And what are these key elements? Whether employees are recognized for their accomplishments is one. Others have to do with good work–life balance, whether employees’ well-being is prioritized, and whether their managers aid their success. Yet others, as found by the report, deal in employee sentiment – for example, whether staff feel empowered.
This is probably where payroll comes in. Nothing translates to empowerment like getting paid. In the world of work, getting paid is the most visceral, fundamental aspect of employment. Put differently, there is no empowerment for most people in work that does not pay.When it comes to this employee experience, it would be interesting to know how the payroll function is among these Leaders vs. Laggards. Who considers payroll as it relates to the employee experience? It’s unclear whether all that many do – even though payroll is, plainly, ground zero for the employee experience.
The Nuts and Bolts of a Good Employee Experience
As leaders set about fostering a meaningful employee experience as a precursor to increasing productivity from greater employee engagement, their thoughts tend to turn first to professional development and workplace culture. Payroll probably comes to mind later, if at all.
Yet payroll sits at the heart of the employee experience. For employees, getting paid accurately, on time, and transparently forms the foundation of trust and satisfaction with their employer. And we know that these and other payroll-dependent expressions of a healthy employee experience are key components of any strong, positive employer culture.
Here’s why payroll is "ground zero" of the employee experience and how businesses can ensure this essential function supports their workforce.
One: Trust Starts with Accuracy and Timeliness
For employees, trust in an employer starts with the basics — being paid correctly and on time. Payroll issues like delays, errors, or confusing deductions are not only frustrating, but also lead to financial stress and erode trust in the employer. The impact goes deeper than the immediate inconvenience of a payroll error. The results of a survey by the Workforce Institute at UKG just a few short years ago revealed that 49% of employees would start looking for a new job after experiencing just two paycheck errors.
Research findings on this question, conducted by several other vendors, are similar. They corroborate the notion that any employer contending with an error-prone payroll process is sitting on a powder keg sure to translate into a likely workforce mutiny in the event of any mistakes.
This is because payroll errors aren't just about numbers — they're about credibility. A company that consistently gets payroll right sends a strong message: "we care about our employees and respect their time and efforts." When payroll runs smoothly, employees don’t have to worry about discrepancies in their paychecks or unexpected interruptions in their income. They can focus on their work instead of chasing HR for corrections or seeking answers to unclear deductions. They go about their work with an implicit trust that they’ll be paid for it.
Two: Payroll Reflects Transparency and Fairness
So, employees want to trust they’ll be paid the correct amount and on time. They also want to believe they’re being compensated fairly in relation to their peers and market standards. And they want transparency — visibility into payroll processes, such as clear explanations of deductions, taxes, and benefits — to help them understand their compensation. Never mind that this, too, builds trust. Confidence in the system reduces feelings of frustration and confusion. Employers who provide detailed yet easy-to-understand pay stubs or accessible payroll portals empower — there’s that word again — employees with information that helps promote feelings of financial security.
Beyond these outcomes of transparency are employees’ sentiments having to do with the perceived equity and fairness of their pay. Employees need assurance that their compensation aligns with their role, qualifications, and contributions. Pay audits and consistent salary benchmarks are valuable tools to reinforce fairness. Employers that actively address wage gaps or disparities send a powerful message about their commitment to a fair and inclusive workplace.
Three: Payroll Drives Employee Well-Being
Nearly one-third (32 percent) of respondents to HR.com’s report, “Future of Employee Well-Being 2024,” indicated they believe running out of money before payday is among their employees’ five greatest sources of financial stress. And, according to PwC’s 2023 Employee Financial Wellness Survey, 63 percent of employees say financial stress has increased over the last few years. Though they’d be useful and intriguing, no research findings are necessary to assume financial well-being is an essential component of the employee experience. Employees who feel financially secure are certainly more engaged and likely to remain with their employer long-term. Financial stress can also cause a temporary lowering of a person’s IQ by as much as 13 points, on average, as reported in a study by Mercer – which, clearly, affects productivity.
Payroll teams and systems can support financial well-being in several ways. Features like flexible payment schedules, early wage access — a.k.a. earned wage access (EWA) or on-demand pay — or savings options tied to payroll (such as direct deposit to savings accounts or retirement plans) significantly reduce employees’ financial stress. Employers that prioritize these options not only meet a financial need, but also demonstrate empathy for their workforce.
Additionally, employers can enhance payroll’s role in well-being by incorporating benefits education into the payroll process. For example, regularly sharing updates about available benefits — like health insurance contributions, retirement plans, or tuition reimbursement — can remind employees of the value they’re receiving beyond their paycheck.
How to Optimize Payroll for the Employee Experience
Payroll must enjoy the attention that anything else more than purely administrative would. Here are some strategies for optimizing payroll to elevate the employee experience:
- Invest in Modern Payroll Systems: Outdated systems are prone to errors, delays, and inefficiencies. Modern payroll software (i.e., cloud-based) helps to automate accurate, timely payments and includes employee self-service (ESS) for greater transparency.
- Foster Communication: Provide employees with clear communication channels to address payroll-related questions or concerns. Whether it’s a dedicated HR contact or an online helpdesk, ensuring employees feel supported is key. (The related link will find its way here once an upcoming episode of the “Future of Payroll and Workforce Management,” featuring a guest speaking exactly to this topic, becomes live.)
- Leverage Analytics for Equity: Regularly review pay data to identify and address potential wage gaps or disparities. Pay equity audits and adjustments demonstrate a company’s commitment to fairness. (And they’re far easier to conduct with the aforementioned modern technology for payroll.)
- Offer Financial Wellness Programs: Pair payroll with resources like financial planning tools, employee discounts, and EWA. These features demonstrate care and go beyond the paycheck to support employees’ overall well-being.
Employee Experience: Starting at Ground Zero
When payroll gets employees’ compensation right, this has a positive cascading effect on everything else in the employee experience. This is because everything employee experience–related resides downstream of making sure employees get paid on time and correctly. Payroll is indeed ground zero for the employee experience. Gone are the bad old days when payroll was a back-office process, out of sight and out of mind, merely an administrative task for some faceless team in the basement to perform every one or two weeks.
And this is good news. With the right technology, much of the task to improve payroll is straightforward and transactional for payroll professionals to implement. As employers look for ways to build a workplace that attracts and retains top talent, they should remember that big changes often start with simple, foundational efforts. Payroll may not always grab headlines, but its impact on the employee experience is undeniable.
