October 23, 2020
October 28, 2020
This year, executives at 336 public companies in the United States – including FedEx, Marriott International, and United Airlines – are cutting base salaries, deferring salary payments, and scrapping end-of-year bonuses. They have a clear understanding of their payroll data, and they can work from informed insights to make difficult, but necessary pay-related decisions.
For smaller firms, however, payroll expenditure can be an unclear metric, and it often goes unmeasured. Here’s what you need to know about payroll data, and why you will want to track it as we venture into 2021.
Payroll data is the collection of metrics that contribute to the overall business expense of paying people for work performed at your company.
There’s more than just base salaries to consider here. Other payroll metrics include:
Having this information available allows for businesses to accurately predict the total cost of payroll and mitigate the risk against any future payroll changes (or revenue changes, for that matter).
Payroll data is a cornerstone metric that is relevant beyond the HR department. It contributes to the overall direction of a business and directly impacts growth. Here are a few ways to use payroll data to your advantage.
Payroll is the largest single cost for almost all businesses. For many service-based businesses where payroll is the primary cost for producing a product or service, payroll can cost as much as 50 percent of your gross revenue.
Consequently, even small persistent errors in payroll can add up to big problems, and you need visibility over your processing and outcomes.
Analyzing payroll data over time can provide more accurate yearly forecasts, so you are better prepared to manage budgets and cash flow in times of change or growth.
In short, having visibility into the process empowers business leaders to plot and evaluate ways to grow their company.
Sure enough, many roles within a company may be interchangeable. But, there are always key roles that are critical to the overall success of the business. Losing well-trained, hard-working individuals in those roles can be damaging to success.
By monitoring and benchmarking payroll data, then, you can begin to achieve the perfect balance between compensation, performance, and loyalty. That way, you ensure the retention of top talent.
The hardest challenge with payroll data is ensuring there’s a stream of consistent, high-value data to gather and analyze. Forecasts and predictive analysis aren’t built on short-term data collection, they’re built by analyzing a wide range of historical data over long periods of time.
To do this accurately, you need the right technology. Only then can you build a picture of payroll data and understand how it impacts the wider business, and only then can you begin to make adjustments to improve your bottom line.