Payroll is a vital source of data in your business and has the potential to have an immediate financial benefit. It can provide a monthly snapshot of your company’s health. Furthermore it is, by its nature, one of the most up-to-date sets of data in your business. Businesses are required by law to keep live payroll information, so there is no chance of your making decisions based on old news.
There are a number of payroll metrics that can give you a deeper understanding of how healthy your business is from a financial point of view. Here are five places to look when analyzing your payroll data:
- Remuneration: Salaries will be an obvious place to start. With these numbers, you can build other metrics into your analysis such as a return on investment (ROI).
- Turnover: It’s not good news if you have a high staff turnover rate—it may signify a deeper problem within the business when it comes to areas such as conditions, morale, and corporate culture. And it can cost money in lost productivity, recruitment, and training.
- Absence: Analyzing data on sick days and vacation time will help you understand when workers are more likely to be absent and whether employees are taking their annual leave at the right time of year for the business.
- Overtime: If employees are regularly working more than their agreed hours, consider what this means in terms of productivity and the way people are working. You can find out whether it’s more cost-effective, for example, to hire part-time or additional staff.
- Training costs: Payroll departments can be under pressure to find ways to cut costs and improve efficiency. With a training cost metric, it’s possible to walk that tight line between making cuts and ensuring employees are skilled properly.
- Across each of these areas you’ll find a huge amount of data available to examine and because it covers such a long period of time, it should be easy to start spotting trends. With the right technology it can give you a great platform for future planning, with the reassurance of knowing you have a constantly up-to-date view of your business. It should be the first place you look, before planning for the future.