How Your Payroll Process Could be Hurting Employee Experience

Nov 5, 2019  | Topic: Culture

Many of the world’s biggest brands are focusing on the employee experience (EX) to ensure they either become, or maintain their status as an employer of choice in their market.

Investment in employee experience programs is growing exponentially, and research suggests it is money well spent - with a study by Harvard Business Review finding a direct correlation between employee engagement and business performance.

‘Employee experience’ encompasses every touchpoint your workforce has with your organisation. It encapsulates everything your people see and feel throughout their employment with you - from the very first contact as a potential recruit, to the final interactions when (and after) they leave.

With working conditions and company culture at the heart of the employee experience, many EX initiatives centre on workplace design, wellbeing programs, reward schemes and flexible working. But hidden in the shadows of these more glamorous concepts, is global payroll.

Payroll is a function that’s often overlooked as a key part of the employee experience. Yet one of the fastest ways to undo all of your hard work on EX programs is to saddle your workforce with negative issues surrounding their pay.

Nothing will create disharmony and disengagement in the workforce quicker than payroll delays or errors. According to PwC’s annual wellness survey 2019 , financial matters are by far the biggest cause of stress for today’s employees - scoring higher than all other factors put together.

So let’s look at the reasons why payroll inaccuracies might be undermining your employee experience - and why investment in payroll today could have a more strategic impact on engagement, as well as attracting tomorrow’s top talent.

The knock-on effects of late employee payments

While it’s often implied that the modern workforce values job satisfaction and flexible hours over salary, it’s money that ultimately makes the world go round.

Everyone has bills to pay, and when payroll runs late, it can cause significant personal issues for your staff - issues which can have a knock-on effect on morale and productivity at work.

Regardless of how much you’ve invested in that inspirational working environment, it will do little to soothe a staff member worrying about a missed mortgage payment or impending bank charges.

If these knock-on effects of a late payroll run seem exaggerated, it should be remembered just how fine the margins can be for many people in an increasingly expensive society. PwC’s survey, for example, reports that 49% of employees find it difficult to meet household expenses on time each month.

The performance of payroll can therefore be critical to employees’ financial and mental wellbeing. While the immediate impact on your business may be difficult to detect, you can be certain there’s a price to pay for every late or inaccurate payment you make.

Counting the cost of a breakdown in employee trust

Payroll inaccuracies can harm productivity on a far more perceptible level too, with employees temporarily downing tools to query and remedy their payslip.

Depending on the scale of the problem, the size of your organisation and the responsiveness of your HR teams, such queries could take a sizeable chunk out of your overall fee-earning capacity.

In reality though, more long-term damage comes from the erosion of trust between employer and employee, especially if mistakes are repeated more than once.

It can’t be understated just how difficult it is to regain a worker’s trust once lost. A breakdown in this relationship will potentially result in the employee looking elsewhere for employment.

The lasting legacy of payroll mistakes

With review websites like Glassdoor now playing a key role in the employment market, any shortcomings in your employee experience can be quickly exposed - and leave an indelible mark on your reputation.

Poor ratings on these increasingly influential websites will have a significant impact on your future recruitment, with top talent likely to filter out low-scoring employers when they search for their next role.

Given the notion that people are more likely to air a bad experience than a good one, paying staff accurately should be very near the top of your EX priorities. After all, nobody ever really complains about the lack of a table-tennis table in the office - but most will be quick to denigrate a business that continually paid them late.

Payroll & EX - In summary

Amid the relatively new focus on employee experience, organizations are scrambling to implement eye-catching initiatives such as office ergonomics, flexible hours, wellbeing programs and social activities. ‘Superstars’ are often regarded as those who do all of these things, but excel in providing superior digital experiences too.

Timely, accurate payroll delivery is arguably one of the most fundamental parts of your employee experience, with a key role to play in maintaining morale, productivity and trust.

Eradicating payroll delays and mistakes should be one of the foundations for any business seeking to improve the experience of its workforce.

When efficient and effective service is established, the payroll department can explore other ways in which it can have a positive effect on the employee experience - for instance, through the exploration of real-time or on-demand pay, which could help position the business as a modern pioneer on pay.