Have you ever noticed that cheery, positive, atmosphere on payday?
It’s the day that employees wait for; it’s one of the reasons they show up every day. To get that paycheck.
But what happens if their paycheck doesn’t show up on payday?
Well, aside from the fact that you’ll have a workforce knocking down your door, employees feel the negative effects of a lack of financial security...immediately.
Studies show that money directly affects stress levels and, in turn, employees may suffer at home and at work.
How Money Affects Employee Stress Levels
They always say, "work to live, not live to work."
And for many employees, the reason they want to work for you is to have financial security.
Your employees are critical to the success of your company. If they have financial stressors, it'll show in their work.
Your workforce depends on timely payments. Many people use direct deposit, and auto bill pay. And if the money isn’t in their account on payday, they may default on loans, electric bills, or go into the red just to buy groceries.
So if payroll drops the ball, employee mental health suffers and so will their work ethic.
The repercussions of unreliable payroll span far-and-wide. Yes, you'll probably get a few angry phone calls and office visits. But here are a few other side-effects of financial-related stress in the workforce:
Loss of Talented Employees
Most employees can accept one mistake regarding payroll, but if it’s a habit, you’re sure to lose employees. Your employees expect a reliable, stable, and secure payday. And if they don't have it, there's very little incentive for them to stay with your company.
Here's the thing, payday doesn’t just represent financial security, there’s a hidden meaning that some employers overlook...and that's respect.
Employees may think that if it’s not a priority to pay them then their employer respect or appreciate them. They may also interpret a late payday as a way of saying, “We aren't in a hurry to pay you. And it’s ok if you find another place to work.”
A reliable paycheck is insurance for you...that your employee stays on staff long-term.
A Decline in Productivity and Work Ethic
Money worries are distracting.
Distraction can lead to on-the-job accidents, workmen’s comp claims, and loss of work ethic.
According to Patricia A. Bonner, Ph.D., CEBS in an article for Benefits Magazine, "Financial stress can be a significant distraction at home and at work. Persons who are distracted or experiencing stress-induced fatigue are more prone to errors and injuries."
If employees aren’t paid on time or get the impression that their employer doesn't appreciate them, there isn’t an incentive to do a good job. And this will show in areas like customer service, production, and organization.
When employees are paid on time, they have one less thing to worry about. They have more bandwidth to focus on the task at hand.
The Cost of A Crumby Payroll
If payroll is late, or unpredictable, and employees quit to find an employer who pays on time, then you must hire new employees to replace them.
And you know what that means:
- Hiring New Employees
Hiring new employees takes time and money. Placing ads, redoing job descriptions, recruiting, interviewing, and orientations all take time, money, and manpower.
- Training New Employees
Training new employees is a time-consuming investment, but if you’re constantly losing employees, then you're constantly training new ones. And there’s always a learning curve so even if training goes well, it can take years for a new employee to be up-to-speed.
Imagine a Friday payday that doesn’t have that perky feel-good vibe, and now imagine it isn’t just one employee sulking around due to money stress...it’s your entire workforce.
Even if it’s just one or two employees with a bitter taste in their mouth, their attitudes will spread like wildfire. One person voicing their concerns about an unreliable paycheck can spark fear and frustration amongst those who work closely with them.
Again, when there isn't an incentive to do a good job, and there are other upset employees nearby, the atmosphere becomes contagious, and employee morale plummets.
As you can see, employee happiness is vital to the success of your company, and finances are directly related to their happiness. So give your team peace of mind by providing a stable, reliable, and consistent payroll.