The pandemic had a profound impact on how small businesses compensate their employees. Due to employee demand, many of the payroll changes implemented during COVID are here to stay.
If you want to keep your best employees, you need to pay attention to what’s happening in the payroll industry.
According to Capterra’s 2022 Company Culture Survey[*], compensation is the top factor in job satisfaction. Companies that don’t have the ability to raise wages are scrambling for solutions.
You may not be in the position to give raises, but adopting these trends can help alleviate other financial woes for your workers—improving their employee experience and boosting retention rates in the process.
Read on to learn more about the payroll industry trends that may be impacting your business now.
Financial wellness platforms ease workers’ money stress
Companies may be unable to raise pay, but through financial wellness platforms, they can at least provide tools to help workers better manage what they have.
And employees increasingly want help managing their finances. According to Capterra’s 2022 Payroll and Compensation Survey[**], 41% of business leaders say their workforce has expressed significant interest in getting help with managing their finances, compared to just 24% in 2021.
As a result, 72% of organizations now offer a financial wellness app, compared to 59% in 2021.
Using these platforms, workers can identify financial areas that are causing them the most stress and receive advice on how to pay down large debts, build up retirement savings, or plan for a big purchase, such as a house or car. Some of these systems even allow workers to connect with a financial coach for further assistance.
CEOs and HR leaders can then monitor their workforce’s overall financial stress over time through dashboards and analytics, giving them insight into common stressors that they could address with other financial wellness tools.
Employees want to get paid more frequently
It’s the beginning of the end for biweekly paydays that occur on the 1st or 15th of the month. Companies have stuck with the static payroll schedule for decades, and as a result, workers needing access to funds before their scheduled payday have suffered. Outside of expensive and predatory payday advance loans, workers have had very few options when emergencies strike.
Because of factors such as rising debt, cost of living increases, and the proliferation of unstable jobs in the gig economy, many U.S. workers have found themselves in uncertain financial situations.
More than 50% of workers live paycheck to paycheck in 2022, which is why forward-thinking companies and payroll providers are testing the idea of dropping the rigid two-week payroll schedule to offer workers much-needed flexibility regarding when they get paid.
Employees increasingly want on-demand pay, which means they can access the money they earn as they earn it, rather than having to wait for payday. Business leaders report that 47% percent of their workforce has expressed significant interest in receiving pay more frequently, which is nearly double the percentage in 2021 (24%).
And businesses are listening. The number of organizations offering on-demand pay jumped from 50% in 2021 to 71% in 2022. Apps such as Even, and new payroll software features such as Gusto‘s Flexible Pay and ADP’s Wisely Pay, make it easier for businesses, especially those with fewer employees, to adopt more flexible compensation options. These tools allow workers to choose which day of the week they get paid, receive a small pay advance with no interest or charges, or even get paid immediately for completed work in the case of 1099 contractor employees.
Pay transparency is becoming the norm
Pay transparency can mean one of two things: (1) It allows potential hires to see either the exact salary of a posting or a salary range or (2) it makes the salaries of current employees public.
Companies such as Buffer, Whole Foods, CareHere, and Hired have decided to list every worker’s pay publicly—from the CEO all the way down to the newly-hired intern—in an effort to prove they’re offering fair and equal pay.
This payroll trend has produced both intended results (such as reducing the pay gap for women and minorities) and unintended consequences (when workers learn they make less than their peers, their productivity suffers).
And demand for pay transparency has increased: 63% of businesses report that interest in pay transparency has increased compared to before the pandemic. As a result, 62% of businesses say they post an exact salary on job postings for potential hires.
When it comes to their pay, people want certainty, not surprises. But that doesn’t mean the payroll process is static—far from it. Payroll trends are determined by employee demands. When was the last time you took a pulse on what your employees need or want in terms of compensation?
As these trends show, there are plenty of levers that small businesses can pull besides raising wages to give workers more support, more flexibility, and more transparency regarding their pay.
If you’re ready to drag your payroll process out of the past and into the future, but don’t have the system to support it, head to our payroll software directory page to find the best options for your business.
*Capterra’s 2022 Company Culture Survey was conducted in December 2021 among 958 employees at U.S. companies with at least six employees: 332 who work fully on-site (e.g., in an office, store, or other central location), 300 who work fully remote, and 326 who split their time between working on-site and remote (i.e., a hybrid model). The goal of this survey was to learn how hybrid and remote work formats impact different aspects of company culture.
**Capterra’s 2022 Compensation & Payroll Survey was conducted in July 2022. We collected 279 responses from U.S. workers in HR, accounting, or executive leadership who have thorough knowledge about their employer’s compensation strategy and payroll systems. The goal of this survey was to learn what changes that companies have made to employee compensation in response to the COVID-19 pandemic and inflation.
- Why are workers quitting?, digital.com
- Why I Started Best Money Moves, Best Money Moves
- Financial stress costs U.S. companies $4.7 billion per week, BenefitsPRO
- Image of Gusto Cashout program, Gusto
- 58% of Americans are living paycheck to paycheck after inflation spike — including 30% of those earning $250,000 or more, CNBC
- Image of Buffer’s transparent salary page, Buffer