Nearly Half of Organizations do not Track Payroll KPIs

Nearly half (49 percent) of all organizations surveyed admitted to not tracking key performance indicators (KPIs) in their payroll department. That’s according to a new survey from Kronos Incorporated conducted with the American Payroll Association.

The “Evolution of Payroll Technology Trendline Survey” polled nearly 1,000 payroll professionals from small, mid, and enterprise-size organizations across all industries. The findings suggest outdated, manual processes and legacy payroll solutions limit a payroll department’s ability to track and report KPIs and hinder their ability to keep up with today’s speed of modern business.

News Facts

Today’s work, yesterday’s tools: Many organizations rely on payroll solutions implemented before the great recession

o For nearly a third (29 percent) of survey respondents, their payroll solution is 10 or more years old – meaning it was deployed around the same time the world was being introduced to Apple’s iPhone for the very first time in 2007.

o Some respondents benefit from more modern solutions: just one out of every 10 (11 percent) use a solution deployed within the last year, while about a quarter (27 percent) use a solution that is less than three years old.

The pulse of performance: Legacy solutions likely hurt payroll’s ability to accurately track and measure business outcomes

o According to the survey, approximately half (49 percent) of respondents admitted that their payroll team does not regularly track and report on KPIs, a possible side effect of using such outdated solutions.

o For those who do track KPIs (51 percent), the most common metrics added over the last decade include measuring the impact of manual/voided/stopped payments (31 percent), payment errors as a percent of total payroll payments (23 percent), and total processing time per pay cycle (18 percent) – all of which are direct indicators of payroll performance and accuracy.

o Progressive payroll departments are also focusing on their impact on the employee experience: about one-fifth (19 percent) now measure the average time to service employee requests per day, week, and month. This is significant because a slow response to payroll requests has a direct, negative impact on engagement.

What keeps payroll professionals up at night: Changing business objectives will create significant challenges

o When evaluating their existing payroll solution, a quarter (25 percent) of survey respondents say merger and acquisition activity requiring the blending of two organizations presents the biggest difficulty to overcome.

o More common occurrences, such as annually evolving business goals (20 percent) and organizational changes, including new leadership or strategic direction (20 percent), are also viewed as obstacles due to their existing payroll solution.

o Widely regarded as experts in regulatory change, just 13 percent of payroll professionals are concerned with the impact their current solution has on their ability to manage new legislative rules and regulations.

Payroll’s wish list: Digital solutions that empower the entire workforce, whether hourly or salary, a manager or employee

o To make their own role more effective, payroll professionals want their next solution to have on-demand reporting and analytics (87 percent), seamless integration with time and labor management to improve data quality (81 percent), and the comprehensive ability to track multiple worker classifications (76 percent), such as seasonal and temporary employees in addition to full- and part-time.

o With an eye on the employee experience, an intuitive user experience (80 percent) and employee self-service (77 percent) scored highly as “must-have” features.

o Almost all survey respondents (90 percent) say a solution that grants security-access levels based on position is critical. This would empower others within the organization – such as finance, operations, or executive leadership – to incorporate payroll data into their own reports for a more complete look at performance without exposing sensitive employee personnel information.