We analyze and measure the productivity of our business in every aspect. Whether it is our ability to meet deadlines, help clients, or grow business, there’s always a factor defining our success. Isn’t it? Do you measure the productivity and efficiency of your payroll department? Do you think that your payroll department is as valuable as it should be? If you wish to improve your payroll management and timely dispatch salaries, then metrics are necessary. You need to evaluate a series of key performance indicators to see if you are performing well. It will help you analyze whether your expenditure on payroll is worth it or not. If you are looking for these KPIs, then we have made a list. Analyze the payroll metrics to follow and see how a payroll service provider can offer you much better outcomes. 

Metrics to Know Efficiency of Payroll

How well is your payroll performing?

In the past year, how many times was the payroll delayed?

Did you make mistakes in tax calculations?

Are you spending too much on payroll management?

To know the answer to these questions, check out the metrics that you need to utilize. 

1. Time to Run

Even when you have somehow managed to purchase the best tool for your payroll department, you need time to process payroll. From the calculation of payroll to the management of taxes, you need time for everything.

Measure the hours spent on final payroll calculations. Also, consider the additional time spent in tax and benefits calculations. This time should be converted to the work hours and calculated in terms of money.

2. Accuracy Rate

Other than the time of payroll, understand the accuracy of payroll. Every month you are calculating the following:

        • Salaries
        • Hourly time 
        • Leaves
        • Deductions
        • Benefits

You may have made some mistakes in these calculations. 

How much did these mistakes cost you? 

If you made a mistake in compliance, then you may have also paid penalties or fines. Calculate the total cost of these mistakes. This should include penalties, fines, and payments.

Further, if you have made a mistake in payroll calculations, then also calculate the cost of doing this activity again to eliminate the error. 

3. Training Costing

Many companies hire one or two employees for payroll calculations. As a result, businesses end up paying for the training of these employees. During onboarding, you may have taught everything to this employee. 

After some time, you will offer training and growth opportunities to this employee. All of this costs money. Calculate these costs to know the training spends. 

4. Labor Cost

Labor costs include the payroll you are offering to the employee along with the benefits. 

Here’s a list: 

        • Payroll
        • Benefits
        • Tax benefits
        • PPF deduction
        • Gratuity
        • Training
        • Office space
        • Software cost
        • Overtime pay

There’s so much money involved in this transaction. Calculate the amount and find out the entire cost of hiring and managing just one employee for your payroll department. 

When you would compile every cost that we have discussed above, you will understand the importance of outsourced payroll. It is much more cost-effective and hassle-free. The performance of your payroll improves in less money. Let’s see how:

Why You Need Payroll Service Provider?

With the help of the above metrics, you may have already found out the efficiency of your payroll department. Many small and medium organizations find this investment a lot. If you also fall in this category, then here’s the solution for you. Utilize an online payroll management system and enjoy lower costs and improved productivity. 

Let’s see the benefits of the payroll service providers:

1. Save Cost

When you want to reduce the cost of payroll management, it is imperative to find a payroll service provider. When you outsource payroll, you can reduce the costs of management. 

Here’s how:

      • The cost of labor is eliminated.
      • There are fewer or no mistakes.
      • The cost of mistakes is eliminated. 

Three of the major costs are eliminated with outsourced payroll. You don’t need to manage employees, pay them, or offer them benefits. In fact, there’s no need to offer training to these employees. Without all this hassle, you still get accurate payroll calculations, on-time results, and real-time reports. This quickly adds up to the performance of your payroll department. 

There are other situations when your cost is mitigated. For instance, when an employee is on maternity leave or on vacation. 

2. Save Time

Apart from cost, time is also saved. There’s no doubt in the fact that payroll management is a time-consuming activity. There are calculations, taxes, PPF, deductions, benefits, and whatnot. You have to consistently change calculations due to year-end appraisals and make adjustments when Labor laws change. In addition, taxes are always complicated. One mistake in submitting TDS, and you have a surprise penalty. 

Outsourced payroll eliminates everything we just discussed above. You are free for core business functions. From compliance to tax deductions, your payroll service provider will look after everything. The only time that you need to spend on this activity is to check reports or make changes in the payroll structure. 

Overall, a decrease in the amount of time spent on payroll leaves you enough time for your core activities. This leads to productivity.

Even if you already have an employee for payroll, you can use this HR employee for people’s management – the task they are supposed to achieve. This will lead to happy, informed, and engaged employees. It is a win-win situation. 

3. Accuracy

As a small or medium business owner, you are not necessarily the best at calculations. In fact, even if you have dedicated employees calculating payroll in-house manually, that’s also not a productive case scenario. Mistakes are bound to happen!

But, the payroll service providers have automation support that helps them with calculations. They also have a team that checks every detail and overviews every calculation. This means accuracy is their top priority, so you don’t have to worry about costly and crucial mistakes. 

With the help of automated attendance calculations and salary preparations, it is possible for the payroll service providers to eliminate issues related to accuracy. Further, since the team understands the structure so well, they understand new tax reform changes quickly. This helps them avoid errors at all costs.  

4. Latest Technology

As we have already discussed above, your payroll service provider has the latest technology. Their online payroll services are designed to help you achieve efficiency. This technology can be used by you in the form of an employee self-service portal.

With a payroll service provider, your employees get an account on the employee self-service portal. Here, every data from salary details to tax deductions is given. They can easily see the bifurcation, analyze payslips, and change personal information. 

5. Support

Apart from anything, an online payroll management system is designed to offer you support. You call experts and ask them for support whenever there’s a need. Everything is already achieved by the payroll service providers, and you just have to overlook details. But, whenever you are stuck, you can call the payroll service providers and discuss details with them. 

You get support and expert advice, which is not possible when you are calculating payroll in-house. It is not possible even when you have one employee for payroll management

Important Note: Based on the above benefits, if you will now calculate the efficiency, errors, accuracy, and cost, then you will automatically find that outsourced payroll is much more cost-effective and efficient than in-house management. 

The Best Payroll Service Provider

One of the questions that we get a lot is about the payroll service provider. There are many small and medium organizations that wish to outsource payroll, but they don’t get a reliable service. 

Don’t worry, you have Paysquare. We have been working in this industry for long enough to gain immense experience and skills in international and national markets. This is why we can help you with payroll outsourcing services. Right from statutory compliance to payroll calculations, our team helps you at every step.

Our communication flow is intact and smooth, and you can call us any time for support. We understand that as a small business, you may have a range of queries, and your team may face various challenges. Our support staff assists you in mitigating these challenges without any issue.


Analysing the health of your payroll department is as important as measuring the health of any other department of the office. Payroll processing assists you with employee payments and keeps them from leaving the company. Hence, you need productive and efficient payroll processes. Check the key metrics that you should analyse for your payroll department. 

If you are not satisfied with the results, then consider options like outsourcing payroll. With this decision, a small or medium organization can specially benefit a lot. You can reduce costs, improve security, and gain peace of mind. 

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