Payroll is a ‘goldmine’ for business data, research finds
New research finds that seeing payroll as a strategic data enabler can double or even triple business visibility.
Employee data is a critical source of information for any business. Payroll accounting both generates and relies upon employee data and, according to research from The Access Group (TAG), most businesses are failing to leverage the value of payroll data.
TAG surveyed 215 senior business decision-makers and found that 28 per cent were using their payroll systems for purposes beyond paying their staff, though 62 per cent wanted to use it more strategically.
Those businesses who see payroll as a source of data, rather than simply a payment processing function, can expect dramatic improvements in visibility.
Payroll data includes information about salaries, hours worked, benefits, taxes, leave, and overtime. According to TAG, collecting, managing, and analysing this data can lead to greater efficiency, better decision making, higher employee satisfaction, and firm-wide boosts to productivity.
“Any organisation without a defined payroll strategy which mitigates the risks involved in paying employees and looks to add value to the employer by the use of technology, data, and insights is potentially missing a competitive advantage,” said Tracy Agwin, director of the Australian Payroll Association.
By leveraging the data, decision making can have the advantage of a wider range of inputs, which can translate to demonstrably better workforce planning, compliance and so on.
Payroll is an “often-overlooked goldmine of data”, said Kerry Agiasotis, APAC president at TAG. The report laid out four main benefits of seeing payroll as a strategic enabler.
Firstly, it can boost workforce management visibility. According to the report, payroll data is often “forgotten in the cloud or on a server until it is needed again – usually for compliance or auditing.”
Business leaders using payroll strategically judge themselves as being better able to gather basic employee information, analyse potential employee challenges, develop competitive advantages, and identify the potential for staff turnover.
Secondly, strategic payroll can help with workforce planning from across the employment cycle – from forecasting labour costs to making informed promotions or redundancies.
“Payroll data can provide insights into employee demographics and skill sets, which can be valuable information for workforce planning and talent acquisition strategies,” said the report.
Thirdly, it can help to improve the employee experience – from ensuring timely and accurate pay and allowing more targeted wellbeing strategies to boosting employee confidence in systems and compliance and enhancing talent acquisition capabilities.
Business leaders who use strategic payroll are nearly three times as likely to consider their data ‘excellent’ when informing and improving the employee experience.
Finally, strategic payroll can translate to better compliance and risk management. By incorporating employee data into business operations, leaders can make more informed decisions on things like gender pay gaps or general payroll compliance.
The federal government is currently consulting on potential changes to the Privacy Act, including potentially narrowing the employee records exemption.
Currently, private-sector employers are exempt from having to comply with the Australian Privacy Principles (APPs) laid out under the Act.
Last year, the government released a report summarising the findings of a review of the legislation which recommended narrowing the exemptions for employee records.
While it is unclear what kind of data will be captured in any potential reform, it is possible that payroll data collection could be complicated by the proposed changes.
Nonetheless, the report recognised that any changes should be balanced against countervailing business interests – such as those to be gained through strategic payroll.
While employee data collection might become more tightly regulated, the TAG report also made the case that strategic payroll can help businesses comply with labour law – from timely and accurate pay to gender pay compliance.
