Are You Giving Your Employees the 'Pay Experience'?
How important is salary? According to Ceridian's 2019 Pay Experience Report, "An employee's experience with pay directly impacts how they feel about working for a company. How compensation is set, and how easily an employee can access what they've earned, is more closely tied to engagement and retention than most imagine."
There are five factors that influence the pay experience:
- Fair pay.
- Accuracy and timeliness of pay.
- Frequency of pay.
- Alternative pay methods.
- Pay understanding and communications.
1. Fair pay
Despite the meteoric rise of workplace benefits, salary remains the most highly valued employee reward.
In the 2020 "Getting Paid In America" survey, 60.03% of employees said higher wages were more important to them than better health benefits, while 39.97% chose the latter.
Employees want to be paid fairly for their work. For most, this means no less than the market rate for the position.
2. Accuracy and timeliness of pay
According to the 2019 Ceridian study, 25% of employees said they were paid inaccurately in the past 12 months, and 22% said they received their pay late.
Per the "Getting Paid In America" survey, 34.19% of employees said it would be very difficult for them to meet their financial responsibilities if their paychecks were delayed by one week, and 34.51% said it would be somewhat difficult.
Inaccurate or late pay inconveniences the employee and may cause their trust in the company to decline.
3. Frequency of pay
A 2020 survey by First National Bank of Omaha found that 53% of U.S. adults "do not have an emergency fund that covers at least three months of expenses," and 49% "say they expect to be living paycheck to paycheck in 2020."
The bottom line is that employees want to be paid within a reasonable time frame, and many cannot afford a lengthy wait. Note, however, that although on-demand pay has been gaining momentum, the "Getting Paid in America" survey shows that most employees (57%) do not want on-demand access to their wages and would rather wait until their regular payday.
4. Different pay methods
These may consist of:
- Paper check.
- Direct deposit.
- Payroll card.
- Prepaid reloadable card.
- Online payment system, such as PayPal or Venmo.
Employers do not have to offer all these options; some may even be impractical. The important thing to remember is that employees want flexible payment methods. At the very least, they want digital alternatives to paper checks, such as direct deposit and payroll cards.
5. Pay understanding and communications
- Giving employees easy-to-read pay stubs that break down how they are paid.
- Being responsive to employees' concerns about their pay.
- Promptly correcting pay mistakes and taking measures to avoid repeating them.
- Implementing pay-related regulations accurately and on time.
- Notifying employees in advance about issues affecting their pay.
- Providing employees with an online self-service portal that enables them to quickly access or update their pay information.
- Soliciting feedback from employees about your pay practices.
Finally, make sure your HR, payroll and financial vendors are committed to helping you enhance the pay experience.