How important is this data?...Very Much! We looked at derivative studies and used four key performance criteria to distinguish the Best-in-Class from Industry Average and Laggard organizations. The four metrics reflect an organization's ability to reduce payroll errors, minimize inaccuracies, and improve business outcomes
1. Payroll Mistakes: In addition to the time and cost associated with redoing a pay check, there is a risk associated with the increased burden on HR and reduced employee satisfaction. Over the past two years the burden on HR, as has the case been with duties in most other job descriptions, has increased substantially. HR Automation and HRMS is slowly becoming the norm for wmployee management. Adding more manual workflows to the process due to payroll errors will impact HR’s productivity and its strategic impact to the business. Moreover, payroll errors also impact employee productivity and satisfaction as they work to address them with HR / payroll staff. Therefore, it is critical that time and attendance data is accurate in order to ensure employees are paid what they deserve and also ensure that there is no instance of payroll overpayment. This metrics is defined by the average percentage of pay checks that require redo every period.
2. Timesheet accuracy: This is defined by the per cent of time sheets that require modification on behalf of the manager or HR. When it comes to efficiency and the burden on the operational manager, modifying timesheets after creation to account for errors, addressing proven violations such as time theft or buddy-punching (not to mention consequent actions or reprimands), and working with HR on other related tasks, can be very time consuming. Accuracy is critical to maximize a payroll manager's time for, and attention to, the core competencies of the business. It also improves HR’s ability to focus on more strategic elements.
3. Paid time off accrual calculation and compliance: These two metrics are essential to the Best-in-Class definition. The third top-ranked factor driving investments in workforce management efforts is compliance. Since leave management, especially as it relates to paid time off / earned time off accruals and other regulation mandates (such as FMLA in the US), affects compliance, We decided to include these two indicators in its definition of the three maturity classes. Paid-time off accuracy is measured by the error rate in accruals, and compliance is measured by improvement in audit score over the previous period in which it was measured.
Other Metrics: Cost and Engagement
When used effectively with business performance data, time and attendance data can be used strategically to make better decisions that impact labour costs and payroll processing. It empowers the payroll manager with many advantages. Though not used to determine Best-in-Class performance, overtime cost analysis showed that capturing accurate time and attendance data does improve deployment decisions. Organizations that achieved top performance indicated that 6% of incurred overtime costs were unplanned versus 8% for all others. Another metric that respondents reported on was the change in manual transactions handled by HR as it related to time and attendances inquiries or cases. Best-in-Class organizations reported a 6% drop in this metric versus 1% for all others.
The last metric worth mentioning that correlates to timekeeping and leave management is engagement. Follow-up conversations with several organizations showed that they were faced with employee reports of unfair preferential treatment among managers in awarding certain employees with overtime hours, certain shifts, or time off. And as a result, employee engagement has suffered. We found that Best-in-Class organizations on average reported 70% engagement versus 39% for their counterparts. In fact, 83% of Best-in-Class companies in our study directly attribute positive changes in revenue to improved engagement.