Tracking International Payroll KPIs

Posted on 15 December 2022 by IRIS FMP

Categories: Global Payroll

When processing payroll in multiple countries with varying tax laws, pay requirements and reporting dates, the act of running payroll each period becomes a priority over creating efficiencies or progressing the business. However, for global companies, tracking key payroll KPIs can also be a hugely effective tool to improve the performance of your payroll, people and business.

Today, we’ll cover not only what to track in international payroll, but how to carry out this task, and why it is so important for you and your business.

What parts of global payroll can you track?

International payroll, unlike single-country payroll, has a variety of different measures that you can track and report on. For example, you can compare overtime paid out in different countries, look at efficiency against overall payroll cost and more.

There are many performance indicators that you can track with global payroll, including:

  • Effectiveness of payroll and workers
  • Cost of implementing compliance in countries
  • Impact of compliance on wages (new tax laws, for example)
  • Resource allocation
  • Cost of running payroll
Online team meeting to discuss KPIs

How to identify payroll KPIs

When identifying your payroll KPIs, you need to set goals that are both SMART (Specific, Measurable, Achievable, Realistic and Time-Based) and unique to your company.

If you have never reported on payroll performance before, then you will want to set up a dashboard of sorts, whether that is through manual or automatic input on a spreadsheet or database program. This way, you can begin to see where you may have gaps in analysis, and subsequently where targets can be met.

Once you have full visibility of all reportable metrics (think data broken down into different dimensions of the country, job role, employee type etc.) then you can begin to identify your KPIs. Having a scope of short-term, medium-term and long-term KPIs is always a good idea, as it allows you to consolidate progress over a longer timescale.

Your payroll KPIs could be:

1. Percentage reduction in payroll processing costs

A percentage reduction of payroll processing costs over a period of time indicates a smoother and more efficient payroll system. A reduction in payroll processing costs could be due to automation, the use of AI, switching payroll providers, or even fully outsourcing to an international payroll provider.

2. Reduction of errors in payroll processing

Errors take up a considerable time and cost to rectify. CIPP (Chartered Institute of Payroll Providers) estimates that 97% is the accuracy rate for manual tasks in payroll, but a 3% inaccuracy rate is still high, especially in large companies.

A reduction in errors not only saves time but can also save large sums of money. Payroll errors, depending on severity, can be huge in cost and impact a business and its employees.

3. Speed of compliance implementation

In multi-country payroll, there are numerous compliance changes from the region, country, economic group and more to regularly adhere to. The ability to pivot to meet new compliance demands can be taxing on a payroll team. As such, setting goals for the speed of implementation of new compliance helps to encourage more efficient processes and software usage.

4. Time to resolve payroll errors

Another key KPI to track is the time taken to resolve payroll errors. As payroll errors cost time and money to a company, reducing the amount of time taken on fixing errors is an indication of not only a qualified and competent payroll team but one that shows the lack of severe errors. You could track a reduction in the time spent error fixing here. Time-sheeting can help here but avoid micromanaging as this can cause employee attrition.

5. Number of payroll queries

Payroll queries from employees or those signing off the cost are often valid, but sometimes an increase of the same query shows a lack of explanation from a payroll team to employees. As such, a reduction in the number of payroll queries received per pay period suggests that the process is explained and easy to comprehend, as well as accurate.

Why track international payroll KPIs?

When operating globally, understanding payroll performance overall and by country or region helps payroll operatives to develop greater efficiencies, stakeholders to feel confident in the progression and scalability of the company and for directors to understand a part of the financial health of a company.

International payroll also has different work cultures attached to it. Whereas a country like Sweden is less likely to work overtime due to its culture, Asian countries like South Korea or Japan are more likely to work hours over what they are scheduled. If this overtime is put onto a timesheet, this can rack costs up quickly in different countries, as there are minimum payment percentages in many countries. By tracking payroll costs and setting a KPI to reduce overtime payments in certain countries, you can create a more reliable and even split of payroll costs per country.

How to track international payroll KPIs

While you could manually track payroll performance by hand, having technology on your side is a huge bonus.

Most modern payroll providers should have an easy-to-use global payroll dashboard or reporting system that enables you to see core payroll data. Once you have this data, creating a reporting dashboard showing data points related to your KPIs is a simple matter of employing an analytics specialist to organize this.

Then, at regular intervals, you can create a digestible report that can be shared with stakeholders and relevant managers.

Discover reportable payroll with IRIS FMP Global

Our managed payroll services can, on request, come with a global payroll dashboard that not only gives you full control but makes it easy to track core KPIs in whatever currency you use. Ask about our global payroll dashboard today.

We can help to make your global payroll more efficient, accurate and up to date. Get in touch today.