Leveraging Payroll Data to Enhance Business Health and Performance
Mention the word ‘payroll’ at random to any accounting professional or business owner in Canada. The first things that flash in their minds are expense, lists, pay-as-you-earn (PAYE), and the Canada Revenue Agency.
Is this all there is to payroll? Just a list of names, line figures, and totals? Certainly not, the new age payroll is different. It has become a treasure trove of insightful business data. Tapping into payroll data and leveraging innovative technologies can help you understand your business health and performance much better.
First Things First, is Payroll Worth Outsourcing?
Well, this is a fundamental question that businesses have had to deal with at one or several points in their life cycles. Despite the convenience of inhouse payroll processing, business owners are increasingly becoming appreciative of the value of outside help.
Look at the complex regulatory environment, technological advancements, and the need for more value-added services. Handling all these functions at the company level is possible, but the opportunity cost may not be worth it.
To give you a sneak preview of the struggles businesses, especially small and mid-sized entities, face in payroll management, consider the following:
• Delays in payroll processing
• Inconsistencies in onboarding and verification of new employees
• Inaccurate job tracking, vacation approvals, and paid time off hours (PTOs)
• Inefficient monitoring of changes in labour laws
Businesses finding themselves knee-deep in the above inconsistencies risk falling out of compliance. The fines and penalties that may follow can dent not just the bottom line but the reputation of the business as well.
Instead of shouldering such avoidable risks, the best approach is to outsource payroll management. It could save you time which you could then plough back into handling core business functions.
Unlocking The Power of Payroll Data
Whether or not you outsource your payroll processing function, there is one thing you can not afford to lose sight of, payroll data. Did you know that if well analyzed, this data can help your business unlock revenue-generating opportunities? Read along!
Payroll Data and Budgeting
In most businesses, payroll, whether considered per individual employee or per business function, is the largest expense item. When budgeting, using actual payroll data can contribute to the accuracy and completeness of budgets. In most budgets, the personnel module traditionally pulls data from the previous year’s payroll.
Tapping into real-time payroll data and adjusting budgets to reflect changes in personnel over the budget period is a crucial practice. It helps businesses gain insights into the current and future financial health of projects and general operations.
Integrating Performance and Payroll Data
While there may be no cause and effect between pay and performance, the two variables seem correlated. It is not uncommon for businesses to use performance reviews in making payroll decisions.
Through technology, businesses can review updated payroll data side-by-side with performance data. This approach can enhance the quality of compensation decisions.
As shown in a 2018 study, published in The Quarterly Journal of Economics, pay inequality can increase absenteeism by 18 percent and decrease output by 0.45 standard deviations. However, when workers perceive that the pay structures are transparent, the pay disparity doesn’t result in poor attendance and reduced output.
Businesses could also use payroll data to assess whether incentives like bonus pay have any impact on customer service reviews, spikes in performance, and other related improvements.
Unearthing Human Resource Shortages or Capacity Problems
When you slice and dice payroll data, you may see spikes in overtime. If this trend is persistent, it could be pointing to staff shortages. Human resource shortages have a direct impact on productivity and revenue.
When the payroll data, both historical and current, is spliced with other human resource data, it can unearth business-saving trends. For instance, it may reveal talent retention problems and slow hiring or training processes.
If your business operates from multiple locations, whether overseas or within Canada, harmonized payroll and other human resource data may provide global insights.
An uneven data landscape can be costly and inefficient. However, leveraging global payroll solutions, you can harmonize and get a handle on your global payroll processes. This information and the oversight it provides can help in comparing performances across divisions and provide a roadmap to implementing cohesive global strategies.
Did you ever think that payroll data could save you a day in court? Well, it can do that and more!
The Canadian Human Rights Act prohibits any employment discrimination whether on ethnicity, gender, race or other factors. The Employment Equity Act protects women, Aboriginal people, the disabled and other visible minorities.
Minimum wage laws are made and enforced at the provincial level. From time to time, these laws change. Therefore, it is the duty of the payroll department or trusted adviser to follow up.
When you dig through your payroll data and compare it with your other human resource reports, you should be able to see the gender composition of your employees, pay structures, minority records, and other details. This information can help you cast a positive image of your business as well as prevent possible lawsuits.
The Best Payroll Software
Payroll processes can be time-consuming. To minimize that and avoid errors, you can turn to payroll automation. The ingenuity with automation is that it helps to consolidate employee data and automate calculations. This enhances compliance with employment regulatory rules.
The right solution should ensure employees are paid correctly, taxes are deducted and remitted to the Canada Revenue Agency and custom reports are available for generation on demand.
With cloud payroll solutions available, you do not have to worry about security or data loss. You can access your payroll data anywhere anytime. Thanks to built-in analytics, you can drill-down to agreements, benefits, timesheets and other data based on the software you use.
Payroll management is no longer a back-office function. It has proved over time that it carries multifaceted data on the most important asset any organization can have: human capital.
In this new light, your business can benefit immensely from the deep insights payroll data provides. When leveraged with other human resource information, this data can help in making crucial business decisions and boost efficiency.