Payroll Metrics You Should Be Measuring and Why

The role of the Payroll Department is starting to shift and evolve over the past few years as senior management begin to realise the value of their input at a strategic level of the business. They have the finger on the pulse of changing trends in relation to retention, salary projections, and capacity forecasting and should definitely have a seat at that decision-making table. In order for this value to be possible, the Payroll team needs to have the data to support their recommendations and this is where metrics tracking comes into play.

It is essential to keep track of metrics that can help measure the effectiveness and efficiency of payroll processes. By tracking the right metrics, businesses can identify potential areas of improvement, make data-driven decisions, and ensure compliance with laws and regulations. In this blog, we will discuss some of the key metrics that businesses should track for payroll and why it is important to do so.

Before we get into the metrics, you may ask, who should be tracking them? It is generally up to the Payroll Manager to decide who is responsible for gathering the data and whether that is them or whether they have someone with enough experience to be able to source and interpret the data on their behalf. A key consideration here is the accessibility of the data. Do your systems and software enable you to easily access this content and if not, do you need to look at upgrading as a priority to enable you to be more analytical and strategic?

Also, you will need to determine your sample criteria, and what timelines are you going to use for comparison and benchmarking. Typically, it would be monthly with a quarterly and annual report to the senior management but it is dependent on the payroll cycles that you operate on, the breakdown of salary v contractors, etc. This will be a decision that is made in line with the senior team as they will need the data based on the frequency that they meet to discuss strategic direction and progress.


Five Key Payroll Metrics to Track

Payroll accuracy

Payroll accuracy is one of the most important metrics that businesses should track. This metric measures the number of errors that occur during the payroll process. Errors can include incorrect salary calculations, missed payments, and incorrect tax withholdings. High levels of payroll accuracy indicate that a business is effectively managing its payroll process, which can help reduce the risk of legal issues and employee dissatisfaction.

Payroll costs

Payroll costs refer to the total cost of paying employees, including salaries, benefits, and taxes. Tracking payroll costs can help businesses identify areas where they can reduce costs, such as reducing overtime or benefits expenses. It can also help businesses plan their budget and ensure that they are allocating their resources efficiently.

Time to process payroll

Time to process payroll is the amount of time it takes to complete the payroll process. This metric measures the efficiency of the payroll process and can help businesses identify areas where they can streamline the process. By reducing the time it takes to process payroll, businesses can reduce the risk of errors, improve employee satisfaction, and increase productivity.


Compliance is another important metric that businesses should track for payroll. Compliance refers to the degree to which a business complies with laws and regulations related to payrolls, such as tax laws, labor laws, and benefit regulations. Failure to comply with these laws can result in legal issues, fines, and damage to the company’s reputation. By tracking compliance metrics, businesses can identify potential areas of non-compliance and take steps to address them.

Employee engagement

Employee engagement refers to the degree to which employees are committed to their work and the company. Tracking employee engagement metrics can help businesses identify areas where employees are dissatisfied, such as with their pay or benefits. By addressing these issues, businesses can improve employee satisfaction and retention, which can ultimately lead to increased productivity and profitability.

In conclusion, tracking payroll metrics is essential for businesses of all sizes as what gets measured gets managed! The metrics discussed in this blog are just a few examples of the many metrics that businesses can track for payroll. By focusing on these metrics and continuously monitoring them, businesses can improve their payroll processes, reduce costs, and improve employee satisfaction.

If you want to speak to one of our payroll advisors about how to set up your metrics monitoring or what you should be tracking then don’t hesitate to get in touch.


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