Gain greater employee satisfaction and retention by adopting innovative new payment strategies
As many companies continue to adapt to the changing business environment inspired by the COVID-19 pandemic, the slow-burning wick of payment innovation has been ignited. And while many larger businesses remain fixed in their internal payments processes–inefficiencies and all–a growing number of firms are speeding ahead, gaining greater employee satisfaction and retention by adopting innovative new payment strategies.
Revealing some of the latest innovations in payroll payments
Over the last five years, the payment landscape has begun to evolve, beginning with fintech startups. These savvy organisations have tamed technology to offer more employee-friendly innovations:
- On-demand earned wage access: On-demand earned wage access, also known as early wage access, provides instant pay if the employee has a financial need that crops up before the official payday. Payroll offerings like these have been demonstrated to improve employee retention and reduce the cost of churn as businesses around the globe continue to struggle with retention.[i] By one account, 81% of survey respondents indicate that they are more likely to take a job with an employer that offers on-demand access to pay.[ii]
- Real-time payments: With real-time payment technology, employees receive cash in their accounts instantly, instead of waiting for checks to clear. According to one survey, 80% of workers would like to stream their pay directly to their bank account as it is earned instead of waiting for an official payday.[iii]
- Push-to-card transactions: Similar to real-time payments sent to a bank account, push-to-card transactions make it possible for employees to receive payroll funds directly to a debit or credit card, even reloadable card options. This payment choice is particularly advantageous for the unbanked or underbanked or contractors and freelance, who can receive their paycheck to a card and then pay expenses directly.
While technology continues to lead the way toward greater employee choice in payroll, allowing workers to determine how and when they receive their paycheck, the typical process on the employer side has changed little over the last decade. It remains highly inefficient and plagued by manual processes.
Fortunately, new innovations in payments technology can improve the efficiency of making payroll payments, particularly for global enterprises, allowing employers to more easily accommodate innovations in payroll, while reducing costs and processing times for the organisation.
Overcoming challenges in global payroll payments
While a small number of cutting-edge firms are already on the verge of payments innovation, the vast majority are still seeking to streamline existing internal processes, cut waste and reduce their overall costs. According to a recent survey conducted by Deloitte, payroll processes continue to constitute a drain on company resources. Respondents indicate that payroll staff can spend a quarter of their time or more on payroll activities including reconciliation, audits, controls, and data entry[iv], that could- with services available today- be automated.
The survey also offered some insight into why companies continue to struggle with payroll inefficiencies. Lack of standardised processes tops the list. According to respondents, 26% had standardised their payroll, but only within a single location or country, and only 15% are moving toward enterprise-wide standardisation.[v]
For many firms, Excel spreadsheets continue to be the most common way to monitor payroll calendars, log headcount and other critical functions.[vi] This approach can leave the organisation without a centralised view of data and could expose it to undue compliance or other risks.
However, internal inefficiencies are not the only challenge that entities face when it comes to processing payroll. Organisations with a global workforce in particular, are often impeded by a slow banking settlement process and costly overhead fees.
The challenge begins right from the start, as organisations must enter information into a number of banking portals just to initiate a global payroll payment. The need to repeat data entry increases the risk of errors. In fact, global payments often fail due to mistakes made when entering routing or account numbers, issues that can take weeks to rectify.
Recent innovations in payroll technology can help global organisations overcome these challenges, by creating a network of local in-country banks. Technology smooths the way, allowing organisations to connect to network banks through a single portal. This means that information is entered only once, reducing the chance of data entry error, allowing funds to transfer faster, even in real time.
Taking this approach, organisations receive unprecedented transparency, with a view of all in-process transactions as well as their current status. And with access to multiple domestic currencies, entities can send payroll payments nearly anywhere, at a fraction of the cost of the traditional global payments process.
In today’s world, the nature of work is evolving. As employees seek greater flexibility as to where they work and how they receive their paycheck, technology is making it easier for employers to attract and retain workers, by offering faster access to payroll funds, while reducing organisational costs.
[i] “Modernizing Payroll Through Earned Wage Access: A Focus on Employee Tenure.” Mercator Advisory Group, Mar. 2021. Web.
[ii] Veronica Combs. “What if Payday Was Every Day? Survey Finds 83% of People Want Access to Paychecks On-demand.” TechRepublic, Sep. 13, 2021. Web.
[iii] Veronica Combs. “What if Payday Was Every Day? Survey Finds 83% of People Want Access to Paychecks On-demand.” TechRepublic, Sep. 13, 2021. Web.
[iv] “Deloitte Payroll Benchmarking Survey.” Deloitte, retrieved from https://www2.deloitte.com/content/dam/Deloitte/us/Documents/human-capital/us-deloitte-payroll-benchmarking-survey.pdf.
[v] “Deloitte Payroll Benchmarking Survey.” Deloitte, retrieved from https://www2.deloitte.com/content/dam/Deloitte/us/Documents/human-capital/us-deloitte-payroll-benchmarking-survey.pdf.
[vi] Paul Bartlett. “Innovation in Global Payroll Technology. Global Payroll Management Institute. Retrieved from http://www.gpminstitute.com/publications-resources/Global-Payroll-Magazine/december-2016-issue/features-innovation-in-global-payroll-technology.