Payroll Performance Scorecard
JAN 27, 2009
Measuring performance takes on new significance in a recession, when everything from your headcount to your travel budget hangs by a delicate thread. But as you make decisions about the future of your HR and payroll operations, are you confident you’re using the right metrics in the right way?
Benchmarks – both internal and external – are a great starting point for analyzing HR or payroll performance, but they’re a lot more meaningful if you take time to look at the context behind them. Think of a standard payroll metric such as the FTE ratio – the number of payroll team members versus the number of employees they serve. When Webster Buchanan Research carried out a qualitative research study among multinationals last summer, we found huge variances in these ratios – ranging from 1:200 to 1:1000 in Europe, and going even higher (one to many thousands) in some US operations. With such large discrepancies – often between different country operations within the same company – deciding who’s really pulling their weight is a little like a bank trying to work out which securitized mortgages to hold onto.
In fact, you can only really make meaningful decisions if you weigh up the many different factors that impact payroll performance. The size of your employee base is clearly one of them, given that larger payroll functions by rights should benefit from greater economies of scale. But the nature of the workforce is equally important, since the mix of hourly versus monthly pay, the extent of overtime and the volume of joiners/leavers will all impact payroll complexity. On top of that, it’s worth looking at the degree of automation, how much payroll work is outsourced, the quality of initial data input and the nature of the payroll function’s responsibilities, which can differ from company to company.
The picture gets even more complicated when you compare payroll internationally, since different regulatory regimes and even country infrastructure issues can impact performance.
All of which explains last month’s launch of Webster Buchanan’s Payroll Performance Scorecard, a set of tools designed to help HR, payroll, finance and other senior executives get a better grip on how well their payroll team really functions. While the Scorecard was developed with members of Webster Buchanan’s Multi-country Payroll Forum, it works equally well for both national and international payroll set-ups. Starting with the core metrics typically deployed in payroll – including accuracy, timeliness, compliance, cost and quality of service – it outlines a number of additional metrics that give greater granularity, and then identifies ways to assess the impact of all the associated contextual factors.
Like benchmarks, the Scorecard doesn’t provide all the answers about your performance, of course, but it does provide some guidelines to help you get a fuller perspective.
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