Payroll Data Analytics
It is no secret that companies rely heavily on data in this complex world of business in order to be ahead of competition. Timely and accurate data helps the management on critical matters such as pricing, resources, cost controls, etc. While the balance sheets, P&L statement or Financials do provide a good picture of the health of an organisation, it is important to review some crucial reports that might help to take even better and informed decisions.
A fairly new concept called payroll data analytics is taking shape and drawing the attention of managements. As the name suggests, these reports are generated from payroll data and primarily related to spending on manpower. Some examples of such reports are provided below.
Overtime reports
One of the most variable and unpredictable cost to any organisation is overtime payments. A company may not have cost visibility until the payroll generates the attendance report to extract overtime hours of its employees. This report can be used by an organisation to evaluate resource imbalances, under or over utilisation of resources, help in resource optimisation, etc. Payroll systems should be able to allow business heads or managers to set overtime threshold hours for their respective functions and alert them if the threshold is reached or breached. This would keep the overtime cost in check or within budget and also helps in resource planning.
Wage parity
One of the most challenging tasks for a manager is to maintain wage parity amongst team members. There could be various situations why wages cannot be maintained at a particular range even though team members may perform similar tasks or are equally qualified and experienced. It could be a case of hiring at a higher wage, salary changes, promotion, etc. It is uncertain if companies regularly track this inequality by each function and recommend corrections. At some point in time, disgruntlement would set in amongst team members, badly impacting productivity and motivation and in worst case, leading to attrition of good, trained resources. Payroll systems can provide comparative data of such departments having huge wage differences between recommended pay scales (or wage tables) and actual payouts.
Attendance reports, EWACS for abscondment, etc
Attendance reports should act as an early warning and control system (EWACS) to detect abscondment or no-show employees. The system should alert the timekeeper or respective managers if a continuous absence of 2-3 days without notice has been detected by the system. In turn, the impacted manager will instruct payroll and HR departments to stop salary payments to the particular employee. This will plug any money leaks in terms of processing of ineligible salaries or extending benefits.
Ghost employees have been a matter of concern for some years now and payroll reports can come in handy to provide a confidence to both the management as well as stakeholders. Payroll can generate a monthly analysis of headcount by comparing its active employee data versus attendance records to weed out ghost employees or duplications, if any.
Sick leave reports, repetitive insurance claims for self, non-availing of PL
Sick leaves cause unplanned disruptions in a process and hampers continuity. However, this cannot be avoided too as these are unpredictable whilst employees are rightly eligible for such leaves. Though a very sensitive matter and may look intrusive, payroll can play a constructive role by providing sick leave reports to HR to help them check the wellness of employees who are on regular sick leaves or for that matter employees submitting regular medical claims for self. HR could plan for their counselling or therapies which will help them to perform better and also repose confidence in the company benefits program. On the other hand, payroll could also generate reports for HR of employees who have not or under availed paid leaves which could cause burn outs and exhaustions.
Wage cost predictions depending on patterns or trend from historical data
Historical payroll data can be used by Finance and Treasury teams to predict wage costs for their financial planning or funding. This will include not only actual salary costs but statutory costs, benefits, retirement funding and other variable costs such as incentives, bonus or overtime depending on the past trends.
The above are only a couple of suggestions and perhaps, many such analysis can be generated depending on the requirement by individual organisations and the kind of data available. Like we say, wherever there is data, there can be analysis.
About the Author
Vinod Gulvady, is the Director & HR Operations specialist of Fynamics Training Solutions. He has over 35 years of hands-on experience in managing India and APAC countries operations.
