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8 Key Payroll Process Metrics Your Company Should Track

  • what is payroll services
  • 10 min read
  • April 29, 2024

payroll process

Today, leading companies use employee compensation metrics as tools to measure how wages get distributed in the organization. The payroll process helps them analyze effective computation policies. Well, why is this important? Computation expenses play a prominent role in most companies’ budget pie charts.

According to the international consulting firm, Deloitte, about 40 to 60% of the business’s operational costs come down to wages, and that’s why investing in a quality competition strategy saves money in the long run.

What is payroll services?

Payroll services involve tasks like calculating wages, deducting taxes, distributing payments, and handling tax filings. Many businesses outsource these to specialized providers for accuracy and compliance. These services include features such as direct deposit and payroll tax filing, allowing organizations to streamline processes and focus on their core activities.

The Importance of Payroll Metrics Tracking

Payroll Metrics Tracking

A study by the Work Institute reveals that compensation is the fifth most common reason employees quit their jobs. It’s important to implement compensation programs that make the organization attractive in the job market. Since the payroll process India might differ from the ones from other countries, it’s essential to keep track of the changes in policies, laws, etc.

Do you still wonder, what is payroll processing? , what are the payroll process steps, and why payroll process key metrics tracking is important? Well, in a data-driven world, metrics are the tools to design any compensation strategy. You can map down the payroll process steps and set a SOP for your organization!

Timely and Competitive Payments Will Keep Your Employees Satisfied

payroll management

The primary function of an HR department is building a compensation program. It is also noted to be one of the best ways to train competent personnel. People work because they are paid. If they think that the reward is not proportional to their efforts and can find a better bargain somewhere else with another firm or company, then they will seek work elsewhere. Opting for the best payroll software India can be your key to enhancing workplace productivity!


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8 Metrics & Steps in Payroll Process To Improve Your Payroll service

steps in payroll process

The advantages of metrics are numerous, and some highlights include supportive strategies for business objectives. Service Payroll metrics tracking helps in salary alignment with market realities simplifies administrative procedures through pay ranges. The metrics also address legal issues concerning discrimination and records fairness within the company, providing a way to improve retention of skilled employees.

#1 Internal Equity

Feelings of pay discrimination are a leading cause of turnover, and internal equity is the best metric for balancing the pay scale. The metric makes it possible to estimate how much workers get paid in a given job compared to workers in a similar position.

#2 Comp Ratio

It is a measure that expresses current pay rates as a percentage of range midpoints to examine how the present pay strategy compares with the market. To calculate comp ratio, divide the individual salary by the midpoint of the salary range.

#3 Geographic Differential

The cost of living varies between states and cities and gets reflected in the salary offered in a given geographical region. The metric calculates the pay variations for an identical job in different locations.

#4 Salary Range Penetration

It informs where an employee’s pay falls within a pay range. The comp ratio compares the salary to the midpoint of the salary range, showing if it’s over or under the median, while salary range penetration reveals the precise point within the range.

#5 Pay Range

Any pay structure has to start with the range of payment. You set the range to determine that you are willing to pay a certain amount for a particular position. It sets limits on a particular position, which is helpful when thinking about promotions or hiring new people.

#6 Target Percentile

The Target Percentile Figure out how much you pay your employees compared to market rates and when planning new hires, it is a useful tool. The target percentile gives the amount with which your budget needs to be adjusted in order for them to take you seriously.

#7 Market Ratio

The market ratio enables you to realize how appealing your company is for potential employees. The formula is not complicated, and the parameters are obtainable. Market ratio = Pay divided by the market rate at your target percentile.

#8 Midpoint

The midpoint of the salary range is the average of the minimum and the maximum pay for a position and is typically considered a job’s market value. This method is practical when you need to implement jobs with no market value or collectively represent positions with similar internal value in your structure.

Streamlining Your Payroll Process with HRMS Software

service payroll

The application of the metric is to identify where employees are in the range when planning for merit increases. When a worker is at the top end of the salary range, questions about whether a promotion is required arise because employee compensation is the largest expense in any organization. Effectively managing the distribution of that resource is a priority.

A free payroll software India might lack the capabilities you need for optimal service payroll processing! That’s why, switching to a paid or premium payroll processing tool can be a great idea!

And there we have it! In this article, we covered the key concepts and importance of employee compensation metrics. Looking for the best HRMS software that helps you tracks these key metrics and more?

Switch to our Payroll Software today! Superworks offers you a comprehensive range of essential payroll management tools. Streamline your workflows and boost workplace productivity with ease by choosing us!


The key employee compensation metrics can be guidelines for making informed decisions when preparing a compensatory strategy, improving proficiency, and reducing turnover rates with Superworks. Metrics can generate quality data that turns compensation into a strategic advantage on the job market for a company. Job seekers no longer make decisions based on not only who will pay the most, but they also want to be part of a work environment that will ultimately make them feel valued.

Written By :

Alpesh Vaghasiya

The founder & CEO of Superworks, I'm on a mission to help small and medium-sized companies to grow to the next level of accomplishments. With a distinctive knowledge of authentic strategies and team-leading skills, my mission has always been to grow businesses digitally. The core mission of Superworks is Connecting people, Optimizing the process, Enhancing performance.

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