In order to measure the effectiveness of your Compensation Program, here are 10 metrics that can be used: Market Index – this metric shows how … Even with the best software tools, it takes hours to work through every step of the payroll process. Statutory sick pay is an excellent example of this, to work out an employee’s SSP, follow the example below. In a world where numbers and metrics determine success, it’s essential to develop and track key performance indicators (KPIs) to show that business objectives are being achieved efficiently. However, it’s important to note the relationship between spending money on payroll performance improvements and the decrease in time and cost to run payroll. • IT support relevant to any payroll processing. This category only includes cookies that ensures basic functionalities and security features of the website. If you find your employees are consistently posting overtime when you measure payroll performance, this could be an indication that a team or department needs to revisit their personnel needs. Natural HR’s fully integrated payroll engine. If not, each and every mistake can lead to serious consequences for the entire organisation. Payroll Spend. Some rather common metrics like “Time to Hire” and “Cost per Hire” have no strategic value, whatsoever. Compare the overtime hours from team to team and contrast with production levels. Throughout the onboarding process, training new employees can be expensive. We also use third-party cookies that help us analyze and understand how you use this website. • Applications for all the different types of leave categories i.e. Since launching in 2010, we’ve been building a comprehensive suite of HR functionality that equips the small to medium-sized enterprise with everything needed to build an effective and efficient HR operation. Whether you’re a standalone employee or part of a larger payroll team, these performance metrics will provide you with the knowledge to track the success of key business objectives, ensure payroll resources are distributed correctly and help support your employees. Implementation of change through projects and initiatives measured according to budget, time and scope. dataLayer.push({ Blog, Terms and Conditions When you are sure your hours have been counted correctly, you can then move to the next efficiency indicator in your people-related expenses: overtime. Benefits The cost of payroll metric will analyse the total spend and provide you with ideal solutions to make running payroll less expensive. This cost justifies the importance of monitoring employee absenteeism in order to make workplace adjustments that can radically reduce costs and improve productivity. Quality. Which seasons see the most PTO use? To be in a position to report on the value that payroll offers with an organisation, certain metrics must be tracked. What Is the Best Way to Pay Unbanked Employees? Our software is a secure, cloud-native application delivered as a Software as a Service solution and operates on any device with a web browser. Success Stories Duration to Full Productivity. 4 ways to optimise performance management, 5 ways to better manage payroll in your business. As shown, there are numerous ways metrics can help you to track and analyse the productivity and effectiveness of your payroll process, and it’s important to think about the unique methods which are central to your business that will show you how to reduce the amount of time and money spent on these processes. Any cookies that may not be particularly necessary for the website to function and is used specifically to collect user personal data via analytics, ads, other embedded contents are termed as non-necessary cookies. Here, you’ll look into the specifics of the payroll departments productivity, while identifying individual performance and contribution. Divide this figure by your total revenue to find this percentage. To ensure an accurate payroll process, consider the elements listed below. A payroll admin has to account for a lot of variables to ensure an accurate payroll, including the following: When it comes to running payroll, perfection matters. Payroll After shoring up your company’s foundation with an accurate payroll process, payroll KPIs then act as tools to measure payroll performance—a cost-benefit analysis of your company’s compensation-related expenses. The people in charge of payroll need to find every error and correct them as soon as possible to avoid serious consequences. She had to edit time logs for her delivery drivers who couldn’t be at the office to punch the physical time clock, and the situation got even more complicated when the time clock got fried in a lightning strike. Payroll KPIs are payroll performance measurements that analyze the relative cost of the payroll process while also indicating whether that process is fully accurate. It can be calculated … The payroll department handles high transaction volumes for activities that are repeated over and over again. Every other payroll performance KPI depends on the accuracy of your payroll data. Have fixed term contracts of more than a year and are on the company’s payroll. Here’s a concrete example: one BambooHR customer used to spend an hour every pay period driving to FedEx to mail physical paychecks to her out-of-state employees. The most efficient way to calculate this metric is to add up the total overtime cost paid out, then analyse payroll cost by departments and teams. We’ll cover it from top to bottom without going over your head. These cookies do not store any personal information. And as a cost center, these improvements can have a direct impact on an organization’s bottom line. These cookies will be stored in your browser only with your consent. Measuring your employee satisfaction through surveys and other metrics is vital to your departmental and organizational health. And yes, if the problem starts with HR, the effects will roll right into your payroll metrics. The ultimate goal of your payroll team is to make sure employees are paid correctly and on time. Ever wondered how much your entire end-to-end payroll process costs your organisation? It helps companies aggregate and present employee data in a meaningful way. View our 2 minute video Likely to be of greatest interest to your finance department, cost is one of the first … … Learn how payroll software can lead to huge benefits for your organization. This website uses cookies to improve your experience while you navigate through the website. In the life of a payroll professional, it’s crucial to eliminate all the errors from their process. Tracking this metric over time lets you see how payroll expenses correlate with your company size, number of employees, pay schedule, and other employee-related decisions. • The differences in salary types i.e. But simply collecting data isn’t helpful. Save my name, email, and website in this browser for the next time I comment. HR KPI Calculation: Total Number of Employees / Number of Human Resources Department Employees. How does attendance vary by location or job site? You also have the option to opt-out of these cookies. We use cookies to improve your browsing experience. This should also include the cost of any software services you use, whether you handle payroll in-house or outsource it to a professional employer organization. According to the Independent, one in four employees overwork by at least 10 hours each week. Just enter your email below to get regular deliveries of awesome HR insights. Responding to errors, fielding questions, and even collecting and processing time sheets and work reports requires more staff, all of whom need specialized training to ensure high quality service delivery. But by taking apart and mapping the end-to-end payroll process, you can pinpoint the bottlenecks that are slowing your process down or requiring too much staff time. The standardised way to measure productivity is to compare the ratio of payroll employees to the number of employees being serviced. Unbanked employees face unique financial challenges. Understanding these intricate balances can help prevent small budget-saving measures from leading to large time and cost increases—paying for software may be an expense that leads to a much larger ROI in speed and accuracy. Believe it or not, there are a number of metrics for your payroll team that can be measured, evaluated, and incorporated into performance goals. The weekly rate (£94.25) is divided by the number of qualifying days in a week and multiplied by the number of days for which an employee is entitled to. }); Here are a few that you might use: Number of errors per number of payments processed. "The Labor Market Data Critical Evaluation Talent Acquisition Metrics and AnalyticsEmployers in the U.S. added 225,000 new jobs in January, … "eventLabel":'Product CTA- Payroll Performance Metrics' Cost-per-hire (CPH) is one of the most intriguing recruiting metrics. • The number of payments processed per payroll processor If you continue to browse this website, we'll assume you're OK with this, but you can opt-out if you wish. }); Electronic invoices as a percentage of total invoices received. • Accuracy of time tracking for hourly compensation. forms/transactions, employee self-service, reporting, payslip production. Electronic invoices are quicker and … It is mandatory to procure user consent prior to running these cookies on your website. "event": "GAevent", All Rights Reserved. }); ). "eventAction":"Side Text CTA Click", $('.js-blog-cta-btn1').click(function(){ Transform the way your HR department works. Below are a few standard payroll metrics to consider: - How many days to resolve payroll issues - Cost associated with payroll inquiry - Cost per payroll payout If variations lead to a drastic increase in the time to run payroll, it may be worth revisiting your processes for calculating and recording these variations. Privacy Policy and Cookies, © Natural HR Limited 2010 - 2021 - Registered in England and Wales #: 08292934. • Payroll enquiries vs the time it takes to respond to them. These KPIs work best when they align with specific processes and challenges. That’s where modern HR software and analytics comes in. To aid your measurement, here’s a list of metrics which help identify any issues affecting productivity. Here are our top tips to make time-off tracking easy and accurate. At the end of the day, how you create the cost of payroll metrics depends on exactly what you’re looking to get out of the data. Brian Anderson is a copywriter with BambooHR, a full-service, cloud-based HR management software. Aleksey Savkin says. Employee absence costs UK businesses over £14 billion each year, which is astonishingly £554 per employee. Once you are positive you have the hours counted correctly, you’ll be able to make informed decisions based on staffing, reducing employees’ workloads, altering overtime schedules and identifying the need to hire more staff. Measuring how long the payroll process takes lets you know the expenses involved and helps you find new efficiencies. Whereas, if you want to know the cost of payroll per employee, take your total payroll expenses and divide it by the number of employees you ran the payroll for. When you have a solid, reliable payroll process in place, payroll professionals can deliver results that keep employees free to focus on their work and leaders free to focus on the future. The Best Payroll Metrics to Track. • The salary cost for time spent on any transactional payroll processing. Therefore, the sum to calculate the employee’s SSP entitlement looks like this: £94.25 / 7 qualifying days = £13.46 of SSP per day. Keep a running tally of payroll errors per pay period. Likewise, you can pinpoint if there are any performance measures your team can take to become more effective when calculating overtime. A metric which can improve every aspect of the payroll department is productivity. maternity, sick leave. Partners • The overall time for integration and maintenance of HMRS and related systems. It’s vital to remember the total training cost should include the costs for instructors, facilities, equipment, travel, hospitality, food and the total time it takes to train new hires. • The time it takes to resolve input that contains unclean data. The average length of time that it takes for you to hire a new employee, from the time … BambooHR. Unlike with other human … hourly, commission, contractor. While it will provide many long-term benefits for your organisation, the initial cost and productivity levels of employees throughout training can be detrimental. Compile absences by department or project. }); $(function () { Have those in charge of payroll submit the hours spent for each payroll run, including the time spent reviewing data and fixing payroll errors. Out of these, the cookies that are categorized as necessary are stored on your browser as they are essential for the working of basic functionalities of the website. Many companies use labor expenses as their main payroll benchmarking metrics and attempt to keep them as low as possible. • The salary of staff who complete timesheets for payroll input. Are there performance measures the team can take to be more effective or productive? Differences in salary type (salary, hourly, commission, contractor, etc. Learn what sick leave is, how sick leave is administered, and eight things that every organization’s sick leave policy should include. While some companies report on their sick pay, the other direct costs related to absences are often overlooked and unrecognised. Payroll additions exceeded the 158,000 new jobs that were expected by economists, and when considered against an unemployment rate holding at a 50-year low, the report shows the economy still has room to grow even in a tight labor market. Whether you’re with a small business that’s just starting out or a growing business looking to improve, these key payroll performance metrics will help ensure your organization’s payroll process allocates resources correctly while fully supporting your employees. • The number of payments processed outside of the normal payroll cycle. Payroll management can range from IT time running the system to accounting time and then to those tasked with oversight and ensuring the system is updated and accurate. Take the total cost of the payroll process, add the cost of your full compensation package (salary, employer benefit contributions, etc.) Building a foundation of accurate payroll processes will not only provide an indicator of how well they are performing but act as cost-benefit analysis for any of your business’ compensation-related costs.