Using Benchmarks and Metrics in a Payroll Department

HR Resource
September 11, 2012 — 5,633 views  
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In the age of automated payroll processes and web based time card solutions, there is a lot to be said for using metrics and benchmarks to increase productivity. In order to understand how these two business critical applications can help increase performance, it’s important to understand what they are, and how they differ.


A metric exists as a type of duality. It is both a process that measures an aspect of a business process and it is the numeric result of that measurement. If a company wants to find out the number of timecards approved by supervisors after the due date, a metric is the tool used to find out. In common parlance, the resultant number is often also called a metric. A metric measures (and is a measurement of) where a business is.


A benchmark is a representation of the ideal, of where a company wants to be. It sets the goal for a process that the company will strive to meet. In the aforementioned example, if the number of late approvals is measured by a metric with the results of 47, and the benchmark for the company is 10, then the company can see where they need to make improvements, and begin instituting business process to increase efficiency and get the number down closer to the benchmark.

So why use Metrics and Benchmarks?

Metrics measure where a company is, and benchmarks tell the company where they want to be. Discrepancies between the two show and area that is in need of improvement and act as a catalyst for process improvement. When there is a range of metrics that measure and assess key points on a number of processes, which are then measured against the benchmarks for those points, a detailed plan of action can be drawn up that will address the metrics that need to be improved in the order that is most logical and most beneficial for the company. One metric may be further from its benchmark than another, but may not be affecting the bottom line as much. Process improvement is about priority as much as it is about overall efficiency.

What are some Payroll Metrics and Benchmarks to Consider?

The exact measurements a payroll department will need will depend on the department, their type and level of automation, company size etc. Below are a few standard payroll metrics to consider:

- How many days to resolve payroll issues
- Cost associated with payroll inquiry
- Cost per payroll payout
- Training costs
- Payroll processing time
- Time card approval

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