1. Payroll data can be a useful strategic tool for senior management making decisions and future plans for their company. It can help to both understand the nature of the problem and to see appropriate solutions.
2. There are many different types of payroll data running from core salary payments, through benefits and withheld taxes, to demographic pay data, or figures required by local tax authorities.
3. Payroll data can often be most efficiently and effectively accessed and analyzed as part of an overall global payroll implementation process.
4. Payroll data can be harnessed for many operational and strategic purposes. Payroll data can play a role in minimizing payroll errors, making strong future decisions, recruiting and retaining excellent staff, boosting compliance, and building fairness and pay equality in a company.
Payroll is a core business function which draws on and generates many different types of data. Payroll data can be used to analyze and guide business strategy, as well as for reporting and making payments to relevant government tax authorities. It can also be used to eliminate errors and inefficiencies in payroll processes and to drive greater pay equality and fairness of compensation across companies.
Payroll data is essential information which can create more value for your company than many business leaders and managers appreciate. It is critical for ensuring compliance with local tax regimes and employment law. With intelligent analysis, payroll data can help make recruitment and retention policies more efficient and productive, or help you to set and monitor fair pay and promotion targets across a diverse workforce
What are the different types of payroll data?
Payroll data goes far beyond simple considerations of base salary and income tax to cover all the metrics contributing to the business expense. There are many different kinds of payroll data and metrics around salaries, taxes and deductions, expenses and various employee benefits. Much of this data is personal and will need to be kept, stored and accessed in an appropriate system aligned with GDPR requirements.
Payroll data is the overall set of information relating to the general business expense of obtaining work for pay. This could include the following:
How is global payroll data accessed and analyzed?
Visibility of payroll data can build a useful picture of operational costs and requirements which puts business leaders in an empowered position to respond.
But before you can leverage the value of payroll data for your company, you need to be able to quickly obtain consistent and high-quality payroll information. This can be a major challenge for smaller companies, or those using outdated payroll software systems, or those using multiple systems across different markets.
Global payroll implementation on a single unified system could give your business the best chance of capitalizing on its payroll data. Global payroll implementation allows all location and population data to be standardized and saved in one automated system, which can then be interrogated relevant queries.
The best global payroll implementation solutions will include real-time data collection and automated integration with other core business systems (e.g. HR or Finance).
How to use payroll data
Once your business is in a position to access comprehensive payroll data, there are many valuable ways to use it.
Improving recruitment and retention
The greatest asset of a multinational business is usually its staff. When your business hires new employees in a specific market, understanding the costs and risks associated with recruitment in that country is vital in ensuring that you are able to hire and retain the best candidate for your job. Payroll data should be able to inform you in these areas.
Payroll data can also help you to decide when to hire new employees and when to engage contingent workers instead. A contractor may be more attractive than a permanent staff member in markets where employers must pay higher benefits to comply with the law and/or compete with other employers.
In other circumstances, where institutional memory, long-term stakeholder relationships, security and training costs are all significant factors, investing in long-term staff could be a sounder business decision than hiring contractors.
Staff compensation is often directly and positively linked with staff engagement and performance. Using payroll data can help unpack the detail underlying this connection and allow you to design and offer compensation packages that are more effective in attracting and retaining high-value employees. In some countries, holiday allowances and flexible working might be more valued than health insurance or pension contributions, for example.
Informing strategic business decisions and future planning
Being able to collect and analyze your payroll data, and having the tools to model different decisions can lead to stronger decisions and more robust future planning. Payroll data helps business leaders to assess the full costs and organizational impacts of both large and small decisions.
In the simplest illustration of this, considering payroll performance over time can provide more accurate yearly forecasts, which then helps to manage budgets and cash flow.
Let’s take a practical example, where a business has been facing high employee attrition and falling productivity in key markets. Here you might look at the payroll data and note the correlation between compensation, retention and productivity.
In response, payroll data might lead you to consider implementing a small pay rise across the business. While this will add to payroll costs, it could also reduce employee attrition and increase engagement and productivity, with these latter factors then reducing payroll costs and boosting company revenue. Alternatively, analysis of payroll data could make you decide to offer an enhanced set of employee benefits rather than a pay-rise.
In another case, your company might be considering opening a new office in one of three possible locations. Payroll data can help you see the full picture on differences in local salaries and taxes, employee contributions, and communications costs. This can then enable you to make a more informed decision on the new office location.
Intelligent analysis of payroll data can also inform future strategy. Your payroll data could show a clear long-term trend of falling profits vs high compensation in one particular market. This insight would then inform planning of global staffing deployment over the next 5-10 years. Good payroll analytics could also help you decide to expand operations in one location over another based on costs for compensation, training, tax liabilities, or even team communication across time zones.
Ensuring compliance with local tax regimes
As an employer, you will be required to submit any relevant reports and payments relating to your employees’ salary, benefits, deductions etc.. to the local authorities. Accuracy and timeliness are important to avoid fines and additional reporting requirements. Inefficiencies in reporting can cause
Data format can be a particular challenge for many global businesses reporting to local authorities. There are major differences in what the German government would expect to receive from employers operating in Germany, compared to UK, China, Italy, USA etc..
Having a functional payroll system, or global payroll implementation run by an expert partner, should provide you with regular, standardized outputs. This can make it easier to collect and submit the right payroll data and remain compliant with local laws.
Creating fairness and pay equality in your company
Payroll data analysis can shine a light on pay equality in your company, showing clearly where pay disparities may exist across gender, race, sexual orientation or other personal characteristics. This can enable business leaders to set meaningful targets for pay equality and help to monitor progress towards these targets.
Minimizing and eliminating errors
Payroll is often the single greatest cost for multinational businesses, responsible for over 50% of a company’s overhead. At this scale, even tiny errors in global payroll can escalate into significant costs. Visibility of processing and monitoring of outcomes are both key to preventing these kinds of financial losses.
In a case where you persistently spot delays or errors in payments, payroll data analysis could indicate that further staff training is needed, or might indicate an issue with incorrect data collection due to staff overwork and overloading. With a clear understanding of the likely problem, you are able to put working solutions in place.
Video — How one company is unlocking the value of payroll data
Paycom CEO, Chad Richison, breaks down for CNBC the latest payroll data relating to wage growth, payroll burden and other insights.
Horizons utilizes global payroll data
Harnessing your payroll data and the insights it can provide, could significantly improve your company’s efficiency, staff engagement scores and strategic decision making, amongst other areas.
If you need further guidance on any of these issues, or if you’re seeking a partner organization to take on international payroll processes, then do get in touch with Horizons.
With extensive operational business experience in over 150 countries, including global payroll processing, Horizons has the expertise to help global companies realize the full benefits of payroll data.
Frequently Asked Questions (FAQ)
Payroll data is the complete set of assorted metrics that make up the business expense of paying staff for the work they perform for your company.
Payroll data entry is the process of entering information into the payroll system to ensure that payments of the right type are made to the right individuals on the right dates, in full compliance with tax and legal requirements.