Issue link: http://www.e-digitaleditions.com/i/295251
[ 24 ] HRO TODAY MAGAZINE | APRIL 2014 Payroll a company's pay data—assuming it is high quality, accurate data—and learn all sorts of things," says Michael Custers, senior vice president of global marketing in the Atlanta office of NGA Human Resources, a global payroll BPO provider. According to Custers, payroll accounts for roughly 75 percent of most companies' total business expenses (just add up wages, payroll taxes, benefits, training, and so on). By comparing overall payroll costs to sales, profits, and other metrics in a particular region or across different job positions, companies can yield ways to generate more revenue per employee—increasing incentive pay where it will provide the biggest bang for the buck. "You can look beyond the transactional data into how your overall reward compensation strategy is actually performing," Custers explains. "There is a repository of amazing insight here." This repository can be the foundation for a company's talent management goals. By knowing that employees in a certain region are underperforming their peers in another region, even though the incentive compensation is the same across regions, it may indicate a need for more targeted employee training, better managers in a region, or a different rewards program. "If your payroll process isn't connected to other performance technology systems, you can't provide an effective performance-based rewards program," Custers says. "If the incentives aren't driving measurable performance, this can have adverse bottom line consequences." Like NGA, ADP also is mashing up payroll data with talent management information to produce pay-for-performance calculations for clients. The firm analyzes current payroll data and compares it to past statutory reporting periods to show clients how the mix of compensation is changing, i.e., base pay versus variable pay. These changes can be contrasted with corporate performance in a specific region to indicate whether monetary rewards or non-monetary rewards are more effective in driving profits. "It gets clients really excited when we show them we can do that," Weinstein says. CloudPay is similarly mining client payroll data to help clients ascertain the productivity of specific employee groups across different regions of the world. The Southbury, U.K.-based global payroll services provider compares the wages for a particular job position in, say, Budapest, to the revenue produced by the company in that country. It subjects other regions in which the organization operates to the same tests, and then compares the findings. "This information can guide vital decisions on where the company may want to grow and where it might want to pull back a bit," says Sheri Sullivan, CloudPay vice president of global business development. By further slicing and dicing this data for the client, it may discern a need to move skilled employees from one region to the next. It may even determine that particular nearshoring and offshoring labor decisions have run their course, and that more effective means of deploying labor are now required in different countries. "We can even compare the effectiveness of different types of employee benefits, by aggregating and integrating payroll data, benefits data, and performance data for comparison purposes," Sullivan says. "You could never do that before." What other nuggets of information are buried within payroll? A lot, it appears. Since payroll data often contains an employee's date of birth, ADP has been able to extract compelling findings suggesting that 19 percent of the U.S. workforce is nearing actual retirement age. "We don't mean the typical statutory age of retirement like 65 or 66 years of age, but the age at which many people actually retire, which is closer to 60," Weinstein explains. Perhaps best of all, specialized payroll providers can aggregate all of their clients' payroll data, and by applying unique algorithms, these data sets glean all sorts of industry-wide performance information. "A provider in a SaaS (Software-as-a-Service) environment can anonymize and amalgamate payroll data across many different companies in a vertical to obtain rich analyses on their overall (labor) costs versus performance," says Karen Paterson, CEO of global payroll services provider Acrede. "We can then extrapolate from these findings to provide value-added consultative services." Clouds Above the Globe The ability to provide this strategic value depends on the providers' global breadth, data analytics capabilities, and cloud-based platform. Fortunately, each of these is a trend in payroll services. Globalization of payroll is made possible by providers working with local client payroll staff and/or shared