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Payroll Metrics – How to Measure the Performance of Your Payroll Team

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Have you made your New Year’s Resolutions yet? When you think about it, setting goals for your business is very similar to setting goals for your own self-improvement. Often times, New Year’s Resolutions are abandoned after a few weeks or months, whether it’s due to unrealistic expectations, lack of progress, or any number of reasons. What if businesses did the same with their goals? Companies would remain stagnant and very little, if any, progress would be made.

An important thing to remember is that goals and progress should be properly defined and measurable. So, how do you apply this to your business? In production or revenue-generating departments, this could be as simple as setting a goal of producing X number of widgets or attaining a minimum number of sales each month. But this doesn’t mean a non-revenue-generating department like payroll can’t have measurable goals and progress.

What can you measure?

Believe it or not, there are a number of metrics for your payroll team that can be measured, evaluated, and incorporated into performance goals. Here are a few that you might use:

  • Number of errors per number of payments processed
    • The ultimate goal of your payroll team is to make sure employees are paid correctly and on time. Measuring the number of errors vs the number of processed payments can provide a high-level accuracy rating for your team.
    • Including the type of error (data entry, incorrect setup, etc.) with this metric can also help find root causes of common or frequent errors.


  • Number of off-cycle payroll runs
    • Some off-cycle runs can be difficult or impossible to avoid, but tracking the frequency and reasons for these unscheduled payments might be indicative of improvements that can be made elsewhere in the organization.


  • Time to process payroll
    • This can be a difficult metric to track if your payroll team is also responding to various inquiries and requests during payroll processing, but having a baseline measure of the time it takes to process payroll can help the team set deadlines and realistic expectations.
    • You might also use this as a measure to track the progress of new members on your team.


  • Time spent on non-payroll activity
      • Does your team spend time doing things that seem trivial or unnecessary? Identifying tasks that can be automated or eliminated altogether can free up your team to spend time on more productive activities.
      • Remember, just because your team is busy, it doesn’t necessarily mean they are being efficient or effective.


Regular tracking of these items can help to find problem areas to improve on, identify various training opportunities, or rethink the way your resources are being allocated.

Done right, this can improve the team’s overall performance. After all, resolutions and goal-setting are all about improvement – and in this climate of constant change, not setting goals and working toward improvement can be a surefire way to fall behind.

Christina Hageny

Christina Hageny

President - Valor Payroll Solutions

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