Payroll Trends: Looking Back, Looking Forward
The start of each new year for many of us usually prompts reflection. As a business owner and consultant, I have spent some time thinking about payroll and the role it can play in the employer-employee relationship. Three major themes come to mind: speed, transparency, and flexibility.
Speed: same-day pay, shorter payroll cycles, and more
Not so very long ago, the idea of sensitive information like employee records and salary data being “out there” in the cloud was considered a security nightmare. But as the cloud has become more secure and therefore more accepted, organizations are taking advantage not only of the convenience, but also the speed a cloud payroll application can offer.
Because integration is enabled across employee timekeeping and payroll, we’ve seen the advent of benefits such as same-day pay for hourly employees and much shorter payroll cycles. Continuing to be able to have a real-time view into company reporting on payroll, as well as individual pay stubs, will be one of the trends this year.
Transparency around payroll
Multiple levels of transparency are necessary when it comes to payroll. This means transparency for employers into what may be thought of as the “black box” of outsourced payroll. Employers need the ability to take accountability for everything that is done by their third-party providers. Transparency must also be communicated from the top-down. This means visibility from both an executive level into your true cost of labor and the available talent pool, as well as transparency for all employees around pay equity in compensation for skills, behavior, and results as appropriate.
Transparency can be difficult, but it is the best way to ensure quality and to make sure that you have an authentic brand in the marketplace. Mistakes might be made along the way, especially as we move toward more transparency around pay. But if the spirit of the intent is correct, it will take us far.
Flexibility as a key differentiator
I’ve spoken a lot in the last year about how changes in the area of payroll can impact the huge number of workers living paycheck to paycheck. But it’s important to remember that, among all employees, whether blue collar or white collar, there are plenty of savvy investors who want access to their money as quickly as possible, so they can reinvest it. Payroll, like some other services, needs to be offered in whatever ways individuals look forward to receiving their information. The ability to meet people where they are when it comes to their financial needs could be a game-changer and true differentiator going forward. It gives employers another lever to pull when it comes to attracting and retaining talent.
Even if organizations don’t have the budget to offer higher compensation than their competitors, the transparency and opportunity they provide around payroll and paychecks may win them talent they might not otherwise have attracted. That means self-service access on mobile devices through text and social media, and workforce management or payroll apps. These apps run the gamut from student-loan repayment to micro-investing your mortgage from your paycheck date at the end of the month, when your payment is due.
Delivering on all these payroll trends requires a strong partnership with payroll providers. Whether you’re just getting a software solution from a third party, or whether they’re doing your full HR strategy, it’s important to bring them into the process sooner rather than later. Technology is a big part of how you execute business strategy, and getting employees to buy-in starts with getting the fundamentals right: a paycheck delivered on time, with access to information and accompanying services when, where, and how they want them.
No matter what technology advancements come our way or how the workforce changes, payroll remains a constant. It’s the contract between employer and employee — and trust is built when employees are paid accurately and on time. However, economics is not a given and things happen. When they do, you’ll want to ensure you’re ready and have a back-up plan to ensure you don’t lose the trust of your valued employees or take a step back in your payroll process. Here is one way Paychex is helping organizations guard against payroll interruptions.