What do you focus on in analytics for HR and payroll? And how to drive real ROI with eg payroll leakage?

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Smart Analytics that drive ROI
Unleash 2018 - Amsterdam
Anita Lettink

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Anomaly detection
the identification of data points, items,
observations or events that do not
conform to the expected pattern of a
given group
Did you spot the outliers?

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What is Payroll Leakage?
Payroll leakage is unintended or unexpected
spending or lost revenue related to labor
activity. Leakage can result from
• loose configuration of HR & payroll
systems
• poorly designed processes
• gaps between policy and practice
• and “gaming” the system.
The key to fixing your payroll leakage is,
finding those leaks
before you have a flood on your hands. 4

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Why is Leakage a problem?
ISG estimates that poorly designed payroll
processes that lack the proper technology
and management routines can cost a
company between 0.5% and 1.5% of total
payroll dollars each year.
Payroll leakage is a significant source of
overspending as well as lost productivity.
Employers often suffer from up to 2.5
percent of total payroll expense being lost to
leakage according to Deloitte
5

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A few examples
• Excessive overtime or bonus pay
• Discretionary and incentive pay
• Inconsistent tax scale – tax amount not
compatible with other employee pay
amounts
• Employees receving redundant allowances
after job change
• Benefits amount not typical for type and
profile of worker
• Pay scales not typical for type and profile
of worker
6

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Do you spot the three workers that joined the company as students,
have been hired as regular employees and are missing some of their allowances?
Dimensions:
- employee grouping
- personal area
- recurring payments
- and ‘one time’
payments with their
averaged median
values

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What if you could action data anomalies?
8
One of the newest techniques to detect anomalies is
called Isolation Forests.
The algorithm is based on the fact that anomalies are data
points that are few and different. As a result of these
properties, anomalies are susceptible to a
mechanism called isolation.
 This functionality is available from NGA and can be
embedded in the pre-payroll process
 Some real life examples:
1. Tax regime not adapted when someone moved
across organization into a new, home based role
2. Mismatch between dependents and children
(new born registration was not updated to
dependents)
3. Group of people from an acquisition missed out
on a recurring payment they should have
received

9. Copyright NGA Human Resources. All rights reserved.Copyright NGA Human Resources. All rights reserved. 9
Beware of little expenses.
A small leak will sink a great ship.
Benjamin Franklin

10. www.ngahr.com
10
Anita Lettink
Anita.Lettink@ngahr.com
@let_anita