It is widely accepted that a good company culture is essential for a business to succeed, but various aspects that can help create this often go overlooked. The implications of payroll on company culture is one such aspect. The fact is, payroll has an effect on many areas of a company including cash flow, productivity, and overall business success. Because of this, it’s vital that business owners and senior staff do what they can to make sure payroll runs smoothly and correctly.
Why is payroll important to company culture?
Research carried out by The Workforce Institute at Kronos revealed that 49% of Americans would start looking for alternative employment after just two payroll errors in their current workplace. This statistic illustrates just how important it is to make sure payroll is consistently correct.
Not only this, but it’s known that when they’re looking for a job potential employees value perks, programs, and benefits that come with a position. In most workplaces, these would also come under the responsibility of the payroll team.
Without an effective and efficient payroll department that can accurately maintain wages/salaries and other compensation, it’s likely that costly errors will start to occur. If this happens, doubt and distrust among employees could easily start to spread. This, in turn, would damage company culture. To understand more about the relationship between company culture and payroll, read on for advice on how to cement this relationship.
How payroll builds company reputation
Ensuring that your payroll department manages all its processes well, and adheres to strict security measures, means there’s a lower chance of mistakes and questionable activity. This helps engender a good reputation for your payroll department, and by extension your company.
On the other hand, if your payroll team become known for regularly making mistakes and for potential suspicious activity, this will lead to bad press. Whether this is through the media or simply word of mouth, it can severely damage your company’s reputation. Such negativity will likely impact your relationships with stakeholders, including staff who will feel let down and maybe even tempted to part ways.
Payroll can increase employee engagement
Being paid correctly is one of the biggest – if not the biggest – priorities for employees when it comes to work. If staff are subjected to incorrect payments more than once, they are likely to start feeling undervalued. This will then lead to a feeling of disengagement. Why would an employee want to put in 100% of their effort if they are going to be paid insufficiently or incorrectly?
Incorrect payments can also plant a seed of doubt regarding the financial stability of a company. If staff are not receiving an adequate amount in their pay check, they may well start worrying that the company can no longer afford to pay them. This too will likely lead to feeling demotivated.
Employees are hired to do a job in exchange for an agreed payment. Therefore an effective payroll team that gets this payment right every time is needed in order to maintain the relationship. It’s also reassuring for staff if they know they can communicate with the payroll team as needed, and get any queries answered in a timely manner.
The payroll department provides compensation
No matter how much an employee enjoys their job, the fact is that they are only doing it on the understanding that they will be compensated in the form of a pay check and any agreed benefits. This age-old system is vital in order to keep employees feeling motivated and happy at work. Without correct and adequate compensation from the payroll department, it will only be a matter of time before employees feel angry and a poor company culture is born.
If a member of staff goes the extra mile, while they might not expect it, financial compensation can go along way toward ensuring they feel valued and happy. Performance-based pay models can be useful in some businesses because they mean that staff are properly compensated in accordance with their performance, which could include commission or a target-based bonus. Such flexible compensation needs to go through a reliable and accurate payroll department.
Payroll motivates employees to progress
A big factor in achieving a good company culture comes from whether or not staff feel they can progress – or even whether they want to. Stagnated employees invariably end up feeling bored and discontent, which can be toxic in a work environment.
These kinds of feelings can be avoided, however, if it’s clear that there is room for progression, and that any promotions will come with an increase in salary from the payroll department. It’s vital that the payroll team is always fully in the loop when it comes to staff job roles, so that they can administer the right payments to the right people, whenever they are due. This may not always be salary, but also bonuses and other benefits too.
Offer more payroll visibility
Another helpful way to improve company culture via the payroll department is to offer staff more visibility of their pay packet and any other relevant benefits. This can be done using effective and reliable payroll software that includes the option of online payslips or a payroll app service for employees.
This kind of additional service means that employees don’t always need to approach their payroll team to get their questions answered, because their pay information is readily available on their mobile or tablet. Having this access to their information will offer reassurance to employees, who will gain more confidence in the payroll team due to the level of transparency.
Considering all the ways in which the payroll department effects employees, it’s clear that payroll has a significant impact on the overall culture of a company. With ineffective or poorly run payroll, businesses will soon end up with a bad reputation, unhappy staff who are disengaged, and probably a high employee turnover. To avoid these issues, business owners need to make sure they invest time, money, and attention in their company’s payroll.