The Power of Payroll Data

There is a difference between payroll data and pay run metrics: timesheets, rosters and overtime. Payroll data is about the stories it can tell you to help you grow your business.

Traditionally seen as a mundane administrative task, payroll data is a goldmine of insights. By harnessing the power of payroll data, businesses can gain insights into workforce productivity and make data-driven decisions. HR can gain insights and make decisions that improve organisations using payroll data. Analysing workforce trends and observing workplace interactions helps us understand areas of strength and areas needing improvement.

Most of the time, people are managed according to judgements based on intuition, hunches, and instincts, which can be uninformed. Analysing data improves people management by providing more objectivity, verification, and insight.

Qualitative vs Quantitative HR Analytics

The core of HR analytics is data, and there are two types of data that HR collects.

Quantitative data covers areas like the number of employees, turnover, performance, labour costs, engagement surveys, sales numbers, and customer satisfaction results. This data is essential for businesses as it quantitatively measures their operations' success. It also helps identify areas where the business may be losing money and resources or underperforming. Additionally, quantitative data helps identify trends and patterns to help businesses make informed decisions.

Qualitative data covers skills, employee sentiment survey comments, and performance reviews. It offers an understanding of why employees think and feel how they do, aiding businesses in comprehending their audience and enhancing their offerings. Additionally, qualitative data uncovers insights that may not be readily apparent from quantitative data alone.

What are the HR data challenges?

HR data is not considered part of the business decision-making set because it is often hard to collate and analyse. This is often due to silo workforce data into different systems or spreadsheets. The software solutions used to collect and record the data are usually fit for a department or task.

Payroll software holds employee pay and hours worked data to ensure compliant pay runs. HR software holds employees' personal data, such as salaries and contracts. This siloed nature of the data means there is no single source of truth to draw detailed workforce insights.

Translating this data into usable information for actionable insights is also a challenge. Most organisations have access to a ton of workforce data, but actionable insights are difficult as each data set tells a different story. In HR, this is generally due to the number of ways data is collected and analysed. In most cases, it is due to a lack of automation and reporting capabilities.

When HR teams build reports manually, it can be time-consuming and often does not provide reliable data for decision-making. Most payroll and HR professionals are not data scientists but are expected to produce impactful reports from disparate systems.

The Top 10 HR Data Challenges

1. Data Quality

To maintain data integrity, it is essential to enter data correctly and prevent errors, duplications, and inconsistencies across different HR systems. The HR metrics and data needed for a successful strategy can be challenging, mainly due to the data source. A multitude of data from separate systems makes data integrity difficult.

2. Technology Challenges

HR systems often comprise multiple software solutions, including HRIS, applicant tracking, performance management, payroll, rostering, and time and attendance. These segmented solutions need data integration with APIs or other means to deliver a holistic data set for analysis. Integrations are not often intuitive enough to manage duplicate data, compromising data quality.

3. Data Interpretation

HR information is highly intricate, consisting of several factors such as payroll, employee absence, engagement, recruitment, attendance, etc. The data may come from multiple sources and have different structures, dimensions, and layers, making it difficult to interpret. Effective analytical skills are needed to extract meaningful insights from these complex data sets.

4. Compliance and Privacy

Sensitive employee information must be protected. Compliance with data protection regulations and robust data encryption are essential. Maintaining compliance with evolving legal and ethical standards related to HR data usage can be challenging. However, keeping up with changing data protection laws is essential for human resources departments.

5. Change Management

HR professionals struggle to transition from traditional HR processes to cloud-based online and real-time solutions that offer data-driven decision-making. Data-driven HR strategies deliver seamless strategic data that aligns with the business strategy. When HR data is aligned with business goals, the data and decisions contribute to achieving the goals.

6. ROI and Measurement

The impact and return on investment of data-driven HR initiatives are difficult to quantify. It is not always possible to translate outcomes into monetary value. Employee engagement initiatives, for example, may not have a clear financial impact. The effectiveness of HR initiatives cannot be measured solely by financial metrics. Employee surveys, performance monitoring, and qualitative evaluations can be used in this process.

7. Cultural Challenges

Any change in cultural norms is a challenge. Transitioning from a traditional HR culture to a data-driven one requires a shift in mindset and practices. Data literacy and promoting the effective use of data may require education initiatives, mentorship, and leadership. To ensure alignment between HR and other departments, reorganisation may be necessary to improve communication and promote collective accountability for data utilisation.

8. Data Availability

Data accessibility and availability are two challenges closely related to security and privacy. Access must only be restricted to authorised users and based on defined roles and responsibilities. Timing is critical for data-driven HR decisions, so real-time data can dramatically improve HR strategies. HR professionals should implement systems and processes that can deliver real-time data.

9. Single Data Source 

HR data can only add value to a business if you trust the data and analytics. It needs to be comprehensive to make a difference in business decisions. Clean, accurate, and easily accessible data is essential to inform and improve employee engagement, recruitment, and training and development. 

10 Strategic HR

Strategic HR is imperative for business strategy to ensure business success. Aligning HR programs and policies with business strategy improves employee performance and productivity.

What are the benefits of payroll data for HR?

Data fuels decision-making in every business strategy, but HR data is often overlooked. Human capital, which includes workforce management, payroll, and human resources, is one of a business's most significant costs.

By leveraging people and payroll data, organisations are better equipped to make data-driven decisions aligned with the overall business strategy. The data informs business productivity, performance, employee engagement, and labour costs. Businesses that align HR and payroll data with their objectives will likely improve performance, reduce employee turnover, and offer a better staff experience. This, in turn, delivers better customer outcomes. A survey by The Access Group found that more than 62% of leaders aim to make better strategic use of their payroll data.

• Workforce management visibility
• Making informed decisions at the right time
• Enhancing employee experience
• Managing compliance and risk

A company's vision and objectives are intricately linked with HR data, and when they harmonise, data-led decision-making supports growth and outcomes.

• Employee engagement - reducing turnover and reducing costs.
• Managing compensation and building a happier workforce.
• Hiring decision-making aligned for business growth.
• Managing skills gaps and improving learning and development.
• Measuring workforce diversity in the workforce.
• Optimising workforce planning.

Strategic Workforce Management for HR. 

Learn about workforce management and how The Access Group can help your business streamline payroll and HR processes. Workforce Management Software. 

Payroll data offers valuable insights into workforce trends. Aligning business objectives with payroll information can help manage your workforce requirements, costs, and compliance and enhance employee experience. Download the Strategic Payroll Research Paper today.