on September 7, 2022 (last modified on September 9, 2022) • 11 minute read
Payroll is one of the most important business tasks to get right the first time.
It determines the capacity and well-being of your organization’s lifeblood — your employees. Plus, any payroll mistakes can set your company’s progress back as you try to make up for them.
A payroll metrics dashboard helps you stay on top of your processes to keep your organization’s finances running smoothly. Let’s talk about payroll performance, the metrics you can use to measure them, and which metrics you should prioritize on your dashboard.
Payroll performance is your organization’s ability to pay employees and manage their hours quickly, accurately, and cost-efficiently.
This measure is often subjective depending on your priorities. If you outsource your payroll, for example, you might weigh cost efficiency higher than speed.
When you have high payroll performance, you’ll have compliant finances, happier employees, and more efficient bookkeeping.
Payroll metrics are quantifiable measures you use to track your payroll performance.
When we talked to 25 different professionals about their payroll performance tracking, they voted on the importance of metrics such as:
Their top choices were productivity/effectiveness, employee leave, and overtime.
It’s also worth noting that you can categorize some metrics as KPIs — metrics that track progress toward your payroll performance goals. For example, if you want your employees to work as close to regular hours as possible, you might consider overtime a KPI to watch.
A payroll metrics dashboard is a visualization of multiple payroll metrics in one place. You can have as many of these dashboards as you want, so you can dedicate different dashboards to different aspects of payroll performance.
Here’s an example of a possible payroll metrics dashboard in a Databox template. The Harvest: Time report dashboard tracks metrics related to billable and non-billable hours in a single visualization.
We also asked the 25 professionals we consulted about their top picks for metrics to follow in your payroll performance dashboard.
They all work in small businesses, with 19 out of 25 working at businesses with 25 employees or fewer. 19 out of the 25 respondents manage their payroll in-house, and one respondent comes from a dedicated payroll/accountancy company. This trend indicates that many of the people we consulted have a high degree of ownership over their payroll.
Now that you understand the context our respondents come from, here are the 8 payroll metrics they consider important:
Payroll goes beyond the money you pay employees — it also touches on benefits you provide, like paid time off.
“In my opinion, as an employer, one of the most crucial metrics to include in the payroll dashboard is employee leave,” says Ben Grindlow of ProXpn. “This metric enables the employer to assess whether workplace improvements are necessary.”
Grindlow continues, “If the employee leaves keep increasing, the firm should have adjustments to improve employees’ productivity. A higher cost for employee leave is not cost-effective in any other way. If the expenses of employee absenteeism remain high, the business may experience issues in the near future.”
If you consider tracking employee leave as a measure of employee productivity, you could benefit from tracking other productivity metrics as well. You’ll get a good grasp on your productivity baseline and see how much leave employees need to stay productive.
When you pay an employee in training, you’re investing in a different kind of productivity than you are with an established employee.
SignWell’s Ruben Gamez suggests tracking training costs separately in payroll: “By measuring our training costs as they relate to payroll, we’re able to see the full cost of a new hire. We split the measures so we can account separately for how much time HR and trainers put into onboarding a hire from the costs of paying a trainee before they become a teammate that fulfills their role’s expectations without extra aid.”
Gamez says, “Though ample onboarding costs are somewhat unavoidable, we’ve been able to optimize our processes, improve the onboarding experience for trainer and trainee, and minimize our training costs. As the economy slows and industries continue to see labor shortages, it’s important for us to keep training costs low without sacrificing our team’s experiences.”
If you decide to monitor training costs through dedicated time entries, make sure you have a solid time tracking solution in place.
Project management is all about juggling: resources, expectations, people, data, and much more. And as a project manager, you not only have to know where your projects are at any given moment, but you also have to be aware of where they’re going and where they need to be in the future. To do that using a project management system, you need an actionable dashboard that allows you to monitor metrics like:
Now you can benefit from the experience of our project managers, who have put together great plug-and-play Databox templates showing the most important KPIs for tracking your team’s performance. It’s simple to implement and start using as a standalone dashboard or in management reports, and best of all, it’s free!
You can easily set it up in just a few clicks – no coding required.
To set up the dashboard, follow these 3 simple steps:
Step 1: Get the template
Step 2: Connect your project management tool with Databox.
Step 3: Watch your dashboard populate in seconds.
With so many respondents running payroll in-house, their finance teams have multiple responsibilities to manage. If you can relate, you might consider tracking your team’s time to run payroll to provide support as needed.
Circuit’s Fernando Lopez says, “Measuring the time to run payroll is a crucial metric that helps us determine whether our payroll is becoming too time-consuming and costly. It includes all the time our payroll team spends on activities related to ensuring our employees are paid the correct amount at the right time. If the time to run payroll starts to creep up, we look into automation and other solutions that can help streamline our processes, cutting labor costs and giving our payroll team extra time to dedicate elsewhere.”
Your payroll team’s ability to deliver the exact payments due to your team is one of the most important performance metrics to track. Even one incorrect payment can reduce employee morale and put you at risk for compliance issues.
Calculate your payment accuracy rate by dividing your number of incorrect payments by your number of total payments. If your payroll tool doesn’t include this metric, you can always add this measure as a custom metric.
“I believe the single most important payroll metric is the ratio between total revenue and total payroll,” Oran Yehiel from CFOservices.io advises. “As long as I have a healthy positive ratio, I know that my company is efficient in terms of creating value, and I probably have fewer areas of hidden unemployment.”
As you track this ratio in your payroll dashboard, you could try tracking other financial KPIs in a dedicated finance dashboard to see what goes into your revenue. You can also compare your revenue to payroll ratio to other ratios comparing your revenue to different areas of spending.
An “hours per month” metric tracks the number of hours each of your employees works every month.
When you keep an eye on this metric, you can identify which tasks take up a lot of time or which employees might need extra support. Once you know where your time is going, you can automate processes, train team members, or re-assign work as needed.
If you decide to track this method, try monitoring a time tracking dashboard alongside your payroll dashboard. Your time tracking data will break hours down by employee, making it much easier to find a solution.
With overtime affecting your employees’ energy and your bottom line, it’s definitely a contender for your payroll metrics dashboard.
“Overtime is an important metric on our payroll metric dashboard,” says Amber Morland from Softwalla. “Though there is great importance attached to making sure employees get compensated for the hours they put in beyond the stipulated working hours, it is equally vital to guarantee that technology issues or limited communication do not create excessive overtime costs, which may stimulate an inefficient working environment.”
Morland adds, “This metric help us focus on emerging trends in relation to overtime. When a department logs overtime regularly, it informs the human resource division of the need to consider taking steps such as reviewing employee workload or hiring more employees.”
Doug Marrone from App Store Apps explains, “As an HR professional, I prefer including overtime costs metrics in the payroll dashboard because they are numeric and quantifiable. Aside from its transparency, this metric lets the organization know if its employees are burdened with many workloads. The organization can identify strategies to increase employee satisfaction by understanding overtime expenditures.”
Marrone continues, “Awareness of your team’s current state can make employees feel valued. This is important because taking care of your employees can increase their productivity and build a more stress-free workplace.”
Morland and Marrone’s advice goes back to the importance of setting up a solid time-tracking process. You don’t need to go super granular with your time categories, but even a few distinct options will help you see where employees overwork.
As you track time and expenses in your payroll dashboard, do you ever consider that payroll itself is an expense? Your payroll metrics dashboard can help you get the most out of your payroll costs by tracking its expenses.
Nexus IT Group’s Travis Lindemoen says, “Payroll expense is the measure I plan to put in my payroll metrics dashboard, according to my judgment. One of the first things firms look for is cost, which is likely to be of greatest importance to your finance department. Running your payroll costs you a certain amount of money.”
Lindemoen continues, “It may be tough to evaluate your payroll costs without the most recent technologies, especially if you work in several countries with different currencies. Overtime spent fixing errors or re-running reports indicates that your payroll department may employ a more cost-effective and reliable payroll system capable of providing this level of information and automating reporting, which would allow you to examine your spending from an overall or detailed perspective.”
Alvaro Moreira from Moreira Team says, “As someone whose niche is financing, I always include the cost of payroll because payroll clerks are handling not one, but all of the employees’ payments. It takes boulders of time and effort to produce error-free, easy-to-digest metrics that the team needs at every cutoff. I pay attention to the cost of payroll because I need to foresee how much it would cost to create flawless payroll metrics so that the payroll clerks stay on the top of their game and, in turn, continue to provide purposeful efforts to the team. Otherwise, it may lead to burnout and general loss of interest, thus having a tendency to result in pay disputes, which we don’t want to happen.”
Are you interested in building your own payroll dashboard now that you know what metrics to add to it? You can give it a shot for free by signing up for Databox.
Our free plan lets you add up to three dashboards and three data sources to your account — plenty for testing your ideas. Then, once you’re ready to scale up, choose from three scaleable pricing plans.
Ask one of our friendly representatives how they can help you set up your first dashboard for free.
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