate potential payroll errors.

Guide future HR planning

The right payroll analysis can drive strategic decision making and help guide future HR planning decisions. Having full visibility of existing payroll processes and regional payroll challenges help to paint a full picture of the organisation’s operational costs and pain points. This then empowers business leaders to rethink and evaluate ways to grow the organisation.

During the analysis, the payroll data may reveal a trend of decreased profits as compared to compensation for a particular country. This may then trigger a reevaluation of staffing deployment, and whether employees are meeting the organisation’s revenue targets. Likewise, the payroll data could also alert HR that senior management in a certain location are nearing retirement age. This could then allow business leaders to start thinking ahead about succession planning and transition.

Understand payroll costs

Good payroll analytics can also help organisations to understand payroll and operational costs across multiple locations. As payroll data captures salary items such as employee compensation, training costs, tax liabilities, and even insurance contributions, this data helps to provide an accurate picture on costs associated with employment in various locations and also drive critical hiring decisions.

For instance, hiring a new employee involves more than just salary payment. In regions where there are higher insurance or statutory contributions, the organisation may consider hiring contingent workers or freelancers to reduce human capital costs. Similarly, fluctuations in payroll reports may indicate high turnover rates as overall payroll compensation may vary widely from month to month. This may then drive HR to relook at compensation costs, and perhaps even conduct market benchmarking exercises to ensure employees are compensated at market rate and increase retention levels.

The first step in leveraging big data in payroll is to ensure that payroll staff has access to consistent, accurate and high-quality data. External payroll vendors such as i-Admin leverage on cloud technology that provides organisations instant access to payroll data on a unified platform. This helps to easily consolidate payroll data from numerous locations and allows HR to run analysis to generate insights.

Real-time data visibility, process standardization and automation are helping organisations realise the power of data that has always been there: payroll information. By leveraging on the opportunity presented by thorough and in-depth analysis of payroll data, this can significantly position the organisation and payroll team for long-term success.


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