Does Big Data mean big headaches for HR professionals?

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Posted:
Dec 9 2016

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When it comes to management information in payroll and HR, big data doesn’t have to mean big headaches. That’s the viewpoint of Oliver Shaw, CEO of Cascade HR.  In a recent feature for Global Payroll Association UK Magazine, he advised where the focus should lie if the two professions are to tackle the increasing challenges they face. If you missed the feature you can read it in full here…

Management information, people analytics, human capital statistics. Call it what you like, there can be no disputing the importance of ‘big data’ in the modern employment landscape. Whilst some have long dismissed it as nothing more than a buzz term, even the cynics have slowly grown to realise that a deeper insight into the workforce – plus a more evidenced understanding of workplace challenges, opportunities and trends – is rapidly shaping the evolution of our organisations.

Research from the likes of technology analysts at Forrester have gone some way to cementing this viewpoint. A recent report headline, for example, stressed the link between savvy HR analytics and bottom line business results. But that doesn’t mean payroll professionals don’t have a role to play.

Time and again I hear those outside of the industry wrongly proclaiming that the payroll profession is one that simply relies on a giant calculator. It’s funny really – those within the industry probably often wish the statement was true! But gone are the days when there are just a few basic sums to determine each month.

Not that those sums should be shunned. Not only is payroll an organisation’s single biggest strategic spend. Employees are also a business’s greatest asset, and there’s no surer way to ruin that valuable relationship than to mess up their remuneration. People don’t praise payroll departments when they’re paid correctly, but they’ll happily place them in the firing line if something goes wrong.

We only have to look at auto enrolment performance. The Pensions Regulator’s latest quarterly figures revealed a rise in compliance notices and fixed penalty fines for businesses falling short of the mark. The rate of non-compliance is reportedly in line with expectations, with some cases no doubt a result of dismissive ignorance and others a reflection of the complexities involved. Either way, it’s a difficult matter to tackle, with staging dates, movable eligibility assessments and the contributions themselves undoubtedly taking some getting used to.

That said, the law is the law. The pensions reform, just like RTI before it, changed the face of payroll. It brought new challenges. And these must now be understood, addressed and overcome. That ‘giant calculator’ has become more important than ever.

But, as odd as it may sound, there’s more to payroll than calculations. The profession is often seen as less strategic than HR, but that shouldn’t be the case.

The gender pay gap is one topic to have dominated the headlines in recent months, for example. Payroll professionals have the key to unlock analysis on this subject. They must ask themselves how average pay rates compare within an organisation, whether there is a difference and, if so, if the reasons for the gap can be evidenced and explained.

Payroll can directly influence recruitment and retention rates too. When the jobs market is vibrant, there is a risk that employees’ heads could be turned by vacancies elsewhere. Organisations must therefore take steps to proactively calculate what level of financial reward they can offer, if any, to thank and retain staff without stretching their salary budget too thinly. By analysing current salaries, investigating proposed pay rises and assessing the bottom line impact of various increases, different ‘what if’ scenarios can be modelled with ease, before any changes are actually made. Whether an incremental pay rise is proposed to the entire workforce, or a more notable reward given to high performers or individuals with rare skill-sets, payroll has the power to determine what is possible.

On the flipside, payroll has the ability to justifiably decline a pay rise too. There’s so much advice available to help employees ask for an increase, but little to help payroll – and business owners –respond to the requests. So, if a team member thinks they should be paid more, why not benchmark that individual’s remuneration data against comparable colleagues’? Detailed analysis of increments and intervals may even show that certain disgruntled staff are in fact among the best rewarded in the company!

Ultimately it’s about having a remuneration policy that works, before understanding and communicating the principles that underpin this.

How long does it take employees to progress through pay bands? Do slow-paced, point-style systems such as the Hay Guide contribute to an attrition problem among graduate recruits? Is a quiet employee, with a ‘middle of the road’ salary, in the middle of a band, being truly rewarded for their unswerving effort, or are they being overlooked in favour of bringing in a high earner who may fail to perform?

Once the analysis starts, there might be no stopping it! Can a business say hand on heart that its commission scheme truly works, for example? And, if a percentage pay rise is planned, should this be issued to all employees, across the board, or should commission-based team members be exempt from an uplift to their basic salary?

Of course it won’t be easy to find the answers to all of these queries, but there are no people better placed to uncover the necessary information than payroll professionals. They have the detail at their fingertips, if only they know what to do with it.

So where should payroll professionals start on their road to big data triangulation? Which metrics really matter, and will they ever attract attention in the boardroom?

  • The first piece of advice is to start small. Make a plan, understand what you want to achieve with your analysis and undertake the exercise, piece by piece. And, because time isn’t always on your side, lean on technology to reduce the administrative burden, streamline efficiencies and safeguard data accuracy.
  • Complete some basic analytics investigations that will add value to your payroll team, in the first instance. But, as your confidence grows, try to define an objective (or objectives) that will ultimately impact positively on the wider business.
  • Think about questions that directors don’t have the answers to. By unearthing the facts and proactively presenting the findings to the board, payroll (and HR) has the power to make senior management teams stop, listen and pay attention.

If you’re interested in finding out how Cascade HR could help you collate and analyse your business data, give us a call on 0113 230 8600, or book a FREE demo here.


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