Compensation, Compensation Administration

Payroll Problems May Undermine Employee Experience, Says Survey

Payroll problems may be the fastest way to send top talent to the exits. According to a new survey from The Workforce Institute at Kronos Incorporated, about half of the American workforce (49%) will begin searching for a new job after experiencing just two issues with their paycheck, an alarming rate that highlights the fragility of a carefully cultivated employee experience if organizations can’t first deliver on core business processes.payroll

Part two of the “Engaging Employees through Payroll” series surveyed more than 1,000 U.S. employees to examine the hidden costs of payroll errors and explore the vital role payroll professionals serve in building an engaging employee experience. Part one of the survey revealed payroll problems affect 82 million U.S. employees, which is more than half (54%) of the American workforce.

Other key findings include:

Little Patience for Problems

Nearly half of American workers (49%) will seek new employment after just two payroll mistakes, such as being paid late or incorrectly.

  • Approximately one in four employees—24%—will look for a new job after the first payroll mistake, while another 25% will seek new employment after the second issue.
  • Salaried employees are more likely than hourly workers to start looking for a new job after the first problem (29% versus 19%.)
  • Nearly a third of parents (30%) will kick off a job search after the first error (compared to 16% of nonparents), while men (29%) are more likely than women (17%) to do the same after just one issue.

Effective Managers Are Vital

Employees look to their direct supervisor before anyone else for help, making this a critical role to resolve pay issues through effective guidance.

  • More than one in four employees (26%) say they would first turn to their manager, direct supervisor, or boss for help fixing a mistake.
  • About one-fifth of employees (19%) would report their payroll problem directly to their Human Resources department, while 14% would turn to their payroll department.
  • Surprisingly, 7% of employees say they would not report a payroll error to anyone. Just 4% are not sure who they would turn to for help correcting a paycheck error.

Generational Differences Exist

Baby Boomers are most forgiving of payroll errors and have the deepest understanding of their paychecks.

  • Nearly half (44%) of American employees aged 55 and older say they would stay at their job as long as they are eventually paid correctly. That’s in stark contrast to their colleagues aged 18 to 29 (13%,) 30 to 39 (17%,) and 40 to 54 (27%,) who are much less willing to stay even if they’re eventually paid correctly.
  • Just 19% of Baby Boomers find the taxes and deductions on their paycheck confusing to read and understand. They once again outperformed other generations, as 45% of employees aged 18 to 29 found their paychecks confusing, while more than half (53%) of employees aged 30 to 39 were confused, along with 38% of those aged 40 to 54.
  • While 43% of employees aged 18 to 29 and more than half (52%) of employees aged 30 to 39 have been forced to make a late payment on a bill such as a credit card, car loan, or home/apartment due to a payroll problem, just one in 10 (11%) Baby Boomers report having ever encountered a similar situation.

Everyone Wants a Raise

An overwhelming majority of U.S. workers feel they deserve an annual pay raise.

  • According to the survey, 84% of all employees expect a pay raise each year they stay with their organization, with hourly (85%), salaried (83%), young employees aged 18 to 29 (81%), Baby Boomers 55+ (81%), female (88%), and male (80%) respondents in nearly universal agreement.

“Although organizations are making significant investments in benefits, rewards and recognition, physical workspaces, and other areas to help deliver an engaging employee experience, many payroll professionals are still burdened with manual processes and outdated technology. Just a single payroll error has the potential to encourage top talent to seek new employment, undoing tireless work to build an engaged workforce,” said Joyce Maroney, Director, The Workforce Institute at Kronos, in a press release of the findings. “Replacing legacy payroll tools with a unified human capital management cloud platform will create a rock-solid foundation for all other employee experience initiatives by helping payroll improve accuracy, process payroll quicker, and ultimately use their tremendous knowledge to take on a more strategic role building engagement and mitigating risk within the organization.”