How to unlock the potential of global payroll analytics

Global payroll analytics is an essential resource for organizations, yet it is still largely underutilized by many. Surveys show that less than 20% of companies actively use global payroll data to drive insights and analytics.

Payroll data insights can help businesses anticipate staffing needs, better control their cash flow, and monitor compliance across multiple geographies. But how can businesses fully leverage the potential of their global payroll data? Which key metrics should they monitor in order to gain useful insights and make data-driven decisions?

This article explains how to unlock the strategic value of multi-country payroll data with the help of global payroll analytics.

Global payroll analytics is the process of analyzing raw payroll data across multiple countries or regions within a company to find meaningful patterns and receive actionable insights. The aim is to gain a comprehensive view of payroll metrics, such as costs, compliance, workforce distribution, overtime, employee benefits, and more, on a global scale.

By centralizing global payroll data and identifying patterns across different regions, global payroll analytics provides insights into payroll compliance, expenses, resource allocation, and more.

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Global payroll analytics can be used in several different ways that make it essential for businesses of any size. Here is an overview of different areas where applying data analytics in global payroll can lead to significant improvements:

• Payroll efficiency and accuracy: Global payroll analytics helps streamline payroll across different regions, reduces payroll errors and time spent on payroll-related tasks by providing real-time data insights and automating many manual tasks involved in payroll processing.

• Compliance monitoring: Analytics can be used to monitor and manage global payroll compliance. Since international organizations must adhere to different country-specific employment regulations and tax laws, a holistic view of their global payroll data can be a real asset in ensuring that they meet all the requirements.

• Cost management: Businesses can analyze their global payroll costs with the help of data analytics to identify cost-saving opportunities across countries, locations, and departments and to allocate resources more effectively.

• Employee experience: By providing insights into payroll errors, payment delays, or compensation trends, global payroll analytics can facilitate improvements in employee satisfaction.

• Workforce planning: By tracking metrics like employee absenteeism, overtime, and workforce distribution, organizations can make informed decisions to allocate resources more effectively and implement strategic workforce planning.

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Through its diverse areas of use, global payroll analytics offers various different benefits for organizations. These benefits include:

• Enhanced decision-making: The insights gained from global payroll analytics can be leveraged to inform business decisions and make decisions based on actual data and facts rather than on mere assumptions.

• Greater scalability: Gaining a better understanding of payroll costs and compliance risks makes it easier to scale payroll operations across regions.

• Better compliance: Global payroll analytics can help reduce compliance risks by improving region-specific reporting and identifying errors and inefficiencies.

• Improved employee retention: Payroll analytics deliver in-depth insights into payroll data and other payroll-related workforce metrics. These insights are crucial for improving employee satisfaction and reducing employee turnover.

Despite the many benefits businesses can gain from using global payroll analytics, there are also some challenges organizations should prepare for. Potential challenges include:

• Data privacy and security: Global payroll analytics involve processing and handling large amounts of highly sensitive data. This requires advanced data security measures and compliance with applicable data protection laws (e.g. GDPR).

• Different legal regulations: The different labor and tax laws that apply in different countries can pose a challenge when it comes to properly interpreting the analytics results, which might require additional effort in monitoring compliance for each geography.

• Legacy systems: Integrating global payroll analytics tools with existing systems can pose challenges, especially if they are legacy systems that are outdated and not built for quick and easy integration.

• Data readiness: Data accuracy is a key requirement for successfully using global payroll analytics. But preparing global payroll data for analysis might require additional steps and processes to achieve clean, standardized payroll data across geographies.

International organizations that want to leverage the potential of global payroll analytics should monitor different metrics. These metrics include payroll KPIs and other workforce-related metrics, such as:

• Payroll expenses and cost distribution: Payroll costs are one of the key metrics that should be monitored when performing global payroll analytics. With the help of data analytics, payroll-related expenses can be clustered and analyzed more in-depth to explore how expenses are distributed across countries, job roles, and departments.

• Overtime and employee absences: Tracking overtime hours and absences can help businesses identify departments that are understaffed and trace patterns in employee absenteeism. These insights can be used to improve productivity and control costs. For instance by reducing overtime and thereby preventing additional salary expenses.

• Compliance-related metrics: There are several different compliance-related metrics that should be tracked in global payroll analytics. They include overtime pay to ensure adherence to country-specific maximum working hour laws, employee wages to ensure that the legally required minimum wage per country is met, and tax withholdings to ensure correct deductions based on local tax laws and avoid payroll tax penalties.

• Workforce distribution and headcount: Knowing how many employees work for the organization and how they are distributed across the different geographies is crucial. Global payroll analytics can help businesses understand where they have their biggest workforce spendings and thereby enable better forecasting and planning.

• Time needed for processing payroll: Payroll processing times are an important metric to track in global payroll analytics. Tracking how long it takes to process payroll can reveal process inefficiencies that lead to high payroll processing costs and bind resources that could be better spent elsewhere.

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Organizations that want to truly unlock the full potential of global payroll analytics need to combine analytics with the right technology stack. This includes:

• Payroll software: The easiest way to gain access to analytical insights into global payroll data is to use payroll software with an integrated payroll analytics feature that allows for tracking metrics across multiple regions and generating multi-country payroll reports.

• System integration: Integrating global payroll analytics tools with other systems for managing the company’s workforce or finances (e. g. HRIS or accounting system) provides a holistic view of all payroll-related data across the entire organization and delivers key insights for informed decision-making.

• Artificial intelligence and machine learning: AI is changing global payroll and HR management. One aspect that is driving this change is that AI and machine learning can enhance payroll analytics by identifying patterns and trends that payroll professionals might miss when analyzing data sets manually.

The use of global payroll analytics holds enormous potential for businesses. But before they can really leverage this potential, businesses first need to implement analytics for their global payroll. Here is how to proceed.

• Define clear objectives: The first step is to set clear objectives that are in line with business requirements and demands. What outcome should be achieved through the use of payroll analytics (e.g. cost reduction, improved compliance etc.)?

• Choose the right tools: Having the right tools at hand is a key requirement for implementing global payroll analytics. Whether it’s a payroll software with analytics functions or an integrated data analytics solution, the tool should meet the business’s needs and align with existing systems.

• Establish key metrics to track: The next step is to define which metrics you want to track and monitor with global payroll analytics. The chosen payroll KPIs should align with the initially established objectives of using analytics.

• Collect and prepare the data: The readiness of your global payroll data is a crucial requirement for effectively using payroll analytics. Therefore, the data has to be collected and cleaned before analysis. Data consistency and standardization across geographies is crucial.

• Implement the infrastructure: The last step is to finally implement the new tool and integrate it with your existing infrastructure to start using analytics on your global payroll data.

Global payroll analytics is subject to major trends that also shape the payroll industry. Here is an overview of what trends and developments influence the future of global payroll analytics.

• AI and predictive analytics: AI-driven predictive analytics has significant potential to transform global payroll analytics by forecasting payroll needs, optimizing labor costs, and preempting compliance issues.

• Automation: Automation is a major game-changer with regard to payroll processing and will also have an impact on global payroll analytics by increasing efficiency and reducing errors.

• Focus on employee experience: Global payroll affects employee morale. With a growing focus on creating a positive employee experience, global payroll analytics are set to play an important role in tailoring payroll practices to improve employee engagement and satisfaction.

• Use of blockchain: Blockchain technology can greatly enhance security and transparency in payroll transactions, solving security challenges for global payroll analytics by creating a decentralized and tamper-proof ledger.

Lano’s global payroll reporting and analytics features enable you to unleash the full potential of your multi-country payroll data. Gain valuable multi-layer insights into global payroll costs, outstanding payroll liabilities, and workforce demographics across different employment types. Leverage our macro-to-micro-insights reporting dashboard and drill down into your global payroll data as needed to make informed decisions.

From a high-level overview of total employer costs, team composition, and joiners and leavers activity to a granular gross-to-net breakdown that provides detailed insights into employee deductions, employer contributions, net additions and deductions - with our sleek, easy-to-navigate dashboard, you have all your global payroll reporting at your fingertips.

Book a demo with one of our global payroll experts to learn more.