The EX Factor: The Employee Experience Begins with Payroll
In recent years, EX has established itself as a core differentiator. Not surprisingly, it's directly connected to making payroll a strategic priority
Alex Margolin| Nov 07, 2023
- Organizations ranked in the top quartile of employee experience had net profit margins that were 8.4% higher than the other 75% of companies.
- Employees who report having a positive EX are 8 times more likely to stay at a company than employees with a negative EX.
- 80% of respondents in pulse surveys conducted by EY believe a mobile payroll experience will help improve their organization’s EX.
- Papaya Global's new mobile app allows employees to stay on top of their finances by giving them more visibility and control over their income.
Jacob Morgan became passionate about the employee experience (EX) because he was having a miserable time at his first job. “After I graduated college I went to work for a company in Los Angeles,” said Morgan, best-selling author, futurist, and keynote speaker on leadership and the future of work. “I was told that I was going to be doing a lot of fun and wonderful projects. Instead, I was doing data entry and cold calling.”
The experiences companies design, Morgan understood, shape employees’ relationships and associations with organizations. This led to his seminal book – “The Employee Experience Advantage: How to Win the War for Talent by Giving Employees the Workspaces They Want, the Tools They Need, and a Culture They Can Celebrate“ – where he coined the term EX, galvanizing HCM leaders and industry researchers to make it the centerpiece of their work.
One of these researchers is Dr. Nick van der Meulen, a Research Scientist at the MIT Sloan Center for Information Systems Research (MIT CISR). Van der Meulen, whose work targets the challenges of senior-level executives, is trying to help organizations “create an environment where employees can do their best work.” And for good reason, too: EX has a real business impact.
The numbers – according to one report van der Meulen co-authored, which was based on a study of approximately 300 companies – are staggering:
- Organizations ranked in the top quartile of employee experience had net profit margins (when adjusted for industry averages) that were 8.4% higher than the other 75% of companies.
- Their revenue from new products and services introduced in the past three years (MIT CISR’s measure for innovation in the study) was more than double that of the other 75%.
- Organizations that provided great employee experience also outperformed the rest in time-to-market and the ability to change rapidly.
Productive, healthy, engaged, on track
While EX has established itself as a core differentiator, its definition is still up for debate. MIT CISR, for instance, defines EX as “the extent to which employees are enabled or constrained by the work environment and work habits to do their jobs today, and to re-imagine their jobs of tomorrow.” In the same vein, The Josh Bersin Company describes EX as “a company-wide initiative to help employees stay productive, healthy, engaged, and on track.“
McKinsey, on the other hand, takes a more employee-centric approach. Here, a positive EX considers “what people value in the broadest sense, acknowledging how life stage, personal circumstances, and even personality type make different propositions attractive for different people.” According to McKinsey research, people who report having a positive EX are 8 times more likely to stay at a company than employees with a negative EX.
In this context, one of the keys to retaining talent is designing a personalized employee experience supported by digital tools that boost flexibility. This is certainly the zeitgeist in the global payroll space: 80% of respondents in pulse surveys conducted by EY and the Global Payroll Management Institute (GPMI) believe a mobile payroll experience will help improve their organization’s EX.
A mobile experience can upgrade an organization’s payroll function with features such as pay transparency and better access to their pay information. Unfortunately, many companies are still struggling in that regard; a recent study by the HR Research Institute revealed that less than half of organizations are confident in their ability to enhance their employee payroll experience.
It’s not business. It’s personal
Enhancing the payroll experience requires a level of payroll maturity, dubbed “strategic payroll functions” – as opposed to “administrative payroll functions” – by the HR Research Institute. The characteristics of a strategic payroll function include, among others, automated payroll processes and a willingness to leverage technology that affects the design and implementation of pay.
One such technology is Papaya Personal, Papaya Global’s new mobile app. In today’s on-the-go world, more and more people use their phones to organize their finances. They monitor checking accounts on bank apps and purchase goods via payment apps. Papaya Personal offers a complementary experience: it allows employees to stay on top of their finances by giving them access to payslips, work documents, and Papaya’s support team.
Easy access to payroll information goes a long way in dealing with financial stress. According to PwC’s 2023 Employee Financial Wellness Survey, 60% of full-time employees are stressed about personal finances. Financially stressed employees tend to be more distracted, less engaged, and are more likely to seek another job.
Providing them with financial wellness resources, like a self-service app that gives more visibility and control over their income, is the epitome of a positive employee experience.