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How does Poor Payroll Management Affect Employee Experience

How does Poor Payroll Management Affect Employee Experience?

Being in the human resources (HR) management job role for almost seven years, I understand the importance of employee experience which is considered to be one of the greatest assets for any-sized organization today.

With remote and hybrid job offerings adding to the overall benefit of an employee experience, poor payroll management can lead to a bad impression for an organization.

What is payroll management?

Payroll management is a primary task of the HR department that makes up for the list of employees currently working for the organization and determines the components of the remuneration including basic pay, variable pay, house rent allowance (HRA), and Leave Travel Allowance (LTA).

An imperfectly managed payroll can lead to financial stress for an employee. And, untimely payments can lead to mental stress for an employee, which in turn impacts their productivity at work.

Even a slight delay in payments can lead to a negative impression and hit those employees the most who depend on their paychecks to manage their household expenses.

What is employee experience?

An employee experience encapsulates what employees encounter and observe during their tenure, from pre-recruitment to post-exit, at an organization.

There are chances of satisfied employees leaving the organization for better prospects, however, at the same time, a then satisfied employee can be your future asset who may think of re-joining your company due to the good experience they had whilst working with your organization.

In addition, a satisfied employee can spread good word-of-mouth amongst their network, improving the organization’s reputation and talent acquisition process too.

What are the major effects of poor payroll management?

Instantly hampers employee’s productivity

Considering your full-time, part-time, or even freelance employees, unable to ensure in-time payments than what was decided at the time of the interview will automatically generate multiple negative thoughts in an employee’s mind, which in turn impacts the need for a sound mind for an employee in their daily tasks while working with your organization.

Increase in attrition rates

Delay in receiving payments automatically hampers an employee’s personal life as many of us are dependent on the remunerations to continue paying a loan, children’s education fees, and leisure expenses too. Hence, a delay in payment can lead an employee to look up new job options and reliable companies, affecting the retention rates for your organization.

Generates negative reviews

Today, employees are smart enough to refer to online employee experience review platforms that include a true voice and are more related to basic requirements, like overworking hours, inadequate and irregular compensation, and poor management. Even a single negative review can impact the decision of multiple candidates for joining your organization.

Missing out on talent & trust

An employee provides his time and skills in return for remunerations and being unable to ensure smooth payroll management will immediately create mental stress for employees, who begin to lose hope and trust while in your organization. And, frequent delays in payments will force many employees to leave the organization the next day after payday, without fulfilling the notice period.

Closing tip for human resource professionals

Technology is helping HR professionals to fill the gap between payroll management and employee experience. It makes it easy for the human resource department to keep their employees in sync and transparent about their pay components while creating an alert in case of delays in payments. This way, an employee has enough time to make up for the delay and be rest assured that their pending dues will be paid off soon.

A discount coupon or loan system can be offered by an organization in case of a payroll management glitch to ensure your employee’s basic necessities are fulfilled during these tough days.