More than just pay

01 September 2019

This article was featured in the September 2019 issue of the magazine. (ADVERTORIAL)

Anthony Vollmer, managing director at Moorepay, explains why payroll must act as a strategic partner to shape the employee offer

As payroll professionals we all know payroll is now ‘more than just pay’, but ‘more than just pay’ isn’t just a throwaway line: there is a recognition across employers of all sizes and types of workforce that the total employee offer must give employees more.

In our most recent research, we surveyed 2,000 UK employees and 550+ UK employers to understand attitudes to employee wellbeing. And the answer to the question of whether work is ‘more than just pay’ was very clear: 92 per cent of employers told us their employees expected more.

So, we are all on the same page here, and employers near universally agree with what we, the payroll professionals, intuitively think and know. But when you look further, at what ‘more than just pay’ really means to employers, you start to see that they recognise the business case behind the slogan too.


The true cost of offering more than just pay

Eight-in-ten employers who think employees want more than just pay told us they found it fairly or very challenging to recruit suitably qualified staff, and seven-in-ten felt the same about retaining staff. And this should come as no surprise.

There are parts of the UK where there are more jobs available than there are qualified staff to fill them (particularly around Oxford and Cambridge), and though this can vary by job role it’s a truism that human resources (HR) people know well enough: right now, it’s a seller’s market, and it’s very competitive.

Which is what makes retention so important – because not only is it difficult to recruit the right talent, it’s also very costly. Estimates for the cost of replacing a member of staff vary by seniority and displacement. These can start at £2,000 and rise to over £50,000 – once you factor in sourcing, advertising, crafting the job spec, screening, initial calls, interviewing, handover, welcome packages, temporary and cover staff, onboarding and training.

One rule of thumb, from US industry body the Society for Human Resource Management, is to assume six to nine months’ salary as the cost of replacing one salaried employee. And while that sounds high, we can probably all accept that the true cost of recruitment is higher than we’d like, and/or higher than we might see on a profit and loss account.


The role payroll must play in developing this competitive advantage

Today, ‘more than just pay’ means a lot of things: insurance, subsidised travel, benefits, flexible working, performance-based leave, community leave, team social budgets – and much else (see Fig. 1). Our research shows businesses are already offering a host of benefits and extras – although many could do a great deal more. But the next generation of payroll software is going to up the ante further, offering new and more meaningful ways to empower employees.

The new world of open banking has raised our expectations for how we manage our financial lives. Money management apps, like Money Dashboard, Cleo and the like, have given us the power to see where our money is going, and slick new challengers like Monzo and Revolut have pushed the high street banks to up their game. 

We anticipate these new expectations will lead to consumer-grade, work/life companion apps becoming the gold standard in payroll over the next eighteen months/two years. And these apps will be part of a much broader package helping employees with their wellbeing, including financial wellness (e.g. budgeting, cash flow, getting value for money, access to support and guidance, and tapping into their fair share of the £10bn-20bn left in unclaimed benefits each year).

Coming from Virgin Media (and before that Tesco Mobile and Plusnet) I’m very new to this industry. But what is clear to me, someone from the outside coming in, is the disparity between how payroll is seen as a ‘backroom’ activity, and the reality that it’s on the frontline of the employee experience. And, ultimately, it’s the employee experience that’s going to make the difference in retaining talent.

So we need to help decision-makers make the right calls when putting together the employee offer because we know, from looking at what employees want, that there are real opportunities for businesses to differentiate and win in the war for talent in their industry, and those that don’t engage run the risk of getting left behind.