Optimizing Payroll Efficiency: A Key Area of Focus

Payroll costs often represent 50% or more of a local government’s total expenditures. As such, any discussion about the cost efficiency of government services must begin with an in-depth payroll analysis. But where do you start?

UHY’s GEARS can help structure and streamline your payroll analysis, uncovering areas for improvement and ensuring your compensation processes are both effective and efficient.

What You Need to Start:

• Annual Budgets
• Human Resources headcount data
• Payroll Register
• Payroll Check Register

Full-Time Equivalent (FTE) Analysis

Start by evaluating your FTE employee base. Compare the FTEs in your annual operating budget to the actual FTEs on the payroll. Any slight discrepancies are expected, but larger variances should be explained. Additionally, employee compensation should be examined against the budgeted salary or hourly rate. If there are notable differences, further analysis is warranted.

Next, aggregate payroll data at the department level and compare it to the department’s payroll budget. Significant discrepancies between the two figures should be investigated further.

Overtime

Analyze overtime by aggregating it by employee and department from the payroll register. Assess whether overtime is being fairly distributed and aligns with the budgeted expectations. Identify any irregularities that may point to inefficiencies or unnecessary overtime expenditures.

Benefits

Reconcile your monthly benefits invoices with your active employee list to ensure you are only paying for the benefits of entitled employees. This quick check helps avoid overpayments and ensures accuracy in your benefits management.

A simple analysis of your payroll data can uncover opportunities for improvement and lead to meaningful efficiency gains. Let UHY’s GEARS Services guide you through the process, providing you with insights that can drive effective payroll management and cost control.