As someone who works in payroll — the most mission-critical department of any organization — you’re a powerful influencer. Why? Because it’s as simple as this: If employees don’t get paid, companies can’t function.
As discussed in our recent webinar , significant advancements have been made to drive the effectiveness of payroll, hone the power of its data, and minimize the risks. Many of the technology and process enhancements focus on integrating payroll with the broader organization, increasing efficiency, and lowering the overall cost of payroll.
In this article, we’ll take a look at the power of payroll, why integration is critical, and the serious consequences of poorly-performing payroll processes.
What power does payroll data hold?
Beyond the gross to net calculation, payroll data reveals critical business intelligence in the form of total people costs of the organization. This data helps make decisions, including which markets to enter, where to grow or retrench, and workforce trends — including talent turnover.
Real-time access to data offers significant advantages. In real time, in an office, or remotely, the total cost of employment in California, Canada, or India, for example, can be revealed, and period on period changes to this.
Alternatively, individuals or even departments spend hours pulling data sets together, cleaning and analyzing it, and manually reporting the findings, which is both time consuming and prone to errors.
HR data analytics and benchmarking are hot topics. The value of having the right tools comes from the ability to review long periods of retrospective data and not just snippets of pay cycles. Access to historical data using the right technology with the correct framework dramatically evolves your position from reactive to proactive.
A poll taken during the webinar revealed just 18% of payroll professionals are ‘extremely confident’ in the accuracy of the data they process. It’s very likely that these professionals are working for firms that have invested in digital technologies that are helping them leverage the value of their payroll data.
Why is integration key?
Integration is critical because your HCM or HRIS needs to feed payroll with real-time, bi-directional data. Relying on manual updates diminishes data integrity and the quality of intelligence and reporting — it also keeps your payroll team stuck doing low-level tasks, rather than using the power of data to analyze trends that can lead to proactive recommendations on areas for improvement.
Lack of integration also raises the risk of data loss and compliance failure. If you’re expanding into international markets, GDPR is very real. Penalties last year hit more than $1 billion, up from $171 million in 2020.
Yet, according to the APA respondents, 51% of firms have no plans for system integrations, 27% are in the process right now, and only 19% of those surveyed are already on an HCM platform.
What are the risks of ignoring the true impact of payroll?
Payroll leakage can drain $30 million from annual profits, adding up to 1.5% on payroll spend – money otherwise invested in talent, and the more countries an organization operates in, the higher the risks. Well-designed and managed processes, technologies, and data analytics can reveal anomalies and help you avoid profit shrinkage, reputational damage, and reduced competitive advantage.
So where do we go from here?
If you have an HRIS or HCM solution in place, lean on your partner and say, “Hey, we need to integrate our payroll. What can you recommend?” If transformation is still in the planning phase, remember that as a payroll professional, you have an impactful voice within your organization that deserves to be heard. Make it clear to management that the system must integrate payroll — for all the reasons discussed above.
You already know that the power of payroll is significant to your organization’s success — equally significant are the risks of getting it wrong. I’d love to help you get it right.
The full webinar (free for APA members) is available on demand until January 31, 2023.