Don't Overlook Payroll's 'Human Side'

Managing an organization's payroll—seeing that employees' time and attendance are accurately processed, and that all paycheck deductions are accurate and up to date—has traditionally been regarded as a back-office, transactional role. Payroll professionals may consequently neglect the "human side" of payroll or relegate it to the back burner. That could be a mistake.

Dissecting the Human Side of Payroll

Payroll professionals carry a hefty interpersonal responsibility, as they are tasked with serving the organization's most precious asset: its people.

Employees see payroll as the bearer of their paychecks. When they have salary concerns, they expect answers, sometimes immediately. It's not uncommon for employees to become instantly distressed, even when they only perceive a problem with their pay.

Employees can become instantly distressed if they perceive a problem with their pay.

"For many people, their perceived worth is often tied to their pay," said Sanja Licina, future of organizations leader at Globant, an IT and software development company. "It's a quantifiable measure, and the societal expectation is that the more we are worth to a company, the more we should be getting paid, and the more experience we gain, the greater our worth will be. So even when a small issue happens, it's often tied to a much deeper meaning within an employee, regarding their worth."

In addition, the employee may be "fighting a battle you know nothing about," said Licina. For instance, they may be "struggling to pay their bills or intended to use the money for something special, such as a gift."

To avoid or de-escalate conflict, payroll professionals must respond appropriately to employees' concerns.

[SHRM members-only forms: Notice to Employees - What You Need to Know About the New Form W-4]

When the Human Side Falls to the Wayside

Imagine an employee's manager calling the payroll department one morning about an employee who has been short-paid. It's year-end, and the payroll team's plate is overflowing.

The payroll administrator tells the manager that she will look into the matter and get back to him in 24 hours. The manager then says he was hoping for a faster turnaround because the employee is distraught about the underpayment.

The payroll administrator curtly states that she cannot respond any sooner and abruptly hangs up the phone.

Even if the payroll administrator's callback time is consistent with the department's policy, the manner in which she communicated could cause the manager and the affected employee to view the department as cold, uncaring and inflexible.

"Different professions, regardless of industry, [need] strong soft skills to be effective, and this applies to payroll professionals as well," Licina said. "The lack of these skills can cause unnecessary friction with employees and subsequently a large loss in productivity as more time is spent working to solve challenges that could have been dealt with more effectively."

While the deficiency in human support can stem from a payroll professional's own shortcomings, it often derives from payroll's transactional nature.

Transactional Duties Are Complex and Critical

Susan Tohyama, chief HR officer at HR software and services firm Ceridian, explained that payroll is complex, with many legislative rules and compliance issues to manage.

"There is no gray area, and administrators must stay on top of legislative changes to ensure compliance," she noted. "Meeting the transactional goals that accomplish the numbers-driven part of payroll is crucial because inaccurate pay can have damaging effects on intended HR outcomes like employee engagement and retention. Not to mention the compliance imperative, which when done wrong also represents a major reputational risk."

With so much at stake, it's not difficult to see why payroll professionals might prioritize the transactional component over the human factor.

Nevertheless, "when organizations approach payroll as solely a transactional experience, they are missing the opportunity to foster a strong connection and build trust with employees," Tohyama said.

Don't miss an opportunity to build trust with employees.

She added, "The most successful employee experience revolves around people being the best version of themselves both at and outside of work. Today's employers want to provide quantifiable value to the business and deliver experiences employees love. This starts with prioritizing employees and their well-being, without compromise."

Achieving Equilibrium

To improve the human side of payroll, Licina suggested applying "procedural justice." This means that if a decision is explained to a person rationally and the reasons behind the decision are perceived as fair, the person is much more likely to accept the decision than if the decision is shared without an explanation.

"Even if a payroll professional thinks a decision is clear and does not need further explanation, open dialogue can go a long way in having an amicable discussion," said Licina.

Take the aforementioned underpaid employee, for example.

The payroll administrator could have politely explained to the employee's manager that the department was busy with year-end processing, but if possible, she will respond sooner than in 24 hours. Had she taken this route, she would have exhibited tact, empathy and flexibility without sacrificing her transactional responsibilities.

Among other steps payroll departments can take to be more responsive to employees are the following.

Apply technology

"Digital transformation can be a great asset for streamlining transactional functions, allowing for more concentration on employee wellness," Tohyama said. "Combining payroll, employee recordkeeping, scheduling, and time and attendance into one system can help organizations manage large amounts of data during crunch time so they can meet goals and pay employees accurately and on time."

Intelligent technology can also help to simplify processes, shorten time frames and boost overall efficiencies.

"Modern technologies can provide a human element to otherwise transactional tasks," she added. "Innovations such as on-demand pay disrupt the traditional pay cycle, allowing employees to access earned wages in real time. This increased flexibility shows employees that their financial wellness is top priority."

Review payroll policies

Another strategy is to closely review payroll policies and procedures to determine if certain restrictions on accommodating employee requests around changing tax withholding or benefit deductions, for instance, are too inflexible—and if so, whether they can be relaxed without jeopardizing transactional operations.

Provide human support

While self-service platforms can do wonders for autonomy and engagement, they should not totally replace human assistance.

Providing human support and satisfying transactional requirements are both mission-critical to payroll. View them as partners working toward a greater good.

Grace Ferguson is a former payroll-and-benefits professional who writes about payroll, employee benefits and human resources. She lives in Marietta, Ga.

Related SHRM Articles:

Out-of-State Remote Work Creates Tax Headaches for Employers, SHRM Online, June 2020

Remind Workers of These Tax Tips, SHRM Online, January 2020

IRS Overhauls Form W-4 for 2020 Employee Withholding, SHRM Online, December 2019

2020 Payroll Taxes Will Hit Higher Incomes, SHRM Online, October 2019