The term "big data" materialized in 2005, when technology expert, Roger Magoulas, encountered challenges processing a vast dataset using traditional business intelligence solutions. As a result, companies have since relied on specialized tools and data analysts to analyze data, leading to improved customer relations, sales, and operational efficiency.

The emergence of big data has presented the most significant opportunity for marketing and sales since the widespread adoption of the Internet two decades ago. The explosion of data has provided insights into various topics, including customer behavior, weather patterns, and emerging market demographics. It is clear that companies that can leverage data to achieve above-market growth excel in three critical areas:

• Utilizing data analytics to discover profitable business prospects and facilitate informed decision-making, thereby augmenting marketing return on investment (MROI).
• Transforming the acquired knowledge into meticulously crafted products and offers that satisfy customers.
• Efficiently bringing these products and incentives to the market.

The goldmine of data available to marketing and sales leaders represents a critical juncture.

Companies integrating big data and analytics into their operations experience higher productivity and profitability, surpassing their peers by 5 to 6 percent.

This advantage is too valuable for any company to ignore.

Considering the current situation where a significant number of employees are quitting their jobs, it is crucial to leverage the potential of data in human resource decisions. The principles of employee value proposition (EVP) management are outdated and in need of revision. Many organizations still rely on short-term tactics to address long-term systemic challenges associated with the future of work. It's time to reassess and adapt to the changing landscape.

The upcoming changes in the future of work call for a departure from relying solely on gut instincts and conventional practices that have been employed for years. Companies must adopt a more analytical approach to managing their human resources to stay ahead of the competition. With increasing globalization and industry demands, data-driven HR decision-making has become vital to organizational success. Through predictive analytics, companies can obtain valuable insights into workforce dynamics, enabling them to make informed decisions that boost business performance. Join our session below to learn about data-driven HR, how to draw actionable insights from data, and ten critical steps to build a data-driven HR strategy.

What is data-driven HR? 

Data-driven HR is a methodology that utilizes data and analytics to aid in decision-making processes within the human resources domain. This approach enables HR practitioners to make better, impartial, and tactical decisions that significantly impact different facets of the company and address challenges related to talent management. The first step in this process is to gather pertinent information by conducting surveys, assessments, evaluating metrics, and utilizing predictive analytics around some areas, such as:

• Performance
• Learning and development
• Turnover
• Engagement
• Workforce demographics

Once you have enough data to evaluate, identifying patterns and trends based on this data serves as the basis for strategic decision-making to drive business success. In addition, this approach enables organizations to create solutions for foreseen obstacles proactively.

Also Read: Top Four Trends in Performance Management in 2023

Drawing actionable insights from the available data

Employers have an untapped repository of employee data that largely remains unexplored. Moreover, organizations find it challenging to extract actionable insights from this data. Here are a few examples where data analysis can uncover both strengths and weaknesses within the workforce, enabling HR teams to make decisive actions that benefit their employees and the business.

• Attracting and retaining talent

  If the data exhibits that your organization is experiencing high employee turnover rates or struggling to recruit top talent, a possible solution could be to develop customized total rewards statements. This approach enables HR teams to showcase the concrete benefits that the company provides, which helps candidates and current staff have a better understanding of their overall compensation package value.

• Benefits utilization

  If the data indicates that your employees are not utilizing the benefits offered by your company, further investigation may be necessary to determine whether the issue is due to poor communication or a genuine lack of interest in certain benefits. To address this, your HR department may consider reallocating resources and funds to better meet employees' needs and preferences or revising communication tactics to encourage greater engagement with the benefits program.

• Debt load and savings rates

  If the data shows that your staff members have student loan debts exceeding the national average or a particular group of employees is facing difficulties creating emergency funds, it may be beneficial to consider providing student loan aid or arranging emergency savings accounts for your employees.

• Retirement readiness

  If employees postpone their retirement, it could result in a substantial expense of up to $50,000 per employee per year for businesses.

  If the data analysis shows that your employees are not readily accepting retirement options, you can provide personalized retirement education or early retirement programs with added incentives.

• Diversity, equity, and inclusion

  If there are different financial prospects for various employee groups in your organization, it is advisable to closely observe how the offered benefits are being utilized to ensure that they meet the diverse needs of your employees. Additionally, keeping track of hiring and promotion policies would be beneficial in ensuring they are equitable. Employers can examine the conduct and requirements of their employees based on factors such as age, gender, race, ethnicity, disability, or other demographics to identify potential discrepancies and opportunities for improvement that may not have been previously recognized.

How do you build a data-driven HR? 10 key steps to build a data-driven HR strategy

• Define a business problem

  Gathering data without a defined objective can lead to unfavorable consequences. For instance, you may find yourself inundated with figures that you cannot utilize effectively. Therefore, it is advisable first to identify a particular challenge or aim to focus on. This strategy guarantees that your people analytics endeavors will generate meaningful outcomes.

  In addition, instead of commencing with an HR-related matter, such as decreasing employee turnover, consider enhancing overall business earnings or quarterly revenue. Establish a larger business objective and determine the necessary measures to accomplish it.

• Create a basic hypothesis before examining the data

  To ensure accurate and valuable insights from data analysis, it is important to begin by creating a hypothesis based on a specific problem or goal. Rushing into data analysis without a clear hypothesis can lead to misleading or incomplete conclusions. Hypotheses can be developed through various methods such as surveys, round tables, or forms. For example, a hypothesis such as "improving career opportunities and transparency in career advancement reduces employee turnover" can be tested through data analysis. This approach of incorporating human aspects into people analytics through hypothesis testing helps to validate assumptions and generate meaningful insights.

• Collect data

  To start with, assess your current data sources and determine if you have gathered feedback from various channels, such as pulse surveys, 360-degree feedback, or exit interviews, to gain comprehensive insights. If you have overlooked any important feedback sources, it's crucial to include them to ensure that you obtain a complete picture. Furthermore, it's essential to collect diverse data types to eliminate potential biases and increase the accuracy of your analysis.

•  Analyze data

  Look for evidence in your data that supports or disproves your hypothesis. When reviewing your data sources, it is important to search for patterns and connections between different variables. For example, you might explore cause-and-effect relationships, such as the impact of changes in hiring practices on employee retention rates. You can consider different analytical techniques, including:

  • Text analytics: This involves analyzing large amounts of text data, such as emails, surveys, job applications, or performance reviews, to extract relevant insights.
  • Predictive analytics: By leveraging artificial intelligence and historical data, you can estimate the likelihood of future events or trends.
  • Voice or speech analytics: Analyzing audio recordings can help you identify the main topics discussed or the tone and words used by speakers.
  • Video analytics: Using CCTV footage, you can gather useful information, such as whether your construction crew follows safety regulations by wearing appropriate gear.
  • Image analytics: This technique uses pattern recognition to extract information from images or graphics.
  • Sentiment analytics: Combining text analytics and other methods, you can better understand your employees' overall attitudes and experiences.

• Count on historical data

  To establish a baseline for measuring progress and identifying trends, organizations must rely on historical data. HR leaders can make evidence-based decisions and identify actionable insights by utilizing various pre-existing HR metrics such as compensation history, turnover rates, and employee engagement. By analyzing this data, companies can identify patterns and trends, allowing them to make informed strategic decisions.

• Reveal insights

  Having access to abundant data doesn't always mean having valuable insights. Therefore, it's important to transform collected data into meaningful insights that provide solutions to strategic questions and contribute to achieving strategic objectives. To do so, it's important to present the data in a way that appeals to different learning styles. This can be done by creating a narrative that incorporates visual aids such as charts, pictures, or videos to support the statistical evidence presented. Additionally, consolidating information into a centralized source can help organizations detect trends and identify areas for improvement.

• Make an HR bid to enhance the business situation

  Start by analyzing the data to gain insights into a specific business problem or opportunity, such as identifying a key talent pool that can drive sales growth. Next, use these insights to develop a comprehensive HR strategy that aligns with the organization’s overall goals and objectives. It is essential to engage stakeholders in the decision-making process to secure their support and ensure the strategy's success. By using data-driven decision-making, HR can demonstrate the value of its contribution to the organization and drive positive business outcomes.

• Understand cultural nuances

  Cultural differences can affect how job candidates engage with potential employers and the criteria they use to evaluate desirable metrics. Therefore, it is essential to consider cultural nuances to avoid misunderstandings and misinterpretations of data sets. HR professionals should be mindful of these differences and strive to create an inclusive and diverse recruitment process that considers cultural factors.

• Always tell a story

  To create a persuasive argument based on data, it is crucial to construct a coherent narrative that provides context for the numbers. Develop concise presentations that illustrate the proposed solution as a result of the insights gained from internal research. Use storytelling techniques, such as using anecdotes or case studies, to make the data more relatable and engaging to stakeholders. This approach can help build support for the proposed solution and increase the likelihood of its successful implementation.

• Make a data-driven HR mission and vision statement.

  The HR strategy's summary and guiding principles are encapsulated in the mission and vision statements, which act as a guiding light for all future policies and decisions. Therefore, it is crucial to make a data-driven HR mission and vision statement that incorporates insights gained from data analysis. This approach will ensure that HR initiatives are aligned with the overall business objectives and that data-driven decision-making is at the core of HR practices.

Wrapping up! 

To effectively support employees' needs, HR should adopt a proactive approach, and leveraging data is crucial to achieving this goal. Organizations should prioritize investing in data and analytics to equip their HR leaders with the necessary insights to drive measurable business impact. With real-time insights, HR teams can create specific strategies that enhance employee well-being and drive business performance.

Exela HR Solutions, a leading firm specializing in HR outsourcing, provides a data-driven approach to tackling HR challenges. Our team of experts can assist you in navigating the complexities of HR by delivering reliable and assertive solutions. Contact Exela HR Solutions now for all your HR needs.

DISCLAIMER: The information on this site is for general information purposes only and is not intended to serve as legal advice. Laws governing the subject matter may change quickly, and Exela cannot guarantee that all the information on this site is current or correct. Should you have specific legal questions about any of the information on this site, you should consult with a licensed attorney in your area.

As we mark the third year since the emergence of COVID-19, its impact on employee behavior patterns and the future of work continues to be felt. Despite the unprecedented challenges organizations face, such as an exhausted workforce, a competitive talent landscape, and pressure to control costs, employees appear to have achieved some of their desired outcomes. Currently, 51% of knowledge workers in the U.S. are working in a hybrid work mode, while 20% are still working remotely.

However, employees have also expressed a desire for more meaningful feedback to increase their engagement with their work. This is where companies need to revamp their strategies. To meet the needs of employees for better performance and feedback, organizations need to evolve their performance management strategies to retain and engage employees in the current year.

As we move into 2023, HR trends indicate a continued focus on employee experience and well-being in response to high levels of burnout, turnover, and low engagement. As a result, it has become crucial to measure and analyze the effectiveness of your performance management strategies. A data-driven, employee-first approach to performance management can help organizations prepare employees for their future with the company and stay competitive as an employer. In this article, we will take a closer look at the performance management trends likely to be followed in 2023.

Top four performance management trends in 2023

Effective performance management is a crucial factor in any organization's success. It involves managing employee performance and development through various methods, such as goal setting, feedback, and coaching. Given the constantly evolving business landscape, performance management trends are continuously changing. In this article, we will explore the top performance management trends likely to be followed in 2023 and reshaping the HR industry.

From employee analytics and artificial intelligence to automation and continuous feedback, these trends are poised to revolutionize performance management practices in the coming years. So, let's delve into these compelling trends that will drive the future of performance management!

1. Market Shift and Growth

   81% of HR leaders are transforming their performance management systems.

   Market shifts and growth are driving HR leaders to transform their performance management systems, as evidenced by 81% of them taking action in this area. However, less than a fifth of these leaders feel that their current performance management systems are thriving. This suggests that a fundamental shift in performance management is imminent. Companies have realized that their current processes are outdated and ineffective, but they are unsure of what their next steps should be. As a result, experimentation is likely to be a major performance management trend.

2. Adios, annual review!

   Annual performance reviews are a critical component of performance management in several organizations. These reviews enable managers to provide feedback to their employees on their performance over the past year, to set goals for the coming year, and to discuss career development opportunities.

   However, one of the main issues with traditional annual performance reviews is that they can be incomplete and unfair, potentially harming company culture and employee experience. In fact, 85% of employees have stated they would consider quitting their job after an unfair review. Consequently, more companies are moving towards different ways to evaluate performance, adding perspective, frequency, and context to their assessments. Here are a few ways organizations are managing employee performance outside of the annual review:

   • Organizations include feedback from peers and other stakeholders through 360-degree assessments to promote fairness and harmony in employee reviews.
   • Project-based appraisals enable timely recognition and rewards.
   • Regular one-on-one meetings between employees and their managers on a weekly basis provide continuous feedback and support for growth.
   • Setting clear goals that align with organizational objectives to help clarify expectations and encourage employees to perform at their best.

   HR leaders are transforming the system by replacing the annual review with ongoing 360-degree feedback and coaching, allowing employees to keep track of their review journey and stay motivated.

Also Read: Performance Management System: Basics and Benefits

3. Crucial conversations? You aren't in a shtook!

   It's hard to accept, but many of us still avoid having crucial conversations. However, these conversations are not as daunting as they sound, certainly not as daunting as annual reviews. Nevertheless, if you are avoiding difficult conversations at work, you are not alone.

   Research shows that 80% of employees procrastinate on necessary yet difficult discussions, while 40% put them off for six months. Additionally, 40% of employees say their manager fails to engage in honest and crucial conversations about work, which leads to disengagement.

   Good communication can solve half the battle straight away. Here is a guide to six crucial conversations that HR managers can have with employees to provide constructive feedback and facilitate growth in the company.

   • Performance Planning Conversation:

     This conversation is held at the beginning of the performance cycle to establish clear performance expectations and goals. The manager and employee discuss the employee's role, responsibilities, and performance expectations. Moreover, it covers key performance indicators and how progress toward specified goals will be measured.

   • Check-in Conversation:

     It is held regularly throughout the performance cycle to provide feedback on progress toward goals, discuss any challenges, and adjust plans as necessary. This conversation focuses on identifying any obstacles and providing support or resources to address them. The check-in conversation helps employees stay on track with their goals and enables managers to offer timely feedback and support to improve performance.

   • Feedback Conversation:

     It is held to provide feedback on specific behaviors or outcomes related to performance. The conversation is focused on constructive feedback that is clear, timely, and actionable. The purpose of the discussion is to help the employee improve their performance.

   • Performance Evaluation Conversation:

     This conversation is held at the end of the performance cycle to review the employee's performance over the past year. The manager and employee discuss strengths, areas for improvement, and any goals achieved or missed. The conversation also covers the employee's development plan for the next performance cycle.

   • Career Development Conversation:

     This conversation is held to discuss the employee's career aspirations, interests, and goals. The manager and employee explore opportunities for development and growth within the organization. Moreover, this conversation may include discussions about job rotations, mentoring, training, and other development opportunities.

   • Coaching Conversation:

     It supports the team members in achieving their goals and improving their performance. The manager and employee work together to identify areas for improvement and create an action plan for development. The conversation is focused on providing support and guidance to help employees achieve their full potential.

4. People Analytics - obligatory!

   In recent years, organizations have increasingly turned to data analytics for making crucial business decisions, and this trend has now extended to the field of human resources. As a result, people analytics, or data and analytics to better understand and manage employees, has become an essential tool for HR professionals.

   One area where people analytics has a significant impact is performance management. By using data and analytics to measure and improve employee performance, organizations can better align individual goals with company objectives, identify areas for improvement, and develop targeted interventions to support employee development. Additionally, people analytics helps understand employee behavior, including what went wrong, the reasons behind it, what could be done to avoid similar situations, and best practices to achieve expected goals.

   Analytics enables HR teams to make more informed, data-driven decisions and empowers team members to reach their full potential. For instance, if your performance analytics exhibit discrepancies, you can investigate to determine the following:

   • Is there any specific reviewer who is giving low ratings?
   • If yes, then why are they doing so?
   • Are the employees lacking somewhere? Do they need additional support or resources to perform the concerned task?
   • Are your managers well-equipped and authorized to manage and evaluate the workforce?

   All these shenanigans are just to ensure nothing but a bias-free performance review based on people analytics.

Conclusion

Performance management is an ever-changing field that adapts to the evolving needs of organizations and their employees. As we look forward to 2023, several key trends are expected to shape the future of performance management. These trends include a greater emphasis on continuous feedback and coaching, the use of data analytics to drive insights and decision-making, and the adoption of more flexible and personalized performance management approaches. By embracing these trends and remaining attentive to the needs of their employees, organizations can create more effective performance management systems that drive engagement, productivity, and growth.

If you are still striving to align your employees and managers and establish a bias-free performance management system, you may benefit from an HR outsourcing solution. Exela HR Solutions is a market leader in HR outsourcing and can assist in establishing a sound performance management system for your organization. Get in touch with Exela HR Solutions today for all your HR needs!

DISCLAIMER: The information on this site is for general information purposes only and is not intended to serve as legal advice. Laws governing the subject matter may change quickly, and Exela cannot guarantee that all the information on this site is current or correct. Should you have specific legal questions about any of the information on this site, you should consult with a licensed attorney in your area.

The primary function of any business is to generate revenue and profits. Human capital is crucial for revenue generation, and customer satisfaction depends on the value an organization provides to them. Therefore, employees play a vital role in achieving these goals.

Given the importance of employees, it is essential to ensure that they feel valued, happy, and satisfied. One way to do this is by giving them clear directions on how to grow and develop within the company. First, however, let's take a broader look at this concept.

To succeed in a company, employees need to perform well. This makes it essential for organizations to provide them with the necessary training and coaching. Performance management plays a critical role in the structure of an organization, as it enables companies to give employees precise feedback, communicate performance expectations, and measure performance metrics. A well-designed, organized, and relevant performance management system is at the core of a successful process for channeling employee engagement, focus, and value.

Therefore, organizations must have an effective performance management system in place. With it, companies can provide accurate employee feedback and set clear performance expectations. Here's a brief breakdown of the basics and benefits of a performance management system.

What is a performance management system?

The performance management system, a systematic approach to measuring employee performance, enables organizations to align their goals, mission, and objectives with available resources, strategies, and set priorities. The execution administration framework performs the necessary procedure that characterizes and conveys the activity parts, duties, goals, execution desires, and setting requirements between the administrator and employees. In addition, it includes the shared objectives and targets between the office, association, and representatives that are lined up with assets and frameworks. In a nutshell, it acts as a channel for clarifying goals and enhancing business processes through different mechanisms and methods.

Purpose of Implementing Performance Management System

The primary objective of establishing a systematic performance management system in an organization is to manage employee performance effectively. Here are six primary purposes that a performance management system serves:

• Strategic Alignment

  A performance management system should align with the organization's overall, individual, and departmental goals. This helps ensure that every employee's activities are linked to the organization's strategic objectives.

• Administrative Support

  The performance management system is a deciding factor for administrative tasks such as employee promotion, demotion, transfer, salary increment, and terminations. It helps identify the organization's best performers, underperformers, or non-performers, as well as the competency and skill levels of employees. This information supports management decisions.

• Communication

  The performance management system provides an effective communication channel to inform employees about their job responsibilities, goals, performance standards, and key deliverables. It also indicates areas for improvement and provides a platform for learning and training new skills to improve employee performance and results.

• Development

  The performance management system provides a structured method for communicating positive feedback, development plans, and improvement areas. In addition, managers can use coaching, mentoring, training, and other methods to help team members perform exceptionally.

• Organizational Maintenance

  The performance management system helps measure organizational, employee, and departmental achievements and evaluate performance gaps using different techniques and tools. This helps maintain a healthy environment and performance standards in the organization.

• Documentation

  The organizations must document and maintain the feedback, reviews, forms, and assessment sheets. These documents help businesses clearly understand what worked best and what went wrong, set new targets, design training and learning programs, and determine developmental needs.

Also Read: 10 Critical HR Metrics to Measure in 2023

Building a Successful Performance Management System

Continuous feedback is a significant cornerstone in performance management. Yet many organizations fail to develop a successful performance management system.

Only 2% of organizations feel their performance management approach furnishes excellent value.

That's a lot of room for improvement for the other organizations. Thus, here are a few key elements that will allow you to improve the quality of your performance management systems.

• Accuracy and Fairness

  The system must be accurate and fair. It is difficult for managers to gauge employee performance accurately or comprehensively. Measuring an individual's performance needs multiple perspectives since various job roles require different skills and capabilities. Thus, having a standard process won't always help - you need to employ accurate and fair approaches to gauge employee performance.

• System efficiency

  The system must be efficient. Inefficient processes can take excessive time and end up detracting from performance instead of elevating it. The performance management system should be more than just a flurry of paperwork to help managers make more sound decisions.

• Performance improvement

  The traditional performance management system ensures that employees meet the minimum performance requirements. However, it's time to look at the potential upper limits. An effective system links employee performance to the organization's strategic objectives and current initiatives. In addition, the system should focus on integrating a culture of taking responsibility and making the foreseen change happen.

• Compensation decisions

  Compensation decisions are indirectly linked to performance management. Giving raises, cutting down on bonuses, or providing additional rewards should solely rely on the performance analysis. If your organization isn't providing competitive pay, the performance management system is of no use. In order to make your performance management lead the path of success and advancement, align compensation decisions with it.

• Multiple sources of data

  Having a single data source can drive the results only in one direction. To have an all-inclusive view of your employee performance, extricate data from different sources. You can take the help of multi-rater feedback. Empower managers to get bias-free opinions and collect accurate data, allowing the system to evaluate accurate performance.

• Coaching and development

  The system should incorporate formal coaching and development skills, allowing employees room for improvement. Recently implemented performance management systems with great results have one common element - frequent coaching conversations. However, providing feedback and coaching doesn't come naturally to everyone - managers need to acquire these skills through certain methods such as:

  • Having a clear understanding of outcomes pursued from coaching conversations.
  • Understanding the required action steps.
  • Observing other’s coaching correctly.
  • Practicing the coaching and development skills until you gain confidence and competence in using them in real scenarios.

How can a performance management system benefit your organization?

Here's how a performance management system can benefit your organization:

• Improves employee performance by giving them a clear understanding of their KRAs and goals.
• Empowers organizations to overcome their skill gaps by highlighting the essential skills that employees possess and where they are lacking.
• It makes the process employee-centric by giving them the leverage to provide feedback and subsidizing rewards and recognition.
• Enables human resource managers to make bias-free and fair performance decisions by giving them the leverage to analyze different aspects of employee performance.
• Relieves HR professionals from the administrative burden of running performance reviews and takes the burden off executive teams by automating the entire process.

Conclusion

The performance management system needs remodeling to serve the organizations better. It should incorporate new processes that take advantage of feedback to emphasize the future instead of crying over the mistakes in the past. The system must explore the upper boundaries of performance rather than measuring against the minimum. To have exceptional results, remodeling the system must preserve the positive elements of past approaches to achieve performance management goals.

If you are still unsure of how to gauge employee performance correctly, take the help of a good HR outsourcing solution. Exela HR Solutions is a market leader in HR outsourcing that helps with your all-inclusive HR processes to meet desired organizational goals and thrive in the modern business world. Speak with our experts at Exela HR Solutions today!

DISCLAIMER: The information on this site is for general information purposes only and is not intended to serve as legal advice. Laws governing the subject matter may change quickly, and Exela cannot guarantee that all the information on this site is current or correct. Should you have specific legal questions about any of the information on this site, you should consult with a licensed attorney in your area.

In today's fast-paced business world, HR professionals make strategic decisions about the company's success and future growth - knowing what's working best for the company and where to infuse future efforts. However, it’s not the HR professionals alone – they always work with other departments, and the collaboration goes both ways.

88% of CFOs reported collaborating with HRs weekly, biweekly, or monthly.

While 57% of CFOs stated they coordinate with their HR counterparts to streamline processes efficiently.

The collaboration makes sense as CHROs and CFOs share several business objectives. These two functionalities work together across several verticals, including business and growth strategy, benefits and rewards, and compensation management. Employee data supports this collaboration by providing facts and figures, assisting HR to have a better understanding of the problem areas before they cost the company talent or money. However, collecting this data can be more challenging than it seems.

According to research, only 3% of surveyed 6,300 executives said they had the data to make sound people decisions.

If you are also amongst those not having sophisticated HR technology or HR data analysts, you can still measure key performance indicators (KPIs) or metrics to assess data and make more informed data-driven decisions. Dive in below to learn 10 critical HR metrics in 2023.

10 Critical HR metrics in 2023

HR metrics demonstrate the values that specify the effectiveness of your human resource initiatives. Once you have set critical goals for your HR needs, you can use HR metrics to take a data-driven approach to assess and track the challenges and progress. Here are 10 crucial HR metrics you must measure in 2023.

1. Cost per Hire (CPH)

   This old-school HR metric is still the same and relevant in 2023. CPH (Cost per Hire) demonstrates the average spending on acquiring a new employee. As with any per capita figure or any value per person, a value can be determined by simply dividing costs by the number of persons in question. For CPH, divide the total hiring money by the total new hires within a specific period.

   HR departments worldwide have long relied on the CPH as one way to gauge the hiring process's efficiency. One reason is that the process is more descriptive than just adding up expenses. Moreover, the metric incorporates the costs incurred by outreach to all potential employees. This may seem counterintuitive, but it's less variable and more illuminating in cost-effectiveness. In addition, more practical to calculate.

2. Time to Hire

   This is another essential HR metric that measures the time required to engage a potential employee in the recruiting process to accept the position. Similar to CPH, time to hire is expressed as a per-person average and used to evaluate the efficiency of the talent acquisition process. If you are encountering a lengthy time to hire, it is a signal of poor reach or the underperformance of the hiring teams. Unfortunately, many HR professionals need more consistency in defining the start of the time-to-hire period. The time to hire differs from the time to fill - it begins when an organization makes an initial job request and ends when a candidate accepts the position.

Also Read: 4 HR Trends Revitalizing HR Operations in 2023

3. Quality of Hire

   Quality of hire is a super-metric exhibiting different employee metrics (often called indicators). The selection of these indicators varies according to the different goals involved. For instance, while the cost per hire and time to hire focus on the efficiency of the recruiting process, the quality of the hire tries to exhibit the value an employee brings to a company. You can calculate the quality of hire by simply adding the values from whichever employee indicators are being used and dividing the result by the total number of indicators being used.

4. Employee Net Promoter Score (eNPS)

   Employee net promoter score (eNPS) shows how likely a group of employees would recommend employment with your company to others. It is relatively easy to measure and indicates reasonable overall employee satisfaction. Employers can carry out a survey asking employees to choose, on a scale from zero to ten, how likely they are to recommend your organization to others. For calculation, employees rating nine or ten are categorized as 'promoters,' employees rating seven or eight are categorized as 'passives,' and those rating a six or below are 'detractors.' To calculate an eNPS, the general formula asks to subtract the number of detractors from the total promoters, divide the result by the total number of respondents, and multiply the final result by 100.

   An eNPS score of 40 to 50 is considered excellent, any score above 20 is considered good, and the range of 10 to 20 is fair. Any score below ten indicates serious workplace satisfaction issues. To know the scope for improvement, you can also incorporate an option to add comments to understand better what is driving the dissatisfaction or satisfaction.

5. Absenteeism Rate

   Absenteeism which refers to employees' unscheduled absences from work, can have a variety of reasons. These may include employees' challenges with commitment, workplace dissatisfaction, and poor health and overall well-being. However, irrespective of the reason, it is crucial for HR professionals to collect attendance data to evaluate the costs and patterns of missing days for a better understanding of employees' needs.

   The basic formula to calculate an absenteeism rate requires dividing the number of unexcused absent days by the total number of expected workdays within any set period and multiplying the result by 100.

6. Employee Growth Rate

   Employee growth rate - also called company growth rate – indicates the company’s number of employees growing or shrinking. This HR metric illustrates the change over a certain period – perhaps a year, a quarter, or five years – by using a headcount at the start and end of the period (Point A and B resp.).

   To calculate the employee growth rate, subtract the headcount at Point A from the headcount at Point B. If the result is negative, there is a net loss in employees. Divide the result by headcount at Point A and multiply the figure by 100.

7. Employee Turnover Rate

   The employee turnover rate (ETR) demonstrates the number of employees who resign within a given period – perhaps a month or a year. The figure is simply a ratio comparing the number of employees leaving the company to the total employees. Employee turnover rate can be calculated by dividing the number of employee releases by the number of employees at the outset of the period in question. Then, multiply the outcome by 100 to get the percentage.

8. Salary Averages

   Salary averages are generally used to describe relative compensation for nearly any category within an organization. This HR metric incorporates subgroups of an organizational structure, such as different departments or position levels. To calculate salary averages, start by adding up the salaries of employees in a specific group and then divide the result by the total number of employees in that group.

9. Salary Range Penetration

   Salary range penetration illustrates how well an employee is being paid compared to the determined salary range for the position. Consequently, there may be multiple reasons behind an employee being at the high or low end of the anticipated salary range. From an HR perspective, the critical part is ensuring appropriate reasons for employee variance.

   To calculate this HR metric, start by identifying the minimum and maximum values for the estimated salary range for the concerned position and subtracting the range minimum from the employee's existing salary. Then, divide the result by the difference between the range maximum and minimum and multiply the figure by 100.

10. Diversity Ratios

    Diversity in the employees can exhibit many things – though the terminology generally implies the employees with varied gender, cultural and racial backgrounds, to name a few. Organizations are increasingly pushing to incorporate diversity, equity, and inclusion (DE&I) terminology in their hiring processes and organizational culture; thus, it is crucial to have genuine estimations of the company's performance to back up the initiative. It often begins with calculating employee diversity ratios.

The bottom line

Having employee data or metrics handy is half the battle achieved for HR professionals – the more easily you get to the root cause, the quicker you can find a solution. Collecting data doesn't necessarily have to imply violating employee privacy. It is as simple as aggregating employee data or analyzing employee behavioral patterns to understand their needs better and optimize the hiring process. The HR metrics mentioned above will help you get to the root cause quickly so that you can find a quicker solution to optimize your recruitment processes.

If you are still not acquainted with the process of calculating these HR metrics, you can take assistance from HR outsourcing companies. Exela HR Solutions is one of the leading HR outsourcing providers that can streamline your processes, increasing efficiency and effectiveness. Talk to our experts to optimize your recruitment processes. Transform your HR function with Exela HR Solutions today!

DISCLAIMER: The information on this site is for general information purposes only and is not intended to serve as legal advice. Laws governing the subject matter may change quickly, and Exela cannot guarantee that all the information on this site is current or correct. Should you have specific legal questions about any of the information on this site, you should consult with a licensed attorney in your area.

The human resource industry has a long-known history of dealing with unforeseen circumstances and finding a way through the most challenging situations. However, with the turn of the decade, we have witnessed a global pandemic, a likely global recession, and a war. Now is when HR functions have become as important to organizations as finance or global security.

Recent unforeseen circumstances due to global issues have brought in an array of new challenges for businesses worldwide. Organizations have been striving to navigate these challenges and stay ahead of the curve in today's competitive business environment. The same goes for human resources - the vast majority of organizations have been experiencing this significant change in one of their most crucial processes, human resource management.

According to Gartner, employee experience, change management, and the future of work are a few of the top priorities of HR leaders.

With evolving times and advanced technologies, businesses today have found their way around dealing with challenges and setting new HR trends. Here are some top HR trends we’ll likely witness in 2023.

Four HR trends in 2023

In the last few years, HR functions have been tested like never before worldwide. HR leaders have faced countless disruptions, from abrupt shifts to remote and hybrid work, economic volatility, and geopolitical events. These significant changes, elevating digitization journeys, and shifting employee expectations have posed a real challenge for HR professionals. However, technology has made HR functions a lot easier and better. Here are four HR trends expected in 2023.

• Future of work
• The 'future of work' indirectly refers to the remote and hybrid workforce. This shift in the work mode is a seismic change for several organizations, yet it is only a part of the equation. Anticipating future needs of talent teams or workforce planning is at the epicenter of a future of work strategy, and so the top priority for HR leaders.

• 42% of HR leaders say the future of work is their top priority.

• On the other hand, 43% reported the absence of an explicit future of work strategy.

• Today, for most organizations, workforce planning is disconnected from reality. And the current strategies are futile at combating the disrupting landscape. However, integrating AI and ML in HR will likely remain a sweeping trend.

• 35% of organizations reported using AI in business, while 35% are exploring it.

• In the coming years, the trend in AI integration will assist HR teams in better analytics, predictions, and diagnoses to make informed decisions based on data - helping the organization become more agile. AI will likely be the stepping stone for HR teams to furnish work-life balance for their employees - especially hourly and frontline workers. In addition, automating repetitive, mundane HR tasks will allow HR professionals to spend more on delivering the best employee experience.
• Employee experience
• Employee productivity and engagement is the key to a successful business. A dedicated and engaged employee brings passion and commitment to the work, positively impacting the business's growth. However, to engage today's modern workforces, organizations must deliver an uber-tech, consumer-forward convenience - in a nutshell, an elevated and evolved employee experience.

• 47% of HR leaders say that employee experience is a top priority.

• There are numerous reasons why employees feel unsatisfied and unhappy at the workplace. Some expect competitive pay and attractive benefits, while some seek an employee-friendly environment. Many also lose interest in their current jobs because they lack compelling career paths.

• 44% of HR leaders believe their organizations do not have compelling career paths.

• According to a survey by Gartner, 1 in 4 employees expressed confidence about their career at their organization, while three in four employees are looking out for new roles and showing interest in external positions. Moreover, the work landscape is experiencing a sweeping change – career options are less visible, current skills are becoming obsolete, employees aren't trained for future roles, and existing jobs are less likely to satisfy employee needs. This represents a new career imperative for HR leaders to create suitable careers for employees and provide them with the best employee experience.

Also Read: The Most Common Recruitment Process Challenges Hindering Business Growth

• Total Rewards
• In the last few years, it has become clear that employees want choice and flexibility in the workplace. When it comes to benefits and compensation, more than a single benefit stack is needed. Reward programs must consider employees' choices and preferences. Here are a few benefits that are likely to trend in 2023:
  • Employees with low earnings and unpredictable expenses are the most financially vulnerable group. Augmenting their longevity and productivity within the system can directly impact the organization's financial health. Providing this class with benefits such as insurance, performance bonuses, and retirement plans can help. In addition, making your employees financially resilient can help open up untapped pools of talent for the organization.
  • With remote and hybrid work cultures becoming the norm, HR professionals must also consider revitalizing HR policies and processes to support remote work. This can be done by simple initiatives like planning virtual get-togethers and events for employees, giving them the freedom and flexibility to manage their work, and making remote work convenient and comfortable.
  • Employees' mental health and wellness is a significant factor that boosts employee morale. Arranging virtual sessions to educate them about anxiety, stress, work-life balance, and burnout can increase employee productivity and loyalty.
• Organizational design and change management

• 53% of HR leaders say change management is their top priority.

• While 45% say, their employees are exhausted from the change.

• Economic uncertainty, digital transformations, and political tensions have led to significant change and disruptions. As a result, organizational design and change management will likely remain a top priority for human resource professionals, especially with organizations witnessing so much uncertainty and change. Consequently, employees are also growing more immune to change.

• 74% of employees are willing to change work behaviors to support organizational changes.

• However, the percentage dropped by 38% in 2022.

• Change exhaustion has clear ramifications. Human resource leaders must help employees navigate this change and mitigate the impact it has driven on their work and well-being.

Conclusion

2023 as a year has an immense scope of opportunities for human resources - with its own share of challenges, though! HR must acknowledge and strategically address challenges to enhance organizational growth and the employee journey. The future of work, employee experience, rewards, organizational design, and change management are a few trends that will likely transform the HR industry in 2023.

Exela HR Solutions is the market leader in outsourcing HR services that streamline your HR processes and provide employees with a smooth, hassle-free experience. Diving through workforce challenges and prioritizing actual business functions at the same time can be exhausting for the business and HR leaders. Exela HR Solutions helps eliminate this hassle from your processes and enables you to dedicate your time to revenue-generating goals and strategies.

DISCLAIMER: The information on this site is for general information purposes only and is not intended to serve as legal advice. Laws governing the subject matter may change quickly, and Exela cannot guarantee that all the information on this site is current or correct. Should you have specific legal questions about any of the information on this site, you should consult with a licensed attorney in your area.

As businesses continue to evolve rapidly, most organizations are expanding their footstep into the international markets – a huge step that can bring unannounced HR management challenges. HRs can miss out on other key aspects while juggling hiring new candidates and adhering to local employment laws, taxes, and payroll practices. Failing to comply with certain rules and regulations and hiring and retaining the best talent can give your HR teams a tough time. Moreover, there are risks involved from the business perspective.

Performing international payroll processing is tricky and needs more attention, which can be a massive bottleneck in your business expansion. Instead of going back and forth with the potential challenges, HR teams should ideally focus on more priority tasks, such as managing the workforce and getting the most out of what they have. Implementing a uniform HR management system can help businesses streamline the entire global workforce with utmost efficiency while minimizing the risks and costs associated with the expansion.

The vast majority of HR teams think they can solve the issues with proper coordination with the HR and payroll systems. However, they often fail to outspread the existing systems and implement a new integrated HR and payroll system as a part of the global expansion. Thus, traditional systems are often scattered and no longer meet modern business requirements. One must consider integrating the payroll and HR solution systems to avoid such barriers. Here’s how payroll and HR integration can be beneficial for your business.

Benefits of integrating your payroll and HR system

The roles of payroll and HR professionals have tremendously changed over the years – they now hold a position of business-critical elements. However, although both departments function differently, they share the same goal – to support employees within the organization. To accomplish this, organizations must consider driving both departments to a more cohesive and integrated model.

A well-synchronized payroll and HR system forms a firm foundation for effectively managing the workforce and helping the company meet its goals and be productive. Moreover, automating and regulating administrative tasks can give HR professionals an edge to focus on value-adding tasks such as strengthening internal relationships and employee engagement.

Here are the benefits of integrating your payroll and HR system:

• No more duplicate files, endless paper trails, and numerous passwords

  Organizations today deal with massive datasets. Managing two different systems and manually transferring data from one system to another requires increased effort in the documentation. This may lead to further setbacks concerning duplicate files, endless paper trails, and different passwords for each system. A unified system helps keep all the records in one place, giving no more duplicate datasets, no more having to deal with endless paper trails, and neither the hold up to remember logins and passwords.

• Enhanced employee experience

  Providing employees with the best possible experience is a top priority for businesses these days. Scattered data sets, files to log in data, limited access to employment documents, and having to shuffle through large datasets from different systems can surely get on the nerves of your employees. Integrated payroll processing and HR solution systems often come with employee self-service functions, allowing them to access to their essential documents, payroll data, and more.

  Integrated systems are also a lot easier to use than having to navigate different systems with different passwords. Moreover, employees can check their payslips, contact details, benefits, or billable hours in one place.

Also Read: Withholding HR and payroll data from employees? Unnecessary!

• Automation of administrative tasks

  Manual data handling and tedious administrative tasks often lead to meaningless errors and increased TATs. Automating these tasks by integrating payroll and HR systems can save you a whole lot of time and energy to focus on other high-value activities. Besides, managing data at both systems can get overwhelming, while it is easier just to integrate the systems and enable automated data flows.

  For instance, you have logged your daily efforts in the HR timesheets, but the payroll professionals missed considering those while calculating the monthly salaries. The situation can get your organizational reputation in trouble. Moreover, logging in and transferring data every time to perform payroll isn’t an efficient practice, which can cause unnecessary hold-ups. With integrated payroll and HR systems, you will no longer have to jumble between the two systems and streamline your processes by automating them.

• Less room for error

  With thousands of employees and hundreds of teams working from geographically situated locations, it becomes evident that there is room for error. In addition, if there are manual tasks involved, the situation goes downhill. And there is not much anyone can do to avoid the mistakes – skipping even one line can get you in trouble. However, automating can make things better.

  You will no longer have to manually enter the data or update the existing information, which means less room for error. As there won’t be any loopholes in the payroll processing, you can boost employee satisfaction and scale productivity rates.

• More transparency and improved reporting

  Integrating your payroll processing and HR solution systems means creating a Single Source of Truth (SSOT) for all your employee data. Having your data stored in one place increases transparency and enables faster and better reporting. In addition, since your teams can extract data from one centralized source rather than spending hours filtering through systems, reports can be compiled and delivered faster than ever.

  With automated workflows and easy data access, a few clicks are all you need to generate reliable reports. This makes it easier to analyze the entire data to develop strategies for further improvement.

• Improved compliance

  An internationally growing business means more responsibilities and liabilities to adhere to local compliance requirements. Failing to comply with certain rules and regulations can get your business in trouble with further legal disputes. And as it is perilous to play with reputational damage, organizations can’t miss on improving compliance.

  Unfortunately, you can’t really do much if you are all caught up with hiring activities or have manual tasks consuming all your time. Integrating payroll and HR systems gives a whole new perspective to this issue – automating and having a centralized system allows you to keep an eye on all the compliance requirements. In addition, having centralized data makes it easier to meet tax deadlines, avoiding penalties. Moreover, you get an edge in securing all your confidential data in one place with only authorized access.

• Saves time and money

  Considering all the benefits of integrating payroll and HR systems, it is safe to say it allows businesses to save time and money. Any legal disputes, errors while entering the data, data management conflicts, or endless paper trails can cost businesses a fortune. Having a unified data set can help businesses save up on resources, time, and compliance-related costs.

The bottom line

Disconnected systems often fail to meet global HR requirements and drive businesses into a situation where there is no global visibility. Moreover, the resources needed to manage complex data add to the total cost of your solution while impacting the ability to make timely and accurate business decisions. Thus, having a centralized system can solve all issues related to payroll processing or HR processes. Exela HR Solutions is the market leader in HR and payroll outsourcing and can help you streamline your operations worldwide and make the bests decisions for better workforce management. Speak with our experts at Exela HR Solutions now!

DISCLAIMER: The information on this site is for general information purposes only and is not intended to serve as legal advice. Laws governing the subject matter may change quickly, and Exela cannot guarantee that all the information on this site is current or correct. Should you have specific legal questions about any of the information on this site, you should consult with a licensed attorney in your area.

HR and payroll data – every salaried professional is well aware of these terms, but how many of these professionals have access to it? It might vary from enterprise to enterprise. But isn’t the employee data supposed to be shared transparently with employees? Of course, yes! Yet, many organizations hide HR and payroll data from employees.

It can be problematic for employees when they are kept in the dark about their own data. There are many instances where employees get stuck into unnecessary jams or get stranded by payroll errors or HR management mistakes – just because they don’t have access to their personal employment data. Picture this – your employees are getting into critical medical situations and have no idea about insurance policies or deductions. Or, they have to chase HR professionals to correct some information; or even worse, employees find out they have been shorted on their check without knowing deductions.

An ineffective knowledge-sharing culture can cost large companies over $47 million in lost productivity annually.

All of this can be sorted with just one solution – let your employees access, update, and manage their own HR and payroll processing data. Built-up communication and transparency are perhaps the most valuable features of a successful work environment.

Companies with a high-trust environment gain two to three times higher stock returns and have 50% lower turnover rates than competitors.

The high-trust environment is where employees can collaboratively and transparently share knowledge. But, as simple as it sounds, many firms aren’t still on board. Here’s why organizations try to keep HR and payroll processing data from employees and how they can stop information from withholding.

The numbers

These numbers are everything you need to see and understand why it’s crucial to effectively and transparently share HR and payroll processing data with employees:

• Delayed salaries can adversely affect the job satisfaction and personal financial outlook of 70% of people.
• Allowing employees to verify payroll processing data before it gets credited helps employees (35%) plan finances more efficiently, (28%) trust their employer even more, and (24%) better plan for changes in wages.
• 30% of employees wish to review the accuracy of their pay before it hits their salary accounts.
• 90% of employees find it beneficial to have 24/7 access to their HR data, including payroll, in one place.
• 77% of employees are frustrated with the outdated technologies they use at work, and 67% would instead take a pay cut for something twice as good.

Also Read: Employee Engagement Starts with Accurate Payroll Outsourcing

Why do organizations keep HR and payroll data from employees

After going through all the numbers showing how adversely hiding employee data can affect both the organization and employees, the most obvious question that arises is why do most organizations hide employee information? According to a survey, the reason could be the fear of losing power or having the leverage to know unique information.

Other reasons might also include the following:

• Identifying knowledge as our own property.
• Worrying that we will be judged on the basis of what we know.
• Disliking or distrusting those who ask us.

In a nutshell, organizations hide information because they fear the potential costs of sharing it. But does information hiding really benefit organizations? Of course not!

According to a survey, people who engage in knowledge hiding are over 17% less likely to thrive at work or experience growth and learning.

Knowledge or information withholding from peers does not actually result in a competitive advantage. It instead makes employees feel psychologically unsafe. It is evident that without psychological safety, employees find it challenging to focus on work, develop meaningful relationships, or explore new working styles without worrying about failures or mistakes. Under such circumstances, employees often struggle to maintain a positive attitude and engage in learning opportunities.

How can organizations stop withholding HR and payroll data from employees?

The HR department has one unique mission to work toward employees’ needs and wants. On top of that, some companies solely work to simplify your HR processes by providing best-in-class HR services – including payroll. Hiding employment data from employees with a negative attitude is only going to harm. Organizations must establish cultures where employees feel comfortable expressing their concerns. Addressing employee issues that are making them feel cynical can help you gain back their trust and help alleviate that cynicism.

Third-party, anonymous surveys can also do wonders in helping you figure out why your HR and payroll management professionals hold cynical attitudes. The results will help you design and implement targeted practices to ensure the workplace is fair, hopeful, and trustworthy for everyone. Moreover, you can also arrange workshops or training for HR management and payroll management teams on understanding employee behavior.

Lastly, HR and payroll outsourcing can essentially turn out to be beneficial. You wouldn’t have to worry about sensitive employee data getting lost or stolen and still can effectively and transparently share with employees. HR outsourcing services ensure that all the records are secure and provide best-in-class platforms where employees can easily access, maintain, or change their HR or payroll data.

Though all of these changes seem easy, implementing those won’t be. Withholding HR and payroll data from employees is widely prevalent in the workplace, which will take time to fix. However, being patient and acknowledging reality can be your first step toward developing an ideal workplace.

Conclusion

Most organizations that provide HR services or payroll processing services are aware of the fact that they are dealing with the most sensitive part of an organization – people. Employees are the most valuable asset that companies can have; thus, it is incredibly critical to help them feel satisfied and happy – which directly affects employee productivity and engagement. While all of this is well communicated, most organizations still make the common mistake of hiding HR and payroll data from employees. This makes your employees feel insecure and less satisfied with the work culture.

Exela HR Solutions is a leader in HR outsourcing and payroll outsourcing services that can help simplify all your HR processes, manage data securely, and implement practices to make your workplace ideal. Our experts provide the best-in-class, unified platform where your employees can easily access and manage all their data. Talk to our experts to discuss your requirements and solution for the same. Get Exela HR Solutions today!

DISCLAIMER: The information on this site is for general information purposes only and is not intended to serve as legal advice. Laws governing the subject matter may change quickly, and Exela cannot guarantee that all the information on this site is current or correct. Should you have specific legal questions about any of the information on this site, you should consult with a licensed attorney in your area.

Filing taxes is on the to-do lists of every working professional – which is also something employees are least excited about doing. If you pull out your recent pay stub, you will notice the tax deductions – however, there is a lot more than what meets the eye. Compliance is a genuine concern for every business when it comes to taxes. And it isn’t just about taxes; it accounts for numerous tax forms, adding new employees to payroll, local tax requirements, updating the changes in employee data, updating the existing tax laws, and much more.

When these tasks add to the existing pressure, it gets even worse – any minor mistake can turn into legal disputes or costly penalties. Deploying software with the right technology and features can readily comply and quickly provide insights to manage payroll taxes. Payroll tax management software reduces your burden of doing everything right – it automates all the tedious and repetitive tasks to streamline processes. You wouldn’t need to keep an eye on the latest tax updates or enter the data of every employee correctly – the software will do it for you. All you need to do is to find the right payroll tax management software that fits your business requirements.

6 questions to find the right payroll tax management software

1. What are payroll taxes?

   Payroll taxes are deducted from an employee’s wages, tips, and salaries. Both employers and employees are required to pay taxes. For employees, the taxes are withdrawn from their salaries and paid to the government by the employers. These taxes essentially incorporates federal, state, and local income taxes and employees’ percentage of Social Security and Medicare taxes (FICA). For employers, the taxes include their share of FICA and federal and state unemployment taxes. Employers need to pay these taxes on time. Moreover, employers need to withhold the taxes from each employee’s pay and submit them to multiple agencies. While doing so, they are required to physically mail paper checks and forms and upload appropriate information to all agency websites.

2. Who pays payroll taxes?

   Basically, everyone involved in a business – both employers and employees - is responsible for paying payroll taxes. These taxes are deducted from employees’ wages, and the organization is responsible for correctly withdrawing and submitting the taxes on time. Newly hired employees typically need to complete a federal Form W-4 to help determine the ultimate tax liability. However, this doesn’t account for every payroll tax.

3. What are the different types of payroll taxes?

   There are multiple payroll taxes, and businesses must comply with them. Here are a few of these standard federal payroll taxes.

   • Federal Insurance Contributions Act (FICA)

     The FICA tax usually helps fund Social Security and Medicare programs. This tax benefits veterans, retirees, children, and people with disabilities.

   • Federal Unemployment Tax Act (FUTA)

     As the name suggests, the law benefits unemployed individuals. Employers are responsible for calculating and remitting this payroll tax.

   • State Unemployment Tax Act (SUTA)

     Similar to FUTA, SUTA also supports unemployed individuals. SUTA, also known as “State Unemployment Insurance,” is a payroll tax collected to support the state unemployment fund. Employers must accurately calculate and remit this tax according to the applicable rate. It is noticeable that tax requirements are ever-changing. Thus, businesses must be agile and constantly aware of the latest payroll taxes.

Also Read: Employee Engagement Starts with Accurate Payroll Outsourcing

4. Why is payroll tax management essential?

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   According to a survey, 40% of small businesses incur an average of $845 in IRS penalties yearly.

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   Poor payroll tax management is one of the significant reasons for these penalties. Even if organizations hire an external accountant to manage payroll taxes, the business owner is still held liable to pay the payroll taxes. Payroll tax management software reduces your burden of responsibilities and liabilities. Moreover, the software handles everything from filing the necessary paperwork to ongoing maintenance of tax records. Having payroll tax management software eases your job, allowing you free time to focus on revenue generation.

5. What is payroll tax management software?

   Payroll tax comes with dozens of responsibilities, tedious tasks, and liabilities. Payroll tax management software automates repetitive and tedious tasks and processes. With this relief, HR professionals can focus on what’s essential – employee empowerment, strategizing, and maximizing the company’s ROI. In a nutshell, payroll tax management software is a savior for HR professionals that automates tasks related to tax management.

6. How do employers find the right payroll tax management software?

   Payroll is an extremely sensitive department that needs every process to be handled with high security and confidentiality. Thus, choosing the right tax management software ideal for your business needs is crucial. Consider asking the following questions while choosing the payroll tax management software.

   • Are your employees mobile, or are they working across geographically situated locations?
   • How well-versed are your employees with their taxes, and how it impacts their pay?
   • What are the weaknesses of the current tax strategy?
   • Does the service provider have frequent and responsive support?
   • Is the service provider legally capable of handling your tax requirements?
   • Check if the service provider is up-to-date with all new tax rules and updates.
   • What services do you offer?
   • Do you manage compliance with your system?
   • Do you handle all the tax processes, including tax deposits and returns?
   • Do you provide responsive support? Is it customer support or tech support?
   • How promptly does your support team react or work toward queries?
   • What are your charges?
   • Do you offer security measures?
   • Can the software be used alongside other accounting software or tools?
   • Do we need the training to use your software?

The Bottom Line

Finding payroll tax management software isn't tricky, but finding one unique to your business requirements is crucial. With the above-listed questions, you can approach your search for the right software with a clear perspective. Exela HR Solutions (EHRS) is an industry leader in payroll outsourcing. We provide the best-in-class services to take care of your tax and compliance needs. Talk to our experts now to discuss your unique needs and get the solution accordingly.

Get Exela HR Solutions today!

DISCLAIMER: The information on this site is for general information purposes only and is not intended to serve as legal advice. Laws governing the subject matter may change quickly, and Exela cannot guarantee that all the information on this site is current or correct. Should you have specific legal questions about any of the information on this site, you should consult with a licensed attorney in your area.

First, let's start by knowing what a payroll management system is and how it helps the organization and the HR department. To understand it clearly, let us first look at how the HR department of any company is responsible for calculating, distributing, and maintaining the salaries of the employees working in an organization. This is why the payroll system is directly linked to the organization’s HR department. The people working in HR interact with it and will be affected by the efficient performance or lack of efficient performance of the payroll system.

In this article, we will outline several key points that will give you a detailed understanding of the payroll system.

The recent trend of using paid payment software applications instead of traditional methods like spreadsheets or paper has brought about a lot of changes. It has made the payment process faster while also making a lot of functionalities and processes clearer for the employees and the HR team.

For example, in the good old days, if an employee had to update his/her banking information, they would have had to obtain paper proof of the change from the bank, then submit it to HR. The HR then would have had to verify the new information, go to the bank/payroll processor, and submit a physical form notifying them of the changes in the banking information of one of their employees. The bank/payroll processor would then have had to verify those changes again and finally update it in their system. Could you imagine how much time it would’ve taken for this entire process to complete? Days, if not weeks! But today, it takes less than three minutes for an employee to log in to the payroll portal, click into the update section, and update their banking information.

This is progress.

Let us now look at what challenges HR professionals face today and mistakes, both common and not-so-common that can be corrected with the help of a properly designed, high-performance payroll management system.

Payroll Management Challenges for HR

In recent years, technology has infiltrated the payroll landscape in many ways – bringing flexibility in pay and innovating time reporting. Nevertheless, even tiny errors in payment processing can harm users – losing hard-earned money is tough. Thus, organizations should consider it an integral part of their business processes. A business thrives when employees are happy, and paying salaries correctly and on time can make them happy. This is why we refer to payroll as one of the key pillars of success in any organization.

Numerous factors come into account while managing payroll processing – employee records, leaves, bonuses, taxes, and more. The payroll management systems can help unravel the challenges associated with managing these factors, as it can get overwhelming when your organization deals with several employees. Payroll software is a savior in such cases – it helps you get the desired data at the requested time. It won’t be surprising to know that each organization wants to retain the best talent. And retention strategies exclusively depend on the benefits and payroll administration – we can’t agree more with this.

Also Read: 5 Trends That are Like to Shape the Future of Payroll Processing

Payment errors from HR management

Now that you are aware of the payroll challenges, you must acknowledge common errors that might occur while managing the payroll of any business. Most of these errors are unintentional and caused due to traditional age-old working methods. The most common mistakes in payroll processing from HR management are irregular payroll cycles, incorrect overtime calculations, delays in providing tax forms, tax calculation errors, incorrect categorization of employees, delays in tax deposits, vulnerable payroll data, and more.

Payroll is crucial to the employee experience (EX). A hassle-free and smooth payroll process are the least an employee can expect in exchange for the services – any errors or miscalculations can lead to dissatisfaction. Moreover, these unforeseen errors can expose your organization to compliance risks, loss of credibility, and financial penalties.

This is where the payroll management systems come into the picture. They enable management teams to access desired data, get analytics, create reports, automate payroll cycles, tax calculations, and more. It entirely depends on the companies and what they really need in their payroll system.

Mistakes that HR generally makes without proper payroll systems in place

• Missing payment deadlines is something that can essentially create a sense of mistrust in HR and the organization, in turn affecting employee performance.
• Clearing past payments can sometimes be an issue. In many unforeseen circumstances, organizations might run into a financial crisis, leading to employee pay cuts. The organization has to pay these pending payments after a while, which can only be possible with adequately maintained records.
• Vulnerable payroll data is the most significant risk of all time. Sometimes organizations find it hard to back up essential payroll data, or even if they have a backup, it is highly vulnerable to risks if handled manually. Payroll management systems make sure your data is safe.
• For organizations having thousands of workers, it gets overwhelming to calculate the taxes. Moreover, manually handling taxes for larger sets of employees can get you in trouble.
• Most times, HR face problems in the classification of employees. It can significantly impact the payroll, as the roles should be carefully considered.
• In today’s working scenarios, most employees work from different locations, and some work at their convenient hours. Calculating salaries for each, including their overtime, gets complex with manual processing. However, with a payroll management system, you can never go wrong with calculations.

Impact of Payroll Deficits on the Employer

Running a successful business is not just about making money; it’s about your organizational reputation, employee satisfaction, and growth. Nevertheless, some organizations often misinterpret the true definition of employee satisfaction. If you want your employees to work with the same performance, they need motivation and clarity from HR. Having bugs in payroll processing cannot make them happy or motivated. Such unforeseen circumstances tend to slow down their work and efficiency – they might also think of switching to another organization. These may seem like trivial changes, but they can have a significant impact on your business.

How outsourcing can improve HR management and employee relations

Here’s how compensation management can help improve employee and HR management relationships.

• If you roll out monthly wages on time, employees will not consider bothering HR.
• You can never go wrong with calculations – monthly salaries and exact deductions.
• HR can focus on more priority tasks without spending too much time on cost management.
• Accurate classification of employees and salary calculation can lead to better payroll cycles.

Payment management system stats

These numbers will give you a brief idea of how payroll management systems have been revolutionary for organizations:

• Most workers in the US – up to 93% – are paid by direct deposit. This makes it imperative to record all the payments precisely.
• The vast majority of employees – 93% – believe their wages are paid on time. However, we must consider the remaining 7% too.
• Around 60% of employees say they are confident that the calculation and other deductions made are accurate, while the remaining may still be in the tragedy of something that went wrong.

How does the compensation management system allow HR management to avoid mistakes?

Deploying a payroll management system is no different than adding an excellent HR resource to your team. However, the payroll management system can perform all tasks that humans cannot without any errors.

• Manage employee files and documents such as salaries, past performance, appraisal documents, and tax sheets.
• Follows a specified payroll cycle to ensure everyone gets their salaries on time.
• Keep track of employee performance and give them feedback.
• Recognize the best performers and design reward systems for them.
• Access payroll data with ease and security to have a better understanding.
• Automate the majority of payroll tasks, leaving no room for errors.

It’s a wrap!

Exela HR Solutions is a leader in HR outsourcing and ensures you get the best-in-class services. With Exela HR Solutions as your HR partner, you can never go wrong with your payroll processing, instantly increasing employee productivity and satisfaction in your organization. From classifying employees and calculating their wages, deductions, taxes, and other benefits to streamlining payroll cycles for timely payments, Exela HR Solutions can get it done for you. Get in touch with our experts to design the best HR strategies for your business. Get Exela HR Solutions and propel your business into the future!

Sources: google.com | en.wikipedia.org | reddit.com | twitter.com | quora.com | paysquare.com

DISCLAIMER: The information on this site is for general information purposes only and is not intended to serve as legal advice. Laws governing the subject matter may change quickly and Exela cannot guarantee that all the information on this site is current or correct. Should you have specific legal questions about any of the information on this site, you should consult with a licensed attorney in your area.

The ongoing supply chain crunch has hit the majority of the manufacturing sector. Over the past year, the supply chain crisis has become so predominant that everyone – from business owners to commoners – knows about the ongoing challenges in the supply chain. For commoners, this may be due to the difficulty in procuring home necessities and, for business owners, difficulty in buying business goods – but for manufacturers, the ongoing disruptions have emerged as one of the most substantial business challenges.

According to a McKinsey survey, 73% of respondents stated that they faced issues with suppliers during the pandemic. On the other hand, a survey noted that 67% of the respondents observed the most significant challenges to their supply chain are related to certifying new suppliers. In comparison, 57% think onboarding them is a challenge. Balancing supply levels with fluctuating demand continue to be a challenge for half of the respondents.

Given these substantial challenges, it won’t be surprising to know manufacturers are making significant changes across their supply chains. This leads to a new drive for regionalization in manufacturing – with 45% of manufacturers reshoring or nearshoring for stronger resilience and agility. It’s a hard sell – nevertheless, it’s a necessity. That being said, we must also consider looking at the economic factors associated with manufacturers reshoring and nearshoring. Here are a few:

• Getting Closer to Customers
• Leveraging Cost Savings
• Building Resilient Supply Chains
• Positioning For the Future

Now that we know how regionalization is turning out for manufacturers, we must be aware of the reality that every great thing comes with challenges. Likewise, manufacturers who are nearshoring and reshoring must acknowledge the potential challenges that are bound to come along. While there are some significant differences between nearshoring and reshoring, outsourcing your HR would definitely help with the environments that come with shoring your operations. Nevertheless, before diving deep into how HRO can help manufacturers in these circumstances, you must know what nearshoring and reshoring are. Here’s everything you must know:

• Nearshoring:

  Nearshoring started in 1964 in Mexico and refers to outsourcing work to a company near your physical location or in a nearby country. This shoring option is more appealing for companies looking to significantly cut down on costs and potential risks while maintaining geographical proximity. In addition, nearshoring operations enable faster TATs, greater control over production, fewer cultural discrepancies and language barriers, and lower travel costs compared to offshoring. Moreover, it also eliminates a significant concern for many manufacturers – the risk of intellectual property getting stolen. Manufacturers nearshoring can promote higher customer responsiveness with continuous, customer-driven improvements and innovations.

• Reshoring:

  Reshoring is bringing work back to the base location – an option manufacturers look into to cut down on costs. Reshoring seems to be a lucrative move for many manufacturers as the costs of operating a business overseas are increasing due to the steep tariff hikes, and reshoring tax benefit programs have much to offer when it comes to cost savings. As a result, several business owners finally realize that moving their operations to the base locations can help save the total cost of ownership (CTO). In addition, reshoring can help manufacturers eliminate potential risks associated with doing business overseas, lower transportation expenses, and cut down on labor costs.

Also Read: Payroll Processing Challenges in the Manufacturing Industry

How can HRO help manufacturers who are Nearshoring and Reshoring?

Human resource is the fundamental pillar to the success of the vast majority of manufacturing companies – to make a lasting impact, having a skilled workforce is imperative. Moreover, HR isn’t only about hiring employees and paying them for their work – HR processes incorporate a variety of tasks, including hiring, onboarding, payroll, benefits administration, compliance, and more. Moving operations is a significant change and needs the entire workforce to make sure operations run smoothly. And for employees, sailing smoothly through this transition can only be possible with a robust HR structure in place. In addition, HR outsourcing can solve the most significant challenge manufacturers face – the workforce shortage.

When manufacturers decide to nearshore, they must find new employees or relocate existing ones to the new work location. This is where HRO comes into the picture – HRO providers understand your requirements, help find the right talent for your manufacturing unit, and retain the best talent for your future projects. Nearshoring is beneficial for manufacturing companies as it reduces risks and costs, but it comes with its own set of challenges. Despite the best facilities, technologies, and a robust work culture in place, manufacturers find it challenging to establish overseas projects. A lot of factors come into play – team engagement, cultural differences, communication quality, knowledge transfer, time-to-market, and more. This is where HRO providers can be a savior. A reputed HRO provider can help businesses attract highly skilled employees, onboard them, arrange facilities and other benefits, and draft rules and regulations for knowledge transfer and the use of technology. In addition, they also help leverage team communication and engagement practices and eliminate cultural differences, enabling you to focus on core business strategies. Reshoring is no different – when you bring your production back to the base location, you need to have a better understanding of the current labor market. An HRO provider does this for you for more, simplifying your HR practices.

50% of the U.S. workforce currently works from home.

With the emergence of hybrid and remote work cultures, it is no longer necessary for all employees to work under the same roof. Employees can now work effectively and efficiently, irrespective of their geographic location – from the comfort of their homes. Managing employees working from different locations, leveraging employee engagement and communication, and increasing ROI are on top of mind for most business owners. While the current market scenario is asking to move productions, you may not necessarily be able to focus on employee management. HRO providers can be the helping hand you need under such circumstances.

It’s a wrap!

By now, you may have a fair idea of how manufacturers are dealing with the ongoing supply chain issues and labor shortages. Nearshoring and reshoring are the best practices that help manufacturing companies not only deal with the supply chain crunch but also enable them to lower the costs and risks associated with doing business overseas. Exela HR Solutions is a market leader in human resource outsourcing, helping businesses across all segments manage their workforce with ease, along with enhancing other crucial HR functions like payroll, benefits administration, hiring, onboarding, and more. Talk to our experts today to figure out the best HR practices that suit your unique business requirements!

DISCLAIMER: The information on this site is for general information purposes only and is not intended to serve as legal advice. Laws governing the subject matter may change quickly, and Exela cannot guarantee that all the information on this site is current or correct. Should you have specific legal questions about any of the information on this site, you should consult with a licensed attorney in your area.