Payroll has been called one of the most critical business functions. Employees do their jobs primarily for one reason, to make a living. So you can get an idea how a company that didn’t deliver on-time and accurate payroll would fare.
Pretty quickly, they would start quitting their jobs without a paycheck. Furthermore, it isn’t long for businesses to witness closure given their employees help bring the money needed to survive.
The only thing preventing a company from losing its most valuable asset – the workforce itself – is accurate, timely payroll processing and flawless payroll management.
But aside from its vital function of making sure employees report for work each day, what makes payroll so significant? How does payroll affect employees and organizations? Here is a deep dive into the significance of payroll.
The Importance of Payroll in Companies
Payroll and the way it is managed directly impacts:
- The company reputation: Businesses that do not properly handle their payroll processes expose themselves to a bad reputation which can bring them on the radar of local labor and tax authorities as well as damage their chances for attracting potential talent in the future.
- Compliance: Processing payroll correctly is important to comply with tax laws and reporting obligations businesses are obliged to financial authorities to avoid fines and penalties.
- Talent retention and employee turnover: If the employees are paid accurately and on time, they will experience satisfaction in their job which in turn will lead to increase in employee loyalty towards the company.
- The financial integrity of a business: A well-managed payroll helps hold a clean, transparent and accountable financial system in the organization.
Employee engagement, morale and productivity: A timely and accurate payroll creates trust between the employees and the company, that translates into a more engagement and motivation which ensures a financial stability that is beneficial for the employee morale and can ultimately even have positive implications for their performance. Employee benefits are also a major factor in engagement and performance.
The next facet to target is the employee experience, which is also closely related to drive employee engagement, morale and productivity.
What Is The Impact Of Payroll On Employee Experience?
The experience of paying payroll is a crucial touchpoint in the overall experience of an employee in the organization, which is the aggregated experience an employee gets with the organization throughout the time of working therein.
It plays a key role in how he or she perceives the company, and ultimately, how ardent he or she will be to do well, and go above and beyond every time it is required.
Timely and accurate wages and salary payments are essential for a positive payroll experience that adds to the employee’s trust in the business, as well as his or her job satisfaction and engagement. However, there’s much more to delivering a positive payroll experience than just paying employees accurately.
In the new age of digital business, payroll can play a paramount role in delivering an attractive experience to the employees.
The right technology enables companies to pay employees the way they want, increasing flexibility with alternative pay methods like digital wallets and even allowing employees to access their earned income early. Allowing employees to choose how and when they are paid can be a major step toward increasing their loyalty, engagement, and financial well-being.
Another thing worth mentioning about modern payroll technology is that it majorly equips employee self-service functions, meaning that workers can search, edit and view their personal payroll information, such as bank details and pay slips at any moment and from anywhere.
How Can Organizations Take Advantage Of The Strategic Potential Of Payroll?
We have already touched on several points regarding the significance of payroll to the organization like financial integrity and compliance.
But a fundamental part of payroll often gets neglected – that’s the strategic opportunity hidden in the vast sets of payroll data generated each month.
With payroll data in hand, businesses can identify inequities in their current pay structures, identify turnover and absenteeism trends, make their salary and benefit packages more competitive, and make sound and informed data based decisions that serve the overall business strategy.
If businesses can join and unify all their data through a payroll solution that has a single source of truth, they can strategically tap into their payroll data.
