Using Payroll Software to Bolster the Employee Experience

Analyst Viewpoint

Employee engagement is a critical factor in the success of any organization. And a positive employee experience plays a crucial role in driving this engagement, as it directly impacts an employee's sense of fulfillment, satisfaction and commitment to their work. Our research reveals that one-half (51%) of organizations believe that HCM technology systems are extremely important to improving employee experience. And yet, rarely does anyone think to include payroll technology in these terms. Generally speaking, payroll is taken for granted. Occasionally, employees review a pay slip to ensure proper deductions and withholdings, but for the most part, the only thought given to payroll is when something goes wrong. This is primarily because payroll systems have historically been viewed as a means to optimize and streamline a complex process, rather than as a tool to bolster the employee experience. Ultimately, payroll is a hygiene factor in a person's motivational hierarchy of needs: without it being right, nothing else can be. It’s time for organizations to start utilizing this investment more strategically.

Payroll technology can have a major impact on the employee experience in several ways. For example, with modern payroll systems, organizations can provide flexibility in how employees are paid. They are no longer dependent solely upon paper checks, which can be costly and inconvenient, or direct deposit, which assumes all employees have bank accounts. Mobile wallet is gaining traction, as employees who already use Venmo, Apple Pay and the like prefer the convenience of having their pay deposited to those accounts where many are already managing bill pay and personal payments. Another significant impact of payroll software on the employee experience is its ability to automate the payroll process, helping payroll teams ensure employees are paid on time, accurately and in full. This builds the most basic level of trust between an employee and their employer, which is particularly relevant given the rise of “work-from-anywhere” policies or for those in unique situations like temporary overseas work assignments.

Managing global payroll can be a daunting task, as each country and specific locale has its own tax laws, regulations and payment processes. Employers must navigate local currency conversions, tax compliance and social security contributions while ensuring employee pay is accurate and timely, and they often do so by engaging multiple local payroll providers that are experts in their region. At the same time, employees working outside of their regular geography face additional challenges such as navigating foreign banking systems, dealing with cultural differences and managing communication barriers. These challenges can create confusion and frustration around payroll for employees, leading to dissatisfaction and even mistrust of their employer if not managed proactively and empathetically.

The right payroll platform can help mitigate these challenges by allowing employees to access their pay information from anywhere, at any time, through a user-friendly interface. They can view their pay stubs, track their time off and manage their benefits information all in one place. This is most effective when the user front-end is consistent across the organization, regardless of location. Having this information readily available in a familiar format can help employees feel more empowered and informed about their compensation. It can also provide a sense of security and stability via a consistent user interface, especially for those employees who may be navigating unfamiliar environments, currencies and financial systems. 

In addition, the right payroll platform can help ensure compliance with local regulations and tax laws by automatically calculating and deducting the appropriate taxes and contributions, reducing the risk of compliance errors and payroll inaccuracies. This is a boon for payroll teams and their own employee experience, reducing the need for manual intervention and helping to normalize data coming from disparate systems within the timeline of a payroll cycle that is non-negotiable.

Payroll technology can also improve transparency and communication between employees and their employers. For example, employees can easily see how their pay is calculated and what deductions are being made, in a currency and language they understand, thus helping to eliminate confusion and misunderstandings. The platform may also be able to facilitate real-time communication between employees and their HR or finance teams. This can help resolve any pay-related issues quickly and efficiently, reducing the likelihood of disputes and improving the overall employee experience.

Employees’ expectations of their employers have shifted dramatically since the pandemic, placing increasing demands on organizations to provide a workplace that values transparency and mutual trust. Payroll technology is an essential tool for today’s digital human resources and finance operations, and it has the potential to significantly impact the employee experience. The right software can improve accuracy, boost compliance, and optimize the payroll process. By making it easy for employees to access and manage their pay information, regardless of location, payroll technology can help foster a culture of trust and transparency that drives engagement and productivity. In today’s competitive business environment, organizations must reframe their view of their HCM technology investments. More than just a pathway to digitalization and process optimization, these tools are critical components of their overall employee experience strategy.