Payroll Ideas for Improving Employee Satisfaction

When it comes to improving employee satisfaction, payroll is one of the last places you might think to look. This is because payroll is traditionally viewed as solely a transactional role, whose primary job is to pay employees accurately and on time.

The responsibility of improving employee satisfaction tends to fall on the Human Resources team and department managers. But payroll is one of the first places you should look.

Why payroll is important for employee satisfaction

The tight labor market has drastically changed the payroll function. To attract and retain qualified people, employers must look beyond their comfort zone — and into overlooked areas like payroll.

This will give payroll practitioners a chance to serve employees in not just an administrative capacity but also a strategic one.

According to a Ceridian report, “Payroll will move from a back-office function to a strategic business partner.” However, most employers aren’t ready to fulfill this role, because they lack modern pay practices.

Per the report, “85% of respondents have problems with their payroll technologies and 69% say they have payroll data issues — and there is even more work to be done to be ready for what tomorrow brings.”

Note that issues with payroll technology and payroll data can impact employees in various adverse ways, including inaccurate and untimely paychecks.

Financial stress is another reason for payroll to assume a more strategic role. In a PwC survey, “Only 42% [of full-time employees] said their compensation is keeping up with the rising cost of living expenses …In addition, one in four full-time employees is working more jobs than in previous years to make ends meet, and 56% are stressed about their finances.”

These are all compelling reasons for payroll to become more involved in improving employee satisfaction. Next we cover some of the ways your payroll team can do this, including:

• Pay transparency
• Pay equity
• Also, pay benchmarking
• On-demand pay
• Modern payroll software
• Payroll data/Key performance indicators (KPIs)
• A knowledgeable and caring payroll staff

Pay transparency is a must-have for employees

Despite the controversial nature of pay transparency, it is quickly becoming a must-have for employees. According to 1 survey, “Nearly 2 in 3 employees (63%) prefer to work at a company that discloses pay information over one that does not.”

However, only a small percentage of employees (19%) say their employers disclose pay information internally among employees.

Career experts say greater pay transparency is essential to closing pay gaps among women and marginalized populations. But to accomplish this, employers and employees must stop making it taboo to talk about pay, and instead encourage healthy pay discussions.

This means overcoming potential barriers to pay discussions, such as employees being afraid to negotiate pay due to fear of being denied. They may also worry about the impact of open pay discussions on their relationship with coworkers.

Keep in mind you may be required to engage in pay transparency practices. A growing number of states and localities are mandating full pay disclosure in job description and postings.

Whether these laws apply to your business or not, take a look at your pay transparency practices and see whether they can be improved.

It’s essential for employers to ensure pay equity

According to Ceridian, 61% of employers are seeking to understand and resolve pay equity issues in order to improve the employee experience.

Pay equity is about ensuring equal pay for equal work, meaning employees who perform the same or similar duties should be compensated in the same way. You can help ensure pay equity by conducting pay audits, which can reveal whether employees are being paid fairly and gaps in pay.

Additionally, pay audits can show you whether you’re complying with pay equity laws.

Pay benchmarking is perfect for gauging market rates

Per Ceridian, most employees rank pay as “what they value most in a job today.” Therefore, it’s critical that employees are paid at no less than the market rate for their role. You may need to pay even more than the market rate for hard-to-fill positions.

Pay benchmarking is a perfect vehicle for gauging market rates and what your competitors are paying for the same or similar positions. As the Ceridian report states, 56% of employers are using pay benchmarking to improve the employee experience.

If you’re not doing so already, start utilizing pay benchmarking to see if you’re keeping up with market rates and your competitors. This is imperative, because it doesn’t take much these days for employees to find out the market rate for their role. They will likely leave if they find out they’re being underpaid.

On-demand pay is a feature employees appreciate

As mentioned, many employees are stressed out about their financial situations. Moreover, many American workers are living paycheck to paycheck and want early access to wages. A national research study found 60% of U.S. workers want immediate access to their daily earned wages (or on-demand pay).

Generally speaking, on-demand pay allows workers to access earned wages before the next pay period. While it is becoming a popular recruitment and retention tool for employers, on-demand pay can be complex to administer.

For this reason, larger companies with more resources are embracing on-demand pay at a faster rate than smaller employers with fewer resources.

You can run employee surveys and cost-benefit analyses to determine whether it would be worth it to offer on-demand pay.

Modern payroll software enhances employee satisfaction

As stated, research shows that most employers are having issues with their payroll technology. Such issues can easily disrupt the employee experience and cause dissatisfaction.

Therefore, it’s important to invest in a modern payroll solution that enhances employee satisfaction.

Ideally, here’s what your payroll solution should do (and more):

• Integrate payroll with related processes like scheduling, time and labor, employee benefits, and Human Resources
• Make it easy for employees to clock in and out from anywhere
• Simplify payroll processing, from start to finish
• Facilitate payroll tax and general ledger reportings
• Offer a self-service portal that employees can use to quickly obtain payroll information and self-manage their benefits
• Let you design (and issue) pay stubs that help employees understand how they were paid
• Increase compliance with payroll laws
• Enable you to run multiple pay schedules, if needed (e.g., biweekly and semimonthly payrolls)
• Promote a paperless payroll environment
• Provide reporting and analytics that help you make data-driven payroll decisions

In short, a modern payroll solution:

• Automates and speeds up payroll processes
• Decreases human data entry (and errors)
• Improves the employee experience

Payroll data and key performance indicators are vital

The Ceridian report says, “Business can’t improve what they don’t measure.” Therefore, to improve payroll service delivery, you must first measure your payroll performance.

This includes defining, tracking, and analyzing the following payroll key performance indicators:

• Payroll accuracy
• On-time delivery
• Time to process and commit payroll
• Overall cost of payroll
• Days to handle retroactive corrections

Establishing KPIs enables your payroll team to evaluate its strengths and weaknesses. Without these metrics, you risk inefficiencies, compliance problems, and employee dissatisfaction — which will hinder the payroll team’s goal to be more strategic.

A knowledgeable and caring payroll staff is essential

The heavy emphasis placed on payroll technology can cause payroll practitioners to disregard or overlook the importance of a knowledgeable, caring payroll staff.

Payroll technology is essential, but you also need trained human beings to handle employee payroll issues that cannot be resolved through the self-service portal.

If you have many employees, it’s likely not feasible to have individual employees contact the payroll department directly. In this case, they can go through their manager or supervisor, who can then contact payroll, who should then seek to resolve the issue as effectively as possible.

When employees believe the payroll team does not care about their pay issues, it can cause them to lose trust in the organization.

If you have few employees, it may be feasible for individual employees to contact the payroll department directly.

When employees believe the payroll team does not care about their pay issues, it can cause them to lose trust in the organization. So, make sure your payroll employees have not only the necessary hard skills but also soft skills.

Payroll soft skills include:

• Communication
• Integrity
• Attention to detail
• Timeliness
• Confidentiality
• Problem-solving
• Empathy

Make employee satisfaction a payroll priority

In doing so, you make payroll a strategic business partner, rather than simply a transactional function.

There are many ways to foster a high-performing payroll team that drives employee satisfaction. Strategies include:

• Pay transparency
• Pay equity
• Also, pay benchmarking
• On-demand pay
• Modern payroll software
• Payroll data/Key performance indicators
• A knowledgeable and caring payroll staff

In the end, it’s about leveraging payroll practices that show employees you care about their well-being. These solutions can strengthen employees’ trust in your organization and motivate them to stay.