Organizations often don’t always take full advantage of the potential of payroll data and one of the big mistakes they make is to only think of such data as financial figures, when in fact it is possible to extract information that may be highly valuable for finance and HR.
Companies looking to increase their efficiency in terms of productivity and performance run a series of payroll and HR data-driven analyses. Combining payroll data with talent management data can lead to multiplying the value of information, since this can provide answers to additional questions such as: Are we really paying the best employees better? How much is talent costing us? Is the relationship between business performance, talent, and cost optimization well balanced? These parameters are highly relevant for analysing organizational effectiveness in order to make other decisions, such as: Do I have the right number of managers I need? What is the cost of having multiple organizational models?
“It’s precisely when payroll data is integrated with HR data, that we are able to do much more meaningful and real-time analytics.
Besides, organizations that are more productive use an HR analytics solution to enable them to extract the full potential of payroll data. The use of analytics in HR provides the organization with insights into all kinds of socio-demographic issues of great interest to the company, such as diversity, salary competitiveness, ageing of the workforce, and more. By using indicators calculated with payroll data and breaking them down into different demographic groups in the organization, it’s possible to obtain more complete information and to understand trends like ageing, parity and absenteeism levels, or work-life balance issues, among other aspects.
In short, combining payroll data with talent data through analytics delivers huge benefits to HR managers, since pulling salary metrics together with talent metrics gives them better control over their processes and costs. Thus, HR becomes a value generator that supports their organization’s growth and profitability. However, we must emphasize that already by using the information within our payroll solution, we can perform valuable and highly meaningful analyses.
The risks of not using payroll data
If HR managers aren’t aware of the real costs of terminations, attrition, vacancies, recruitment, and onboarding, they won’t be able to effectively manage their talent. Payroll data enables a company to identify quantitatively and accurately what’s happening through various key performance indicators, and what their workforce is costing them. Without this information it would be hard to get a reliable overview, or even to anticipate or make predictions. Inevitably, actions taken on people won’t be data-driven, instead they will be subject to beliefs. If these beliefs turn out to be wrong, such actions will consequently be risky for the business.
In 2020, HR leaders had to address major challenges in their organizations and in managing their people. For 2021, the business economy and profitability are undoubtedly a top priority. This year more than ever, companies need to know where to invest and divest in order to overcome operational challenges in uncertain times. By truly connecting HR management with operational management, together with HR analytics and business intelligence, HR managers and directors will firmly position themselves as legitimate stakeholders in executive management committees.