As flexibility has become the most important factor in where and when people work - and how they’re paid - payroll operations all over the world have had plenty of work to do to adjust. Even though things are now gradually settling down after the turbulence of the COVID-19 pandemic, what ‘normal’ looks like is now very different from a payroll perspective.
What organizations are finding now is that adjustments are necessary in order to keep both current and new employees satisfied. At a time when three-quarters of the global workforce are considering new jobs in what has been termed the great resignation (according to Everest Group), the majority also asserts that financial well-being has a major influence on employee experience, which has become a key value for many over the last few years.
That’s why employee payroll experiences must be enhanced and revamped, in order to meet their needs and expectations, in turn improving retention and spurring more successful recruitment. This blog explores the five key drivers behind this demand in more detail.
The five factors
These five trends relate to more than just employee experience. They also have major roles to play in shaping the future of payroll as a whole and propelling change in how it works:
A generational shift in the workforce
The younger cohorts such as millennials and Generation Z are gradually comprising more and more of the global workforce. Everest Group suggests that by 2025, this demographic will collectively make up more than 65% of employees worldwide, and will increasingly be at an age where they are taking leadership roles.
This means their demands for flexibility and financial security from employers will hold increasing sway, and those who don’t respond will experience decreased employee satisfaction and find it harder and harder to retain and attract top talent.
The need for a modern pay experience
As part of younger employees’ demand for financial security, they also want more digitally-led pay experiences. They’re so used to paperless, digital-first transactions and administration in other parts of their lives that they have come to expect the same from their employer’s payroll operations, which may become directly linked to job satisfaction.
This means many employees no longer see things like the opportunity to access pay and payroll information from mobile devices and the ability to do as much as possible independent of anyone else (such as payroll staff) as perks, but rather as essential services.
New workforce models
As the world of work and workplace culture has changed, traditionally rigid payroll practices are no longer proving to be fit for purpose. That’s because contractors, freelancers, gig workers, temps, and other non-full-time types of employees have working arrangements that don’t really fit in with standard bi-weekly or monthly payroll cycles. At the same time, remote working and co-location also throw extra curveballs into the payroll mix as more circumstances and currencies must be accounted for.
Put simply, the future of work demands a payroll approach that is far more fluid than perhaps it has been previously.
The cost of living crisis that is gripping many countries around the world has exposed the financial vulnerability that many employees suffer. When people are living paycheck to paycheck, they don’t have the savings that can help them deal with unexpected bills without resorting to credit cards or short-term loans.
A more flexible, autonomous payroll system such as Earned Wage Access can help, as employees can withdraw accrued wages at any time they need them, helping them avoid any potential spirals of debt.
Sense of fairness
Earned Wage Access also has a less tangible, but no less important benefit in improving employee experience and satisfaction. Employees increasingly value their worth and earning power in the workplace: hence the reason they want unencumbered access to the money they’ve earned and are unwilling to commit to extra hours that they won’t be paid for.
EWA allows them to see and withdraw all the money they’ve earned day-by-day, and appreciate a direct correlation between their efforts and their financial compensation.
At a time when the world of work is changing rapidly, these five factors show that there is much for payroll to consider, in order to deliver on the expectations of employees. What is clear, however, is that the changes are happening so fast that there is no time to lose for businesses that haven’t already adjusted.
Not only does a more fluid approach to payroll help attract and retain talented employees, but it can also be beneficial for the business and business performance by easing the burden of administration on payroll staff.
Learn more about how Earned Wage Access can be strategically beneficial for employers, and support employee well-being, in Everest Group’s new report here.