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Reporting Vs. Analytics in Global Payroll

Nov 1, 2018 

Because payroll is an essential business function and often an organisation’s largest cost centre, payroll performance reports are a critical resource for business leaders. Providing an overall view of key metrics and how many employees were paid what and when, payroll reporting can be in itself a challenging and time-consuming process, depending on the system used. So it’s upsetting to think that all that effort spent preparing reports is falling short of its potential.

Today’s leading solutions enable payroll professionals, as well as business leaders, to look beyond the end-process snapshot figures provided by typical reporting methods and use analytics to dive deeper into payroll efficiency and performance. Where reporting looks at the result, analytics examine the process, providing the means for better understanding your payroll and evaluating efforts to improve it. Here are just three examples of how analytics provides insights beyond report results.

Accuracy vs. First-Time Approval Rate

Accuracy remains the primary goal of any payroll operation, as well as one of the greatest ongoing challenges. A variety of factors can cause inaccurate payroll data, ranging from valid late changes such as an unforeseen leaver to more systemic issues like an error-prone manual transfer process. Determining what percentage of payroll data is correct versus incorrect, and monitoring that number from cycle to cycle, is important for maintaining an overall view of your ability to meet employees’ needs and, ideally, for spotting any particularly challenging periods, such as during the holidays.

However, while the accuracy rate reports an important snapshot of the end performance, the rate of first-time approvals looks deeper into the process to help identify where accuracy issues occur. If the accuracy rate is the final score on game day, consider first-time approvals to be an assessment of training in the weeks before. An excellent rate of first-time approvals tells you that your data collection and processing is highly accurate from the start, empowering you to look elsewhere in the process for opportunities for improvement. On the other hand, if you consistently require multiple rounds to approve your payrolls, it may be time to look at your data collection methods.

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Error Rate vs. Data Input Issues

The rate of error in a payroll is another key reporting number. Whether you look at an overall percentage or the actual figure per payroll, error rates can help provide context for metrics like timeliness and accuracy. For example, a high error rate may help explain a longer payroll cycle if your team has to spend a lot of their time correcting issues. Conversely, a low error rate could point to more accurate data entry—or efficient calculations or a fault in error reporting.

Proper payroll analytics look beyond the final report number to pinpoint where and when in the process errors occur. Looking at the number of issues caused at the point of data input can shed light on the quality of your source data and the efficiency of data transfer into your payroll system. To address a high rate of data input issues, your team may even need to look upstream of the payroll process to determine where the problem begins. Then again, if you have very few errors at input but still require multiple approval rounds, you know the problem lies in your processing or calculations, rather than your data.

Timeliness vs. Calendar Window

After accuracy, timeliness is probably the most sought-after figure in payroll performance reports. Did you pay people correctly and on time? For too many organisations, consideration of the payroll function begins and ends with that question and answer. However, reporting a good figure for timeliness shows merely that your payroll team can meet deadlines, and offers no insight into the time and attention required to achieve that number.

Examining the calendar window for payroll, however, provides a broader view of your process efficiency and can be instrumental in evaluating the impact and success of improvement initiatives. For example, an organisation who have recently integrated their cloud-based global payroll and HCM systems should see a decrease in the length of their payroll calendar window because the integration would eliminate the need for a manual data transfer process. Automation provides even more opportunities to reduce the window, such as by replacing tedious manual data checks with robotic data validation, which can cut days out of the payroll process.

The Right Tool for Today

As your analytics will reveal, each change made to the payroll process has knock-on effects. A shorter calendar window allows for more data to be included in each run, improving payroll efficiency and accuracy, and saving time and cost by reducing the need for supplemental runs. Understanding how changes impact the process and where opportunities for improvement remain is key to improving not only payroll, but every connected function.

While performance reports will always have their place, the real power to improve the numbers they contain lies with analytics. By providing unprecedented visibility and access to real-time, unified data, advanced payroll solutions are equipping global teams with the insights needed to transform payroll performance—and the role those teams play within the broader organisation.


 A version of this article was previously published in GPA Live.

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