Payroll Play 8/10: How to get the Most Value from Payroll Data
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Payroll Play 8/10: How to get the Most Value from Payroll Data

Today, every payroll staff member is accountable for interpreting the red flags in payroll data to let executives find the bottlenecks in workforce management.

From a managerial standpoint, payroll analytics may realize greater operational agility without spending way too much time on pointless interactions.

Here are several tips to master the art of reading payroll data. So let’s jump right into it.


- Identifying payroll fraud, such as tax fraud, or phantom employee schemes.

- Finding the right decision while balancing competing priorities.

- Reducing costs and compliance risks.

- Evaluating the ROI of new hires or payroll management software.


1. Ask executives what they need to see in payroll reports

Start by chatting with executives, including not only payroll & HR management but also the CEO and business owners. The goal is to identify what metrics they need right now and what will be important in the future to meet goals.

2. Consider payroll metrics

Without KPIs, guardians have no clue if they’re hitting targets. Metrics are our roadmap for growth. Here are a few to use:

  • Payroll processing accuracy rates
  • Time to run payroll
  • Turnover rates
  • Payroll expenses as a percentage of revenue
  • Tax penalties per entity
  • Total cost per employee
  • Overtime as a percentage of total hours
  • Percentage of off-cycle payments

3. Set benchmarks

To measure your own performance, compare your KPIs to standards:

  • Internal benchmarking

That's a lot easier to create internal metrics than to access competitors’ payroll analytics benchmarks.

How does it work: you compare your metric over time. Later, you can continue to use your benchmarks to the point where you step into international payroll management.

  • Industry benchmarking

There are open sources like the APA GPMI and Deloitte global benchmarking survey (2020). Check it out to compare your company to others in the areas of operations, employee experience, etc.

Another Deloitte survey was launched in 2023, so stay tuned for an updated report in 2024.

4. Prevent operational issues by asking the right questions

Imagine, the payroll department diligently processed salaries without much oversight from executives. They assumed everything ran smoothly, unaware of underlying issues.

Months passed, and unchecked inefficiencies led to frequent errors in paychecks, causing morale to drop and financial strain due to expenses from off-cycle payments.

Let's rewind the film. If the bosses had just kept an eye on the payroll analytics, this could have been avoided.

Likewise, you can ask these three questions to ensure you grasp any potential problems:

1) Why did it happen?

Example: What caused the total cost to be higher/lower than the budget?

2) What could happen?

Example: Where are errors most likely to occur that will trigger the need for off-cycle payments?

3) How can we prevent it?

Example: Will changing pay frequency and workforce management solutions reduce costs?

This helps us to draft an action plan based on payroll data and act proactively.

Find more questions below:

5. Use workforce management solutions

In a comprehensive workforce management solution, you can blend massive databases with real-time and planning analytics dashboards. Look how it may look like in BambooHR.

Source: BambooHR.

For example, you can capture insights if some departments underdeliver, compare wages to forecast, and make quicker decisions over decreasing or increasing labor to meet the monthly targets.

6. Check for potential violations

- Look out for patterns such as employees regularly submitting expense reimbursement requests without proper documentation or unusually high amounts.

- Verify expense reimbursement requests above a certain threshold amount manually or set up alerts for payments exceeding this threshold.

- Watch for payments made after an employee's termination,

- Watch for transactions that happen outside regular business hours, such as on weekends or late at night.

Expected results

  • Higher accuracy rates.
  • Faster cycle times.
  • Lower processing costs.
  • Fewer noncompliance penalties.
  • Higher revenue.
  • Lower employee costs during slower periods.

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