Mining payroll data for business value

For companies that operate on a global scale, even the smallest changes can make a huge difference. A 1% cash flow variation can significantly affect profits—which is why businesses invest so much in efficiency improvement and market predictions.

Enter business intelligence. The data you collect, no matter how small, can have a major impact if used appropriately. And because payroll yields as much or more information than any other area of your business, it’s ripe for realizing opportunities and gaining advantages from business intelligence.

If examined properly, payroll data can prevent expensive mistakes, reduce waste and help make better business decisions. This paper examines how to gather, store and use payroll data, as well as the challenges of payroll data collection.

Your payroll data protocol

If there was a department with the responsibility to collect and examine payroll data, it would be called “human resources accounting.” Although the term exists in business, it’s often the case that departments fulfilling this role do not.

Small businesses don’t generally have a dedicated HR person, and the work may well be given to a member of staff with an entirely different primary function, such as the company accountant, a recruiter or a facilities manager. Though larger businesses rightly separate these functions, detailed analyses of payroll data often fall through the cracks or are left to an executive with other things to focus on.

But no matter the company size, it’s vital that payroll data is regularly analyzed. This is more than just the salaries, taxes and benefit paid to the employee. It also includes:

  • Salaries paid to comparable employees in other markets
  • Employee attrition and turnover costs
  • The costs of payroll compliance itself
  • Communication expenses such as Virtual Private Networks (VPNs) or international phone calls among employees
  • Data about the economy, interest rates and availability of investment money

Having this information allows the impact of major business decisions to be predicted as accurately as possible. A 5% company-wide pay raise will increase your overall payroll by some amount, but it will also have a measurable impact on employee attrition and productivity, thereby reducing payroll costs and increasing revenues.

An improvement in benefits may reduce the need for that pay raise entirely. Collecting your payroll data and having the tools to run these kinds of projections can make all the difference in these types of scenarios.

Another example: Let’s say your company has offices in Paris and Tokyo, and you’re considering opening a third international office either in Zurich or Seoul. If you’re able to look at your payroll data to tell the differences in salaries and employee contributions, the cost of late-night phone calls and the productivity of employees in one market versus another, you can make a much more educated decision than just by looking at sales data or external market forces.

Challenges of payroll data collection 

Of course, finding and tracking this kind of information may be easier said than done, especially for smaller organizations. A company with 100 employees likely doesn’t have access to a business intelligence tool that can predict how a change in salary will affect turnover costs. Nor does it have access to detailed records on changes in the global marketplace or global employee salary comparisons.

Another challenge is data format. Businesses likely make their major decisions from a global headquarters. But since the German government requires different contributions and reporting than China, Italy or Brazil, payroll managers in each country have their own data to keep track of. If they send their reports to world headquarters in their own format, the CFO suddenly has several kinds of reports to assimilate. And the challenge is compounded when different languages are involved or data needs to be re-entered, as every typo or shifted decimal point has drastic consequences.

For a company with decentralized decision-making, none of these factors may be a problem. But for a company trying to make centralized business decisions, dispersed data can be a killer. A lack of global knowledge is more than just inconvenience—and inefficiencies in reporting can bleed a company dry.

Centralized global payroll

A global payroll services provider serves an organization’s payroll needs worldwide, going beyond basic payroll to include the high level of data that can help a company make complex business decisions.

The advantages of a global payroll provider are considerable.

A provider will often have a global partner network, with experts in every country, whose job it is to understand specific country laws and reporting requirements. The partners keep aware of regulatory changes and how they affect the payroll administration and processes.

Additionally, because they are centrally managed, providers can compile the data from each office into a single digestible report. Information like who’s paying what to whom, when they’re paying it, where it’s going and what benefits are provided can be used to make truly smart business decisions.

Contact us today to speak with a global payroll expert and learn more about how centralized global payroll can help your company see more value from payroll data.

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