5 KPIs For Evaluating Payroll Processing
Alex Margolin| Apr 15, 2019
Managing payroll comes down to one thing – make sure your employees are paid on time in full compliance with local laws. Getting there, of course, is far from simple. It takes significant staff time to ensure that payroll is delivered with proper accounting and minimal errors.
With so many moving parts, a payroll department is often rife with inefficiencies that have a significant impact on a company’s bottom line.To improve efficiency, we believe that creating a series of key performance indicators (KPIs) to measure the essential aspects of the payroll workflow provides the essential information you need to improve payroll performance.
Here are some payroll KPI examples:
1. Staff time required to complete the task
Payroll management can range from IT time running the system to accounting time and then to those tasked with oversight and ensuring the system is updated and accurate. Responding to errors, fielding questions, and even collecting and processing time sheets and work reports requires more staff, all of whom need specialized training to ensure high quality service delivery. Having payroll KPI that tracks staff tasks will help you identify how well-managed your payroll is.
2. Monitoring your time expended on Payroll
How much time each employee spends on payroll can identify areas of inefficiency. Once the time spent is known, it’s possible to evaluate every part of the process and create a better workflow to reduce the hours and save on the bottom line. Measuring this metric can also help to find potential issues that need to be improved in the process, a long with identifying the improvement over time.
3. Number of errors and how they are corrected
In any human process, especially one as complex as payroll management, errors are inevitable. Errors could be overpayment, underpayment, or missed payment. Measuring how many errors get through, what kind of errors are most common, and how quickly they are corrected contributes to lowering the number of errors and preparing solutions for those that happen anyway
In today’s workforce, turnover rates keep growing as workers remain on the lookout for the next opportunity. Workers also move frequently within companies and organizations, requiring payroll managers, accounting departments, and those in charge of statutory reporting to remain ever vigilant for changes in data. Integrating the likelihood for these and other shifts in payroll information can lower the costs associated with them.
4. Business Intelligence (BI) coordination with Human Resources
Payroll numbers offer a wealth of business intelligence insights, helping companies establish solutions based on past analytics, and monitoring their payroll performance. The challenge, particularly in large companies, is ensuring that various departments are working in tandem to achieve the best possible results. Payroll managers must actively coordinate with their counterparts in human resources to ensure a smooth flow between the departments. Measuring the level of coordination can help expose areas of inefficiency.
5. Percentage of workforce cost out of total revenue
Workforce cost is an important metric to monitor, but as a company grows it is important to understand the ratio of the workforce costs to the revenue, rather than a stand-alone cost. that is why especially for a growing global company, it is very important to understand whether the ratio between your workforce cost and revenue is a healthy ratio, that depicts growth in both revenue and the number of employees. Using payroll software can help monitor the balance consistently and help identify large time and cost increases.
Local vs. Global Payroll
Carrying out payroll at one company with one location can be challenging and time consuming. Imagine the difficulty when a company has multiple locations around the world requiring a multi-country payroll operation. In that sense, even a single company functions like a whole fleet of companies, with payroll terms and compliance demands changing from country to country.
In today’s global environment, companies frequently open branches overseas to save costs. But the challenge to payroll efficiency grows in parallel, with more potential errors, new compliance challenges, and more demand on the oversight and reporting staff. A company may save money overall, but if there were issues with payroll efficiency in one location, a global workforce will only deepen those problems.
When the challenge grows so much, it’s time to look to technology. Today by automating global payroll errors can be taken out of the equation entirely, and compliance can be programmed into the process. Oversight and reporting can be simplified.
In other words, automation improves all of the KPIs dramatically, even as the challenges increase. That’s why more companies are working with technology companies when they go overseas. Instead of focusing on all the complex regulations, they choose to focus on their core business instead. They do the things that help them grow.
The winners in this environment are the companies that use the tools of success to their greatest advantage. Payroll no longer has to be a source of inefficiency.
Automate your Payroll process
The choice is clear. A company can use a global payroll company, to automate the process and focus on its strengths, or it can compete with companies that have already started doing it and reap the rewards. The question is how much time it takes for companies to take advantage of real opportunities to increase efficiency.
In an increasingly global economy companies can no longer ignore the gaps, both in their payroll processes and in their KPIs. With our cloud based workforce management solution, we meet the challenges of both – a joined up, streamlined global payroll and improved KPIS in payroll errors, time expended and reporting insights. Schedule a demo today.
Papaya’s global payroll technology thinks about everything. So you can focus on what matters–your business.
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