Why it’s time for payroll to get into analytics

Step back in time five years and you would struggle to move for articles and white papers on big Безымянный-2data and analytics. These were the hottest topics in technology and the excitement surrounding them was at its peak.  Last year, analyst Gartner dropped its hype cycle for Big Data, confirming in an article, entitled: The Demise of Big Data, Its Lessons and the State of Things to Come” that “we did it to move the big data discussion past hype and into practice”.  Certainly when it comes to the HR arena, big data and the analytics tools that can be built on top of it are now in a maturing phase.

Recent years have seen a rise in the adoption of analytical tools across HR.  Companies have started to see the strategic advantages of using these systems to make data driven decisions. What is acting as a further catalyst is that the latest generation of tools are so much easier to use than their predecessors, which were typically big and complex and required significant investment of time, money and technical know-how to get them to work well.

Some of this new generation promise the Holy Grail – powerful, flexible yet easy to use tools that help businesses gain insight into the data held in their payroll and HR systems. Critically, the best of the new breed raise the bar in terms of their visualisation capability. The trends and the ‘so what’s’ that live hidden away within HR data are now much easier to see and explore, resulting in greater insight and more accurate decision-making.

Payroll is perhaps the single area of HR which offers the most immediate potential for the future growth and development of analytics technology. Of all HR staff, payroll professionals typically have the most innate feel for analysis. Most are comfortable with Excel spreadsheets; creating pivot tables and understanding what the data is telling them. However, when it comes to applying analytics in order to drive business advantage, the challenge payroll faces is that it is typically concerned with transactional processes. Payroll staff tend to focus more on making sure everything balances at the end each pay period and that variances are explainable rather than looking at the overall cost of employment and evaluating other long term strategic trends that have the potential to drive competitive edge.

Putting analytics tools into the hands of their payroll staff, however, gives businesses the chance to change all this.  Switching to the latest analytics technology provides professionals with the opportunity to evaluate data month on month, or period on period, and start picking out key trends. With the payroll bill typically the largest item of expense in any organisation, the benefits to the business from bringing it under greater scrutiny are clear – and the emergence of new HR rules and regulations is now acting as a further catalyst.

The new gender pay gap reporting legislation, for example is expected to be introduced in early 2017, impacting larger organisations. Within most such firms, this is expected to be handed to the payroll department to report on. It is just one example of where payroll professionals are going to be expected to start analysing their data in a different way to their historical practice.

The Time is Now

The confluence of all of these factors represents a golden opportunity for payroll departments and for the professionals that work in them. Functionally-rich analytics tools are now increasingly available across the HR domain, offering businesses the chance to start looking at their data, whether it is within a single country, or across multiple territories, and get a much better grasp on how pay is being managed throughout the organisation.  Payroll has, after all, traditionally had to fulfil a largely reactive role focused on the regular weekly or monthly cycle of generating the business’s payslips.

The emergence of analytics gives them the opportunity to step out of the shadows, to have their voice heard by the finance director, finance controller or CEO; provide key insight into the structure of costs within the organisation and how the business is working and raise the reputation of the department across the whole enterprise.

And there are a growing range of benefits they can tap into both within country, and for larger international concerns, at a global level. Typically, these can range from simply understanding how many people they employ (it’s surprising how many global organisations don’t have that piece of information at their fingertips!) right through to aggregating all of the data from multiple countries’ payrolls into a single system and then running in-depth analytics and reporting on that aggregated data.

With the emergence of the latest analytics tools, there is now a great opportunity for payroll professionals to become data rich, provide hard evidence-based decision-making to leadership teams across the organisation and start delivering valuable business benefits that have the potential to drive the success of the whole enterprise. For today’s payroll professionals then, the message is clear: it’s time to get into analytics!

About David Woodward

David Woodward, chief product and marketing officer, SD Worx UK

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