Are You Overlooking These 7 Key Payroll Data Metrics?

As your employee pool grows, so too will the need to have efficient payroll processes. However, as you may well know, payroll professionals are somewhat scarce. And, even if you are fortunate enough to have enough of them, your payroll process is still likely marred with inefficiencies, delays, and compliance challenges.

Given that employees are at the heart of your organization, their engagement, satisfaction, and wellness are your most valuable assets. Data suggests that you can increase profitability by 21% with a highly engaged workforce. In this regard, bottlenecks in your payroll process can be extremely detrimental. 

To ensure that payroll resources are distributed accurately, and on time, there are key payroll KPIs that you should track. Sadly, you cannot achieve this with outdated or manual payroll systems. In this article, you’ll learn about seven key payroll data metrics and why you need a human capital management solution.

What Is Payroll Data?

When it comes to payroll expenses, it’s easy to think of it as the sum of all your salaries. However, whereas salaries are the largest contributor, there are other contributing factors. These include overtime, bonuses, and more.

Payroll data refers to all the elements that contribute to payroll expenses. Such expenses will vary from one employee to the next and from month to month. Failure to accurately account for such costs can translate to inaccuracies between presumed and actual available balances.

Overlooked Payroll Data Metrics

There are several payroll data metrics that are easy to overlook but have a significant impact. They include:

1. Paid Leave

As a legally compliant company, you are required to offer your employees different types of leave. On top of annual leave, this may include sick leave and maternity leave. Such leave is owed to employees to a reasonable extent.

During such periods, the employees will take time off of work while still remaining on the payroll. As such, taking into account the number of leave days taken during a specific period is a key part of the payroll process. 

Moreover, you should also analyze this data to identify patterns and trends. This will help you make adjustments that allow the company to manage such costs better and cope with absenteeism. 

2. Withheld Taxes

Each of your employees is liable to pay taxes to the government for their income. With withholding taxes, you are responsible for remitting them to the government on behalf of your employees. As such, withholding taxes are deducted from the salary and should be accurately recorded. 

3. Bonuses

A key element of an organization’s success is employee productivity. To encourage them to continue working at peak performance, you can offer bonuses for exemplary work. If so, there should be a mechanism within your payroll system to track such bonuses and ensure you account for them.

4. Overtime Work

As the company grows or depending on projects, employees may have to take on additional work or go the extra mile to finish projects on time. This may require exceeding the stipulated working hours in their contract. Therefore, it’s important to acknowledge and appreciate such commitment and effort by accounting for it in their overtime pay.

But even as you do so, you must track overtime hours accurately. This will prevent errors such as overpaying or underpaying for overtime.

5. Freelance Work

You may require a freelancer for a service you are ill-equipped to perform from time to time. The tricky bit with such costs is that they are hard to track as they’re not a regular occurrence. Also, the amount may vary from one session to the next.

Therefore, you must have a payroll system that makes tracking freelance work and assigning the appropriate amounts easy.

6. Payroll Processing Fees

Other than the direct payroll expenses such as salaries, bonuses, and overtime, the process itself also attracts some costs. As such, payroll processing fees are an essential metric to track. In this regard, you should be keen on:

• Payroll department salaries
• Software costs
• Cost of payroll errors

7. Training Expenses

Part of growing a company is bringing on new people to help with the workload and improving the capacity of current employees. Often, this requires an investment in training, which should be incorporated into payroll costs.

Such training costs may include things such as instructors, transport, equipment, etc. So, in addition to having clear records, you should also find ways to make it more efficient and reduce costs.

Organize Payroll Data With HCM 

Undoubtedly, the payroll process plays a key role in the efficiency and success of an organization. It significantly influences employee morale and costs incurred. But, it’s not just about remitting salaries as a lot of things come into play. As such, HR professionals have to be extremely keen.

This is why HR professionals spend a significant proportion of their time on the payroll process. Even still, it’s plagued by costly inaccuracies. However, it does not have to be like this. The process is more efficient with modern payroll software, and HR professionals have more time to focus on other activities. 

Some of the benefits you’ll enjoy with an HCM solution include:

• Enables you to reduce costs
• Enhances reporting efficiency while reducing necessary paperwork
• Reduces exposure to liability from compliance requirements
• Boosts employee morale and productivity
• Increases the ROI of the HR department
• Produces more accurate results
• Saves time
• Improves data security
• Easy to track employee actions

Is a Payroll Solution Worth It?

As the business landscape becomes more competitive, any advantage you can get will be valuable. Instead of committing many manual hours to the payroll process, which will still have errors, invest in a reliable payroll solution.

On top of making the process more efficient and accurate, it will also help you reduce costs. Such costs and time saved can be channeled to other areas of the business to boost your bottom line. 

However, it’s not just about getting an HCM solution but choosing the right one for you. At Your Payroll Department, we specialize in helping businesses reduce their costs and maximize profits. We offer advice on all things payroll. Get in touch with us today to tap into our vast knowledge and expertise to take your business to the next level.