Data is the lifeblood of just about any business, and certainly so from a payroll standpoint. Accurate data is obviously the essential ingredient needed to make sure employees are paid accurately and on time. But are you getting full use out of your payroll data? How can it help you understand your business better? What difference can payroll data make to the way your business is managed and your employees are cared for?
In my previous article, I talked about putting your payroll data into action to drive operational performance. In this second part of the series, we will discuss integrating global payroll data into management information outside of just in the payroll function itself, to support wider business planning and decision making.
Global Standardization, Consistency, and Automation
Every business needs a consistent, standardized foundation of data to operate effectively. A global business needs a global payroll system, where the data, processes, and teams managing the payrolls are unified. This is the solid foundation every payroll manager strives for to run a successful global payroll function.
Implementing modern and scalable payroll technology that enables automation and system integrations is the first step. Automating the collection and transfer of employee data to your payroll provider via integrations, plus the use of artificial intelligence-supported data validation tools reduces manual effort and increases accuracy, compliance, and efficiency.
The system must track the end-to-end process from data-in to payslip-out, providing instant access to all payroll data throughout. It must also include analytics to enable detailed reporting on the system at every stage.
Continuous Performance Improvement
To reap the benefits of such a system, you’ll need to create a working culture that proactively looks for potential weaknesses in the system to improve performance. Having such an open mindset across teams means you’ll be constantly optimising performance, which will improve compliance, efficiency, and productivity. The key payroll performance metrics I focused on last time were the following:
- First-time approvals: The percentage of payrolls passed by the customer without any amendments required, after the provider has run data collection, processing, and validation functions
- Data input issues: The percentage of errors that can be attributed to errors in data input. This metric indicates the source of issues rather than overall performance
- Issues per 1,000 payslips: The average rate of occurrence of errors that need action to remedy. This metric can highlight overall improvements such as configuration changes or staff training required from the provider
- Calendar length: The length of time in days between the cut-off for customer amends to the payroll and the payday itself. A shorter calendar length is preferable, as it maximizes the time available to bring data into the payroll run and reduces pressure on HR and payroll teams
- Supplemental impact: The percentage of payroll running outside the normal payroll run schedule. This can happen for a variety of reasons—which all have cost and administrative implications—including but not limited to staff departures and urgent expense reimbursement. This can be a bigger issue in some countries for cultural or general administrative reasons.
Digging into the data around these key performance indicators (KPI) unearths the insights needed to take corrective action that can make a practical difference. And with the global perspective, regional performance benchmarking will support the setting of standards beyond borders.
Integrating Payroll Data with HR, Finance, and Treasury Systems
The essential activity of paying employees accurately and on time is dependent on having robust data flows between payroll, human resources (HR), finance, and treasury. Each function is interdependent, so quality of data is a critical success factor.
When standardized payroll data is aligned with HR and finance systems, this cross-functional shared access enables faster, more informed, and coordinated decision-making that reaps the benefits that are broader than payroll.
A tighter partnership across payroll, HR, and finance can better support strategic goals such as enhancing global employee experience. For example, a cross-functional approach is optimal when planning and implementing employee self-service tools for improved employee on-boarding, payroll set-up, and access to employee benefits.
Earned wage access (EWA) is a prime example of an employee benefit that involves data-sharing and aligned business processes between HR, payroll, finance, and treasury functions. The decision to offer EWA is a low-cost, high-value benefit that not only provides employee well-being, but supports HR’s talent acquisition and retention goals. The EWA solution will be managed by the payroll function, and the underlying FinTech used to make EWA payments will be managed from the treasury function.
Quality Assurance, Operational Risk
Achieving standardized global payroll data, analytics, and reporting is typically one of the key goals in a payroll transformation project. Such an initiative will consolidate payroll vendors to reap benefits that include improved quality assurance to reduce operational risk. Benefits will include:
- Simplified vendor contract data protection terms in a single global agreement
- Improved cyber security risk management with a unified global model. PWC’s 2022 Global Digital Trust Insights Trust Survey found that “the organizations that had the best cyber outcomes over the past two years have consolidated tech vendors as a simplification move.”
- Risk mitigation through process visibility for performance audit reviews—the ability to track and interrogate KPIs as described above
- Improved compliance through detailed process tracking and visibility for statutory checkpoints
These examples of actionable insights are the outcomes of having robust and accessible data, with powerful analytics and meaningful business reporting that support crucial business decisions.
Scalability for Business Growth
Dynamic global organizations require mobile and scalable solutions to meet the competitive demands of business today. A global business needs a global payroll function that—aligned with HR and finance—will support business growth. The system needs to have the ability to respond rapidly to mergers and acquisitions activity, supporting the business and employees alike.
This unified, scalable approach demands continuous process and technology innovation, which creates both opportunities and challenges from the expansion of data that comes with such growth. So, we’re back to thinking about data standardisation, consistency, and automation.
Cost Management
Lack of visibility over costs, along with inconsistent reporting, are common challenges for businesses operating across multiple countries.
Tighter management of payroll costs can be achieved with a global contract across all locations, with visibility of time, resources, and costs through a single dashboard. This level of data accessibility and analytics makes it possible to measure, track, and benchmark cost-effectiveness across different territories. Having the data insight to identify best practice will enable corrective action to better control costs.
Reframe—It’s No Longer ‘Just Payroll’
Future-proofing payroll should be a part of every business plan. For any business operating internationally, that means developing an international system with the standardized and consistent data I’ve been talking about.
I’ve suggested a change in mindset, in terms of how a payroll function operates. Payroll needs to openly operate alongside HR and finance, as part of a broader and more integrated ecosystem. As a crucial function of every business, payroll can drive operational and organizational change that is both substantial and meaningful. Companies that continue with a fragmented approach will lose ground to their more progressive competitors.
At CloudPay, we talk about defining the modern pay experience. I think that by adopting this different mindset, payroll transformation can deliver the opportunity to modernize the way a business operates and the way it treats its employees. It’s about applying digital transformation and people-centric service innovation to payroll, HR, and finance.
If you have the right technology and vendor partnership in place to make it happen, the potential of the data within a unified global payroll system can be unleashed.