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Think payroll is just about paying your workers? Although most people see payroll as a transactional affair—payment for a job performed—it’s actually more important that that. Payroll can actually have a much broader impact on your business’s overall health, driving employee morale, productivity, and even turnover rates.
The key is to understand the unexpected connection between payroll and your workers’ job satisfaction. Once you do, not only will it help you understand a major cause of employee dissatisfaction, you’ll also have some solid ideas about how to combat it.
We take a look at your employees, your payroll, and how you can help them play nice together—so you can focus on growing your business instead of replacing the next worker who quits.
According to Work Institute’s 2017 Retention Report, turnover can cost as much as 33% of a worker’s annual salary. With a number like that, too much turnover will obviously eat into your profits.
And the bad news is that just one payroll mistake can drive off good employees. Or maybe the worse news is that they’re all but expecting you to make that mistake. About half of the US workforce (82 million workers) report that they’ve experienced a problem with their paycheck. And when they’re seeing headlines about employers stealing from workers’ paychecks with illegal deductions, they go on high alert.
The issue isn’t just employee-employer distrust, though:
As an employer, there’s a lot you can do to ensure these issues don’t impact your workers. For instance, since a lot of turnover stems from payroll mistakes, you only need to be sure your payroll process minimizes mistakes.
And since 45% of workers would appreciate help understand their pay stubs, taxes, and deductions, you can boost morale by sitting down with them to answer their questions. Seriously, it’s that easy.
Writers at Harvard Business Review agree. They’ve found that workers’ “intent to leave” decreases when they’re happy with their pay, and they recommend clear, down-to-earth conversations:
Clearly, having transparent and honest conversations with employees is a no-cost way to improve engagement. But for many businesses, it represents a challenge because it means adopting a whole new mindset around pay.
If your employees struggle to understand their pay stub, this infographic by Wagepoint should help. It breaks down each part of the pay stub and explains what’s going in and what’s coming out of the paycheck:
When you sit down to talk to employees, keep in mind:
We don’t typically associate employee satisfaction with understanding pay stubs. But your workers don’t always understand the numbers and the acronyms behind them. As it turns out, keeping them engaged and happy is as simple as answering their questions.
If that’s all it takes to reduce employee turnover, it’s a no-brainer.