At a workshop held on July 9 during PayrollOrg’s annual Virtual Congress, payroll professionals and employers were urged to recognize payroll data as a powerful tool for strategic business decision-making, not just as a back-office necessity. The session, “The Power of Payroll Data — How Payroll Becomes a C-suite Advisor,” led by Kathy Soderman, Managing Director at Ernst & Young LLP, highlighted the evolving role of payroll in shaping executive decisions and driving organizational success.
Unlocking Hidden Value
Soderman’s presentation underscored that payroll data—often overlooked—can provide critical insights for executive leadership. By transforming payroll from a transactional function into a strategic asset, organizations can influence workforce planning, financial forecasting, and overall business strategy. Payroll data, when integrated with human resources, time and attendance, accounting, and compliance systems, becomes a treasure trove of information, supporting everything from labor cost analysis to compliance monitoring.
Key Insights and Practical Steps
The session provided a step-by-step approach for payroll professionals to leverage data in several key areas:
Labor Cost Analysis: Collecting and categorizing payroll data enables organizations to calculate costs per employee or department, benchmark against industry standards, and inform staffing or automation decisions.
Turnover and Retention Trends: Payroll data helps track turnover rates, identify root causes, and support actions to improve employee retention.
Compliance and Risk Monitoring: Automated data collection and regular audits help ensure adherence to federal, state, and local regulations, reducing the risk of penalties.
Forecasting and Budgeting: Historical payroll data supports accurate labor cost forecasting, budget variance analysis, and scenario modeling.
Location-Based Insights: Segmenting payroll data by location allows for regional benchmarking of costs, productivity, and compliance.
Compensation Benchmarking: Comparing internal pay data to external market benchmarks ensures competitiveness and pay equity.
Workforce Productivity: Payroll data helps measure output per employee, utilization rates, and productivity trends.
Real-World Applications
The presentation included practical metrics for measuring payroll function efficiency, such as cycle times, process efficiency, productivity, and cost effectiveness. For example, metrics like total days to process payroll, number of payroll-related inquiries, and payroll disbursement per full-time equivalent (FTE) were discussed as benchmarks for continuous improvement.
Emerging Trends
The session also addressed the growing importance of pay equity and transparency, noting that global requirements for gender pay gap reporting are expanding rapidly. New regulations, such as the EU Pay Transparency Directive and various state laws in the US, are increasing the complexity and importance of accurate payroll data management.
Key Takeaways
Payroll professionals were encouraged to view payroll data as a rich source of business intelligence, capable of supporting real-time decision-making and aligning with C-suite priorities. When integrated with broader HR and finance systems, payroll data can help organizations predict turnover, optimize compensation strategies, and ensure compliance. Empowering payroll teams with analytics tools fosters a culture of data literacy and strategic thinking.
As organizations face increasing regulatory scrutiny and competitive pressures, leveraging payroll data for strategic insight is becoming essential for success in today’s business environment.
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