Aside from healthcare and frontline workers, the payroll industry has seen more pandemic disruptions and challenges than perhaps any other industry. What with ever-changing laws and mandates as well as ensuring timely, accurate payments for employees around the world while working remotely — payroll professionals have had an extremely challenging couple of years.
Now, with nearly twice as many job openings as candidates, hiring and retaining talent has become the biggest corporate challenge today. Covid-19, economic crises and the Great Resignation have created a jobseeker’s market. This impact is visible across all industries and functions, but particularly in healthcare, tech, HR, payroll, travel and hospitality.
“All industries that require specialty knowledge such as the payroll industry are finding it a challenge to hire staff,” says John Dooney, HR Knowledge Advisor at SHRM. Excessive inflation and lagging wage increments have made the situation worse.
In ADP’s soon-to-be-released study, The potential of payroll: Global payroll survey 2022, more than half of respondents said their payroll service has been affected by a shortage of payroll staff. The nearly 1,500 payroll stakeholders at multinational companies surveyed reported multiple tactics to tackle the shortage:
What’s the state of your payroll team?
It comes as no surprise that hiring talented payroll staff has become harder for organizations. With high turnover in critical departments such as HR, finance and payroll, building a rich talent pipeline is necessary for business continuity.
“I’ve never seen anything like it: the number of people changing their jobs, the salary increases,” says Melanie Pizzey, CEO of the Global Payroll Association. “People are really struggling to recruit.”
The direct cost of replacing an employee is estimated to be from 50% to 60% of their annual salary. So without a talent pipeline in place, companies risk losing tens of thousands of dollars when a payroll worker quits.
But recruitment isn’t the only cost when a payroll employee leaves a role. The cost of disrupted payroll functioning, which can include late payments to employees and vendors, costly compliance errors, and worse, is a lot higher and can be devastating.
A talent pipeline helps to mitigate this risk and cut down on hiring time, saving potentially hundreds of thousands of dollars.
How to build a talent pipeline
In view of the payroll hiring challenges, simply putting out a job ad when there’s an opening is like ordering more toner only when you need to print something. LinkedIn found in 2021 that the median time between when a candidate submitted an application to the first day of the job was 49 days.
Building a pool or database of qualified candidates — both internal and external — lets you bounce back quickly when an employee leaves. It helps to cut down on the time it takes to hire a new employee, and lessens disruptions to your payroll operations.
“The work of building a pipeline starts early,” says Bob Lockett, ADP’s Chief Diversity & Talent Officer. “When you hire, you need to think about whether that person can advance in the organization. I’d rather hire for aptitude and train for skills. I need to teach you the tools as you engage with the clients, but it’s about hiring someone who can learn.”
Building a talent pipeline is a proactive, ongoing process. It can be helpful to keep the promising job applicants’ resumes and contact information after every hiring exercise. Savvy hiring managers will add prospective candidates on LinkedIn, even if they don’t end up making it to the final round, to keep abreast of their career development.
Another great way to add strong candidates to the pipeline is through an employee referral program. Employees can reach out to their network of professional acquaintances, friends and family — and an employee referral program allows organizations access to these networks in return for a small referral bonus.
“Generally, an employee referral has higher retention in an organization, compared to other recruiting sources,” Dooney says.
Other ways of nurturing a talent pipeline include advertising in spaces potential candidates are likely to occupy, both online and offline, and maintaining a compelling employer presence on social media. A payroll professional can work wherever they like; why should they work for your organization specifically? “People have to promote the organization to get entry-level people,” Pizzey says.
The Global Payroll Association recently launched a new campaign, #PayrollisaCareer, to boost the industry’s profile for new workers. Payroll professionals from many industries share how they got started, and describe the varied possibilities that are available.
For more experienced roles in payroll, Pizzey is seeing more companies using internal recruiters rather than paying external agencies for placements.
LinkedIn is a great place to scout new candidates, as are job fairs and industry conferences. In the offline space, businesses could also consider displaying job ads near their own office (or competitors’ offices), so potential candidates are likely to see them.
“In addition, an employer may want to reach out to payroll training professionals at colleges or other private training programs to alert them of openings an employer may have for training specialists,” Dooney says. Hiring managers are well-advised to make connections with such educational organizations even before they have an opening.
Good pay and benefits
An important part of building a talent pipeline is offering more attractive benefits than competitors. Salary, always a critical consideration, has become even more important with inflation. ADPRI found that 61% of workers are anticipating a pay raise in the next year, and 63% said salary was their No. 1 consideration in taking a job.
Organizations that proactively review and adjust pay are likely to be more successful at retaining talent, especially in payroll. Not only are wage increments crucial in keeping up with inflation and reducing financial insecurity in employees, they also build trust.
Flexibility in terms of work hours and location is another important benefit. ADPRI found that 71% of workers are looking for flexibility around when they work, without changing the total number of work hours in a week, with 50% saying they’d be willing to take a pay cut for this flexibility. Flexibility around location of work is also critical, with 52% of respondents willing to take a pay cut to guarantee the option of working remotely or in a hybrid manner.
The option to work from home at least part time has become non-negotiable for many workers. “Staff are more efficient now that they work from home. The hybrid model works,” Pizzey says. “Employers who want everybody back in the office all the time need to think again.”
Another important aspect of employee engagement in payroll is investing in technology and training to make it easier for payroll workers to do their jobs smoothly and efficiently. Continuing education, certification opportunities and advancement potential are also crucial in retaining payroll professionals. Helping your employees grow their skills benefits both them and the company.
“Once salary and benefits meet general industry levels, workplace culture, training and development opportunities, and employee engagement then become influential factors for retaining employee staff,” Dooney says, adding that “employers may want to consider offering to pay for payroll professionals to obtain a payroll certification.”
While offering benefits like unlimited vacation policies has become a popular route for retention, they’re not always suitable for payroll departments. And if payroll employees find themselves unable to enjoy perks as their co-workers do, it can naturally feel frustrating and unfair to them.
To keep payroll staff happy, make sure your company offers meaningful benefits they can use. The most important is having a backup system in place that allows payroll employees to take time off — whether planned in advance or in the case of an emergency — without feeling guilty.
Some benefits that are particularly attractive to payroll workers include investment in up-to-date, user-friendly software, and robust back-up systems that allow your organization to function smoothly when payroll workers take time off.
Investing in software and training can make payroll workers’ jobs easier, a hugely underrated benefit. “Payroll systems can be complicated, and without proper training, employees will struggle,” says Matthew Burr, a New York-based HR consultant and SHRM volunteer.
Talent pipelines: good for DEI
Really embracing diversity, equity and inclusion (DEI) targets can have a massive impact on hiring. The way a company presents itself publicly plays a huge role in the kind of talent it attracts.
“You’ll find great talent in underserved markets. It’s a tremendous opportunity to find talent and hire new people who are happy to join,” Lockett says. “Train them, give them the opportunity to learn and grow. Building a succession plan will happen if you’re hiring people who can grow. Give your people stretch assignments and help them be seen in the organization.”
According to ADPRI, 76% of respondents said they would consider looking for a new job if they discovered their company had an unfair gender pay gap or no diversity and inclusion policy.
Pay equity is an equally important component of DEI, and payroll professionals are particularly well-placed to spot unfair pay and wage gaps based on gender, ethnicity, sexual identity and/or disability status. That makes it even more important for organizations to pay close attention to their DEI policies, review them regularly, and correct wage gaps. Regularly benchmarking and reviewing salaries through a gender and ethnicity lens can help bring to light gaps that would otherwise not have been apparent.
Payroll professionals are often in the unique position of having access to salary data across the company. Prioritizing equity, conducting regular reviews, being transparent about sharing this data, and being quick to address any gaps can go a long way towards building trust and helping retain payroll talent.
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