Over 15% of businesses failed to be profitable over the last 12 months, at a time when cost of doing business has increased for well over half of businesses (57%) – 21% of which report to a ‘great extent’, data from the Australian Bureau of Statistics (ABS) shows.
Human capital is arguably the largest cost centre of an organisation and the most difficult to manage without supporting data, according to a new research paper from business practice solution specialists, The Access Group.
Historically, payroll functions have been used to calculate and disburse salaries and benefits, ensuring employees are paid accurately and on time. It’s generally considered an administrative, back-office function separate from other business units. However, payroll systems can serve a broader and more strategic function, ultimately helping build business confidence in challenging times.
The Access Group survey shows less than one-third (28%) of business leaders believe their payroll system extends beyond simply paying employees, with more than three in five (62%) leaders wanting to utilise this system more strategically for workforce management visibility, more informed decisions, an enhanced employee experience and to better manage compliance and risk.
Serving as an open letter to the payroll industry, the paper delves into the untapped potential residing within payroll systems, recognising data as a key driver of organisational decision-making.
In today’s competitive landscape, organisations must leverage every available resource to gain a competitive edge, according to The Access Group president of Asia Pacific, Kerry Agiasotis (pictured).
“The research paper highlights the often-overlooked goldmine of data that’s right in front of us and offers tangible steps for businesses to turn this information into a strategic asset, assisting organisations to make informed decisions and drive efficiencies,” he said.
Workforce management visibility
Payroll systems can provide insights to improve operations and workforce performance, yet only 36% of organisations have payroll systems that provide complete visibility of their workforce, operations and data. Businesses that use payroll strategically are twice as likely to rate their ability to achieve outcomes as ‘excellent’ compared to those that did not.
Strategic use of payroll systems provides accurate insights into workforce expenses, allowing for better budgeting and resource allocation. In addition, it streamlines processes, reduces administrative burdens and saves time.
More informed decision-making
When asked to rate the extent to which their payroll system and its data helps make informed business decisions, just 30% rated their ability as ‘excellent’. For those using payroll strategically, the number jumped to 49% and for non-strategic payroll users, the number dropped to 23%.
When payroll data is used for workforce planning and analysis such as employee attendance, turnover rates and labour costs, it helps identify trends and future staffing needs. It can also provide insights into employee demographics and skills sets for workforce planning and talent acquisition.
Strategic payroll helps to forecast labour costs for 38% of organisations compared to only 18% that use non-strategic payroll, inform promotions or redundancies for 24% of organisations versus only 12% that use non-strategic payroll, help decide hiring decisions for 26% of businesses compared to 11% that use non-strategic payroll.
Enhance the employee experience
Only 25% of respondents rated payroll systems and their data as ‘excellent’ for their ability to inform and improve the employee experience. This number doubled to 49% for those that use payroll strategically, compared to 15% for those who did not – almost a three-fold increase.
Organisations using payroll as a strategic enabler were two to three times more likely to maintain high employee satisfaction levels by ensuring people were paid the right amount and on time, developing wellbeing strategies based on turnover rates and absenteeism, offering self-service functions, creating a positive employer branding experience, employee confidence in systems and compliance, and the ability to attract new talent.
Better manage compliance and risk
A payroll system and its data provide information such as overtime pay and annual leave, which helps businesses comply with laws that regulate working hours, leave periods and other compliance-related issues.
Only 40% of respondents rated their ability to use payroll data to stay on top of compliance and regulatory requirements as ‘excellent’. By contrast, only 29% of those who do not use payroll strategically achieve this result.
Payroll used as a strategic enabler results in twice as much confidence in compliance and business continuity as payroll used as a functional tool.