For a long time, the payroll function wasn’t of particular interest for leaders and decision makers. The role of the payroll team was limited to getting all staff paid accurately and on time. In a world where big data has suddenly turned into a key concept when managing a business, the payroll function has also stepped out of the shadows and gained a formerly unknown importance.
Global leaders have discovered the value of consistent, high-quality payroll data. Having access to reliable sets of data containing detailed information on the cost of your workforce is often said to be a major advantage for decision making and accurate forecasting. But how exactly can payroll data be leveraged by global businesses? What value can they gain from it? In this blog post, we’ll show you five different ways how businesses benefit from analyzing their payroll data. Plus, we’ll tell you how a global payroll solution can help you get access to the data you need in a quick and compliant way.
What is payroll data and who should have access to it?
Payroll data is the complete set of data related to your overall workforce costs. There are different metrics that need to be taken into account when analyzing payroll data. The main metric that is collected during the payroll process is, of course, base wages and salaries. But there are other types of payroll data as well.
Apart from base salaries, payroll data includes:
Benefits provided to employees (e.g. pension contributions, health insurance, meal allowances and more)
Bonuses (13th salary, performance-based bonuses and more)
Contingent workforce costs, i.e. payments made to freelancers, contractors or external consultants
Income tax and other payroll taxes
Expenses related to communication between employees (Virtual Private Networks, phone bills and more)
Costs for maintaining payroll compliance
Employee turnover costs
Payroll data is more than just some numbers noted somewhere on a spreadsheet. If used in the correct way, it can enhance the overall performance of your business, also on a global level. But in order to get there, you must make sure that your global payroll data is available to the right people. HR, talent management and payroll departments all benefit from having access to reliable and detailed payroll data reports. Not to forget the upper management who is in charge of making the right decisions to bring the business forward.
How to collect your global payroll data
There are many ways of collecting payroll data, but some are definitely more efficient than others. Compare for example the effort needed to create a detailed payroll report using a payroll software to using spreadsheets. Especially when collecting data for your global payroll, it’s important for the process to be as efficient as possible. Also, the chance for errors to occur should be as low as possible.
When gathering your global payroll data, you should make sure to collect the same information for each geography in a standardized format that can easily be merged into a global payroll data report. Plus, it should be kept in a central storage facility that provides easy access.
However, there are several challenges linked to the collecting and storing of payroll data. One is that businesses operating in various geographies often have a different local payroll provider for each country. When they all send in their reports in different formats, the CFO will have a lot of work putting them together to have a clear view of the company’s global payroll data. Another challenge is to ensure compliance with data protection regulations like the GDPR.
Once you’ve gathered all your payroll data, you’ll probably wonder what to do with it. What can you actually use your payroll data for and how can you gain value from it? Here are five ways how analyzing payroll data can enhance your business operations.
#1 Using payroll data to minimize error frequency in payroll processing
When looking at the total amount of business expenses, it soon becomes apparent that workforce-related costs represent the biggest share in a business’s overhead costs – in some industries, payroll-related costs may even represent between 50% and 70% of a company’s overheads. Processing errors in payroll can therefore quickly turn into significant costs, no matter how small they are. Having knowledge about your payroll data enables you to track any possible changes and quickly spot and correct processing errors, which will ultimately allow you to avoid financial losses.
#2 Uncovering hidden gender pay gaps with detailed payroll data
Even in the 21st century, the pay gap between men and women continues to be one of the major problems in the world of work. Although the gender pay gap isn’t just the result of pay discrimination against women, the latter still plays an important part. Having detailed payroll data for your entire workforce can help you discover hidden inequalities in your pay structures and take appropriate action against it. Not only is this the morally right thing to do, but it’s also mandatory by law in many countries.
#3 Analyzing payroll data to ensure full compliance
The fact that transparent payroll data can shine a light on possible gender pay gaps in your company and thus help you avoid legal fines is just one example of how data-driven operations can help you maximize compliance. Especially when operating with a globally distributed team, companies have many different compliance risks to worry about. Here is an overview of the compliance requirements global businesses face and the role payroll data can play in meeting each one of them.
Gender pay gap reporting: Many countries require employers to draw up reports on pay equality in their company. Having the necessary data at hand will speed up the process, prevent errors and save your payroll team a lot of time.
Payroll reports: Most jurisdictions expect employers to submit payroll reports on a regular basis to make sure they comply with the local tax regulations and pay income tax and social security contributions correctly. Composing those reports is much easier if you don’t have to make your way through various Excel sheets first to gather all the necessary data. Not to forget that manual data gathering is prone to error, which could eventually result in fines for false reporting.
Local employment law: Every country is different when it comes to employment rules, i.e. which benefits an employee is entitled to, how many additional hours they’re allowed to work, etc. Having your payroll data in order ultimately also allows you to verify you comply with key employment regulations. For instance, a quick glance at overtime metrics will tell you immediately if the amount of overtime worked is in line with the legally allowed maximum.
#4 Leveraging payroll data to attract and retain the best talent
Providing a great employee experience and a welcoming and friendly work environment is definitely an important factor when it comes to attracting new members of your global team and retaining them. However, there is one aspect that is even more crucial, and that’s money. Numbers generally speak louder than words praising a friendly work culture. With access to complete and transparent payroll data, your HR team can run different analyses to gather valuable information on salary competitiveness which they can then leverage to win new talent.
In a similar way, payroll data insights can help you retain your company’s top performers. Monitor and benchmark your payroll data to make sure you keep offering your best workers the compensation they deserve. Plus, you can check whether the compensation of your workers, their performance and the overall business results are in sync with each other or if you need to make adjustments. On the other hand, if your employee turnover is exceptionally high, it can be a good idea to scrutinize your pay structures to see whether the compensation you offer is to blame for the high turnover rate.
#5 Taking better strategic business decisions based on payroll data
Finally, data analytics in payroll can help improve your strategic decision making, especially when operating in various markets or when mapping out a strategy for global expansion. Having a clear view of total workforce costs enables leaders to make more accurate forecasts and plan and budget accordingly. There are numerous examples of how global expansion managers and other important decision makers can benefit from detailed payroll reports. Some of the most common scenarios in the context of international business expansion and global workforce management are:
Taking staff decisions, e.g. whether it’s more economic to pay existing employees overtime or hire a new member of staff in times of rapid business growth
Evaluating whether to stay in or leave a particular market by weighing local workforce costs against business profits – also with regard to longtail countries
Analyzing and comparing payroll data from different geographies to identify the best international hiring destinations and decide where best to hire the next members of your global team
Get access to reliable and transparent global payroll data with Lano
The first step towards enhancing your business decision making through payroll data is to find a way to efficiently collect, store and organize the necessary data for easy viewing. Global businesses with payroll operations in different geographies will find it difficult to accomplish the task without major effort from their payroll teams.
A global payroll solution like Lano is designed to give you easy access to your global payroll data in full compliance with data protection regulations. Our platform allows you to connect all your payroll providers and consolidate payroll data for your entire global team in one central dashboard for full data transparency and high visibility. Receive detailed payroll reports and view payroll data for your remote employees and international freelancers on one single screen. Get in touch with us today to start unlocking the strategic value of your payroll data.
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