Payroll analytics also accessible to small international companies

From poor relation to strategic policy maker!

A growing number of organizations are discovering the strategic value of payroll HR data through the application of intelligent analysis. Payroll analytics technology is also becoming more affordable as a component of middleware solutions. This brings it within reach of international organizations with a few hundred or a few thousand employees. Whereas, in the past, a payroll administrator or payroll officer primarily focused on providing timely and correct payroll administration, in the near future he or she will also provide strategic information that is essential for HR policy.

HR analytics adds new value to data

In the past, payroll administration mainly involved the manual processing of forms, but nowadays it is mostly done with largely automated e-HRM processes and systems. E-HRM is currently undergoing a new revolution – payroll HR analytics.

Further digitization accelerates the development of data-oriented working, which will determine the future of payroll. Some of the new technologies that involve payroll include Robotic Process Automation (RPA), Artificial Intelligence (AI), Chatbots, Internet of Things (IoT) and blockchain. Big data on, e.g. personnel costs, investments, performance and engagement can be analysed and given valuable meaning with digital computing power that was previously not possible.

Payroll professionals are already encountering some of these developments in their daily operations. The use of chatbots at the HR shared service centre and RPA for checking transactions and other data is becoming increasingly common. More jobs will be created in the years ahead in the field of computer science, data analysis and dealing with intelligent systems, according to a research report published by the Hospitality Group: ‘Futures Forum – the future of work in 2025’.

What does this development entail for the work of payroll administrators and international payroll officers?
 
 

Payroll-analytics

 
 

History: from manual labour to automation

For many years, payroll was primarily focused on processing transactions in monthly salary administration. The transactions were delivered via Excel files and transaction forms that were mostly entered manually.

Payroll processing changed with the advent of the Internet. Manually processable transaction forms made way for data-entry systems that are used to pass on salary transactions. The changed data were transported via a modem to the salary provider on the agreed date. Audit reports were needed to check whether the transactions were processed correctly. After approval, the salary production was printed.

The technology underwent further development when the first PSA systems (Professional Services Automation) emerged. In addition to payroll processing, a PSA system can now also turn out simple reports; this helped to reveal the real value of the data. E-HRM appeared on the scene somewhere around 2009. E-HRM was a revolution in the field of HRM. Automation no longer only took over part of the manual work, the entire process was automated, and it became possible to generate new kinds of reports. That was, however, only a small beginning compared to the capabilities of payroll HR analytics.

Data: solution in the case of unreliable payroll performance

The outcome of an International payroll survey (GPA/TMF 2017) revealed, among other things, imperfect monitoring in terms of compliance and the management of monthly global payroll data. This problem can be solved with the use of payroll analytics. Payroll analytics reduces the risk of error to zero by measuring and comparing the monthly data, and by focusing on compliance, by comparing and controlling costs and by detecting irregularities.

Within easy reach of small and medium-sized organizations

A growing number of small and medium-sized enterprises are seeing international growth opportunities and expanding abroad. Borders are becoming more diffuse and the Internet brings the whole world within our reach. Increasing globalization gives HR and payroll an increasingly important role; also thanks to Multi Country Payroll solutions (MCPO).

What was only possible for large multinationals with top range systems ten years ago, is now also within the reach of ‘medium and small enterprise’. Reliable HR and payroll analytics are also becoming increasingly affordable for smaller international players. Here, too, payroll analytics is on the rise and many middleware solutions are being provided with analytics functionalities. These tools offer professionals the opportunity to compare data in many different ways.

Data analysis to the next level

Data analysis is nothing new. HR analysis was also used in the past; for example, to measure sick leave and other forms of absenteeism. Payroll data was also used to determine the budgets for the new year. Collective Labour Agreement (CAO) increases and indexations were passed on to the new year. Those results were often decisive for the workforce. Digital payroll analytics is however taking the possibilities to a higher level.

It is becoming increasingly clear how important payroll information is and what you can do with it. For example, ensuring compliance with local laws and regulations in various countries, benchmarking between different countries, drafting variance reports, comparing data from the current and previous payroll periods, detecting fraud, and so much more.

In our white paper, MCPOT, you can read more about all the other benefits payroll analytics has to offer.

Payroll HR analytics: Where to begin?

Suppose you have experienced the value of payroll HR analytics and want to implement it in your own organization. Where should you begin? What’s the correct route to follow?

It all starts with gathering the right knowledge about what payroll analytics entails in practice and which tools are required for this. It’s also important to find out how payroll analytics can best be fitted into your organization. You can follow specific training courses for that purpose. A number of training institutions in the Netherlands offer ‘Excel data analysis’ training courses that are specifically aimed at HR, salary and other administrative tasks. Some of the elements of these courses include the effective application of specific methods and the presentation of analyses in a clear dashboard.

Metamorphosis of the salary administrator: a conscious choice

Practically seen, the payroll administrator, who generally has a greater affinity with figures than the average HR adviser, will be responsible for processing HR analytics. However, it does entail a different way of working for him or her. It’s quite often a major change for someone who might still be anchored in a ‘traditional’ administrative role.

Fortunately, the workload of the payroll administrator is also lightened in environments where digitization has already been embraced. Robotisation and Artificial Intelligence (AI) can reduce the workload, whereby manual and control tasks are increasingly being taken over. This gives the payroll administrator more time to transfer his or her professional knowledge to another area of competence, that of payroll analytics. Nevertheless, this does however demand a focused choice on the part of the organization, as well as the individual himself/herself.

The 2018 Nirpa Trend Survey shows that the most important operations performed by payroll administrators still consist of processing transactions, conducting audits and processing salaries. It also transpires that they spend less than 30% of their time generating reports. In addition, the research also shows that the workload and complexity have again increased slightly compared to previous years. Remaining with the old system leaves little time for dealing with future changes.

Do not miss out on the opportunities of payroll analytics

A growing number of enterprises are becoming increasingly aware that payroll data contain a wealth of valuable information. However, this is only possible if the organization and, more specifically, the payroll administrator has adopted payroll analytics. This entails a shift in operations and presents the opportunity to change the image of payroll from one of little importance to a reliable and important source of strategic information.

The consultants at VroomHR

VroomHR specializes in the selection and implementation of HR systems and payroll services. VroomHR works with methods and techniques that have been proven, in practice, to increase workers’ willingness to change and adopt the new way of working. We understand what Payroll and HR, managers and employees need and work with you to get the most out of your HR systems.

Do you have local compliance issues in your international organization?
Do you see the value of payroll analytics, but don’t know how it would fit into your organization?

If so, contact us and discover what we can do for your company!

Here you can read more about international payroll.