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Payroll’s Benefit to Employee Experience Exceeds Sum of Transactions

July 16, 2021, 4:12 PM

Viewing payroll as more than an employer’s obligation to pay employees for work performed, but also as essential to employees’ perception of their value to a company, benefits employees as well as employers and their brand, a speaker said July 15.

Several strategies can help companies break through old ways of thinking about payroll as just a transactional requirement and encourage “more human” interactions with employees, said Kenny Latimer, group marketing manager for BambooHR, a human resources software company for small and medium-sized companies.

Perceived Value

Considering payroll as an expression of gratitude, appreciation, and a means of conveying to employees that they and their work are valued can be transformational to a company, improving employee satisfaction, perception, and retention, said Latimer, who is responsible for both payroll and time tracking products.

The amount employees are paid, how they are paid, when they are paid, and how accurately they are paid are all factors that go into employees feeling that they are valued, said Latimer, who spoke at the American Payroll Association’s Virtual Congress.

Payroll errors and inaccuracies, missed deadlines, lack of transparency, lack of understanding about payroll data, and an inability to access payroll data are among the ways that payroll departments play a role in degrading the employee experience, he said.

Transformative Strategies

Seven strategies can transform companies’ payroll departments, Latimer said. Namely, “nail the fundamentals,” empower employees, provide payroll education, be transparent, understand employees, treat payroll as a benefit, and support financial wellness, he said.

Nailing the fundamentals requires eliminating errors, completing payroll on time, and ensuring that updates are reflected in payroll through a well thought-out and ironclad process, Latimer said.

“If we don’t nail these fundamentals, our payroll is going to be that contributor to pushing employees out of our organization and degrading our employer brand,” Latimer said. Using software to automate the process, ensuring a second or third set of eyes are part of the approval process, and setting a schedule can be helpful, he said.

Empowering employees by allowing them to update their personal information, adjust their 401(k) contribution, manage their direct deposit, and view historical paystubs allows them to feel like they are part of the process, Latimer said. It also improves the likelihood that the data will be more accurate and limits the time that payroll officers spend answering questions, he said.

Educating employees to better understand federal and state taxes, deductions, benefits, direct deposit, timing, and payroll processes helps them to better understand what they are getting paid and what those numbers and terms mean when they are looking at their paystubs, Latimer said, noting that payroll is a complicated world that is difficult for employees to understand. Helping employees to better understand their paystub is a good place to start, he said.

Transparency with employees about reimbursement timing, commission clawbacks, deduction suppression, prorated checks, and 401(k) contributions is important, Latimer said. Without transparency in these areas, employees lose trust and start to feel like the company will do what is in its best interest without considering the employee, when in reality these practices may be established policy, he said.

Understanding what employees care about on paystubs, what questions they have, what timing challenges they have with getting paid, as well as what payroll education is needed can be identified by conducting internal interviews and surveys, Latimer said.

Understanding more about how employees perceive payroll is just one step, Latimer said. The second step is to make a plan to take care of the problems uncovered during that research, he said.

“There’s not one right way to make this plan, there’s not one right way to conduct this research, but both of these steps should take place,” Latimer said. Part of the objective of that plan should be, “How can I transform payroll from just being a transaction to being a human interaction?” he said.

Treating payroll as a benefit also can make for a better employee experience, Latimer said. Consider how to make the payroll experience better, such as through unique pay schedules, more flexibility options such as rapid disbursement and paycards, commission structures, and whether employees prefer paychecks or direct deposit, he said.

Supporting financial wellness is not directly tied to payroll, obviously, but it is a critical component to a holistic compensation strategy, Latimer said.

Employees who are not paid at the right time or who are not on the right type of pay schedule are not able to meet the expenses that they normally have, Latimer said. “So that’s degrading to their feeling of financial wellness, and if they are feeling like their organization is not helping them achieve that, then that could be a problem,” he said.

Tackle as many of these strategies as possible, giving emphasis or focus to one or two areas, Latimer said. Try starting with nailing the fundamentals and understanding your employees and maybe that will spark which area should be focused on going forward, he said.

Thinking about how payroll is part of employees’ experience and how employees perceive the company as a result of the way payroll is executed can provide interesting insights that can change how a company behaves and executes its payroll, Latimer said.

To contact the reporter on this story: Christine Pulfrey in Washington at cpulfrey@bloombergindustry.com

To contact the editor responsible for this story: William Dunn at wdunn@bloombergindustry.com; Jamie Rathjen at jrathjen@bloombergindustry.com

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