FEATURE INSIGHT
Payroll data benchmarking can help an organisation understand how they compare to others in terms of quality, efficiency and cost – but it then needs to act upon the results, says Kavitha Sivasubramaniam, freelance writer and editor A measure of success
B enchmarking is a practice that is frequently carried out by organisations to identify best practice and areas of improvement, as well as to establish and build a competitive environment within the business. Broadly speaking, it can be defined as a standard or level of quality against which things may be compared. From a business perspective, the process allows an employer to gain an insight into how they perform in comparison to others and learning from the outside world. So why is it important to benchmark payroll data, in particular? And how can employers ensure they are correctly going about the process? The first step is to work out what your business goals are – you need to know what you want to gain from benchmarking before you embark on the process in order to make sure you get the best from it. This may sound obvious, but you’d be surprised at how many organisations decide to benchmark without really having a clear understanding of what they are going to do with the information once they receive it. From the outset, decide what your objectives are.
The business case for benchmarking
organisation, demonstrating the value of the function within the business. Carsten Staehr, chief executive officer of Cintra HR & Payroll Services, explains that it has long been known that we don’t use or analyse payroll data enough, although everybody agrees that it has wealth of corporate and historical information. He says it is also a fair assumption that typically the payroll data is of an extremely high quality due to the nature of paying salaries correctly. “Salaries form a high proportion of any company’s cost base. In a knowledge economy you will have to look a long time for companies that don’t analyse the salary cost as way of controlling profit level,” he explains. Staehr believes that, although driven by legislation, gender pay gap reporting is a good example of using the payroll data in a different way. “It should always be at the back of your mind that this is only one aspect of data and it should be used in conjunction with the equally important measurement of soft values such as culture and talent management,” he says. Benchmarking gives you access to potentially valuable data, which can inform a wider strategic approach such as sickness absence rates, holiday entitlements, training budgets, graduate starting salaries, labour turnover, overtime payments, redundancy management, shift pay, as well as Christmas working
Employers have several different reasons for wanting to benchmark their payroll data, and there are a several key benefits to be gained by doing so. Businesses can see how they compare to others and identify whether they are meeting best practice standards. They can also see where they sit in the payroll business environment. For example, are you an employer of choice regarding process management? Are you efficient and effective? “Benchmarking provides a guide to what others are capable of given similar conditions,” says Manish Grover, head of strategic marketing at NGA Human Resources. “It drives improved performance and highlights where there are gaps. As payroll is a tangible and quantifiable operation, it is ideally positioned to be benchmarked against the industry standard.” Organisations need to make sure both they are legislatively compliant and are exercising best practice when it comes to payroll. Remember, too, that benchmarking data can elevate the strategic role of payroll within an
...know what you want to gain from benchmarking before you embark on the process...
| Professional in Payroll, Pensions and Reward | July/August 2017 | Issue 32 48
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