Payroll department deals with a lot of precious data, capable of influencing an organization’s future policies and performance. Until a few years back, the payroll process was registered on papers. You could watch the payroll staff engrossed with their pen and papers. The only digitized process was printing documents. So even if there was an enormous amount of data, it was difficult to utilize for decision-making purposes.
But everything changed with the emergence of digitalization, big data, artificial intelligence, and IoT. The complete HR & payroll management has been digitized and automated. The payroll software, integrated with AI, is capable of processing a vast amount of data and make data-driven decisions. Finally, you can utilize payroll data for various other purposes, besides using it for generating employee payslips.
Let us have a look at the benefits of leveraging big data in payroll.
Simplifying Hiring Process
Payroll data contains personal information of the employees, including name, age, gender, place of residence, qualifications, salaries & perks, and so on. When you have access to huge amounts of payroll data, you can run algorithms to determine various trends and employee behavior. For example, if you take age as the variable, you can accumulate payroll data, run the algorithm, and generate reports.
The data will render insights related to the average age of employees, whether you must conduct a recruitment drive as most of the employees are about to retire or you should divert expenses from insurance to incentive-based programs because a lot of young individuals work in your company.
Similarly, you can harness big data potential to excavate hiring trends in a region. For example, for a particular job, is it better to hire a contractual worker or a full-time employee? You can analyze expenses related to both the conditions. Further, it is important to analyze factors like confidentiality, human resource availability, qualification and experience of the candidates, and so on. You will be able to identify risks and benefits associated with both the cases, in terms of performance, costs, and other factors.
Analyze Performance and Retain Workforce
The success of a business is considerably dependent on its employees. The big data in payroll can assist you in analyzing key performance indicators and make a suitable decision. The performance indicators can be related to workforce productivity, revenue-expense ratio, and so on. If you are struggling with these parameters, it is time to utilize payroll insights for workforce planning and managing payroll expenses.
For example, payroll – such as wages, benefits, incentives, taxes, training – accounts for the maximum portion of the total expenses. When you have payroll data, the accounting software can assess payroll expenses and optimize them for better utilization, let’s say, increasing incentives to generate more sales per employee.
Payroll data can also unfold employee performance at various levels. Let’s say you have business operations in two different regions. Despite the same compensation and incentives, employees at one office are delivering excellent performance. While in another office, the employees are not performing as per expectations. This will prompt you to arrange training programs to boost performance and increase productivity.
Weed out Errors & Discrepancies
It’s difficult to rule out errors and discrepancies unless you deploy a foolproof, automated mechanism in place. When handling payroll tasks, you have to be cautious as minor errors can result in major goof ups. For example, mishandling of travel receipts will result in inaccurate expense figures.
Big data analytics play a crucial in these situations. It analyzes millions of payroll cases to identify common errors and discrepancies that might occur during payroll processing. Afterward, you can either opt for a solution, suggested by the payroll software, or devise a solution based on your organizational needs.
Global Outlook and Future Predictions
The payroll industry is undergoing an evolution wherein companies are digitizing data before moving it over to cloud, and big data algorithms are working relentlessly to unearth global payroll trends, that further assist in making future predictions. The payroll rules and procedures differ from region to region. So the companies that are planning to expand their operations, need payroll data to optimize their expansion plans.
For example, tax compliances and employee health benefits programs generally differ from country to country. And since it’s the first time you are stepping in a foreign land, you have no idea about the rules and regulations. In this case, big data analytics play a crucial role. You get access to payroll management data pertaining to a specific region. As you can see, you got a global outlook and now you are in a better position to make decisions that will influence future business operations.
The Big Role of Big Data in Payroll
It’s time to explore the potential of big data in payroll. When you have the opportunity to analyze a massive amount of payroll data, you should exploit it for maximum benefits. The data will aid in optimizing internal business operations and will assist in the decision-making process as well.
Sanjay Darji is a Head of Digital Marketing at SoftwareSuggest. He has a strong knowledge of product marketing & used various digital marketing strategies to build the brand globally. His areas of expertise include best performance management software, payroll, inventory software and ERP software. In his free time, he enjoys reading, spending time with friends and family.