January 2023

Experts Discuss Importance of KPIs to Measure Global Payroll Efficiency

By Bryan Kirk

In the on-demand GPMI webinar “KPIs, Performance, and Benchmarking—The New Payroll Efficiency Report,” sponsored by CloudPay, experts addressed several topics related to the payroll efficiency index (PEI) and the key performance indicators (KPIs).

KPIs measure payroll performance, look at which countries are the most efficient at processing their payroll, and examine the impact that issues such as COVID-19 and the Great Resignation had—and in some cases continue to have—on payroll efficiency.

Katherine Doyle, Manager, Marketing Campaigns at CloudPay, and Marlene Felisberto, Global Director, Consulting Solutions, at CloudPay, introduced webinar participants to the global PEI and defined how these processes analyze global payroll efficiency and performance.

“The global PEI report sets a new standard for payroll KPIs,” said Doyle, adding that the typical industry standard of service level agreement (SLA) timeliness and accuracy often fall short in providing real time analysis throughout the payroll cycle. “That’s why we’ve created an industry benchmarking payroll report of processing and KPIs across more than 130 countries.”

The five KPIs recommended for tracking payroll performance include:

  1. First Time Approvals—The percentage of gross-to-net calculations approved upon initial review
  2. Data Input Issues—The percentage of issues impacting payroll caused by mistakes in data input
  3. Issues Per 1,000 Pay Slips—The number of pay slips affected by issues in each cycle
  4. Calendar Length—The number of days required to complete payroll processing
  5. Supplemental Impact—The percentage of payroll runs completed as supplemental runs

The global PEI is in its third edition and not only allows a more robust and continuous process improvement but seeks to identify the metrics that make a difference to payroll performance.

Felisberto said there have been two major events over the last three years that had significant impacts on global payroll. In 2020, it was, of course, the COVID-19 pandemic that negatively impacted the world economies and forced many businesses globally to close their doors temporarily or permanently.

The second event to impact some global payroll entities was The Great Resignation that began in 2021. During this time, many workers—primarily in the United States—opted to leave their jobs, which created a talent shortage for companies.

“The Great Resignation resulted in a higher turnover rate, which made things a little more difficult to find payroll talent and increased workload on the payroll function…meaning the remaining talent had to pick up new tasks and potentially do more that was outside of their role,” Felisberto said.

This scenario created frustration among payroll staff members in some global industries, which also led to a decline in payroll efficiency. Felisberto said this had a ripple effect on the employee experience, which only accelerated the impact of The Great Resignation.

However, other regions of the global economy didn’t necessarily experience The Great Resignation. In some cases, COVID-19 restrictions are still in effect, particularly in the Asia-Pacific Region (APAC), according to the global PEI.

“This past year, we’ve recorded a substantial divergence in performance between APAC, and the EMEA (Europe, Middle East, and Africa) and Americas regions,” Felisberto said, adding that the existing COVID-19 restrictions in the APAC region had discouraged workers from changing jobs, which was a positive for global payroll professionals.

Thus, the APAC region didn’t experience the same impact from The Great Resignation that was seen in the EMEA and Americas regions. This means there are counties that are more efficient—based on the first-time approval rating and payroll complexity—at processing payroll. The top five countries that are the most efficient include:

  1. Bahrain—95.7%
  2. China—95.6%
  3. Russia—93.4%
  4. Brazil—90.9%
  5. Peru—90.8%

Felisberto said there is a big gap in payroll software maturity, which can hinder payroll efficiency in some regions, as much as the depletion of payroll talent in various regions has in recent years.

“As important as the technology is, the people who are behind that technology are also very important,” she said. “Unfortunately, we have not found a way to have payroll run itself yet, so we do need those people.”

Register for the on-demand webinar today.

Bryan Kirk is the Senior Writer and Editor of Membership Publications for the GPMI and the American Payroll Association (APA).
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