Last year, researchers confirmed that millennials are now the largest demographic of the U.S. workforce. From the BYOD and enterprise mobility movements, to changing habits in how millennials apply for their jobs in the first place, a younger workforce presents knock-on effects for the entire corporation.
Take, for instance, payroll. With payment technologies evolving, millennials have become some of the fastest adopters of mobile and digital payments and financial services solutions.
A new report from HR and payroll firm Namely released last week examined how millennials’ challenging demands from their employers are shaping the evolution of payroll solutions and where employers are and aren’t willing to give in to their demands.
A New Generation
A separate, recent report from PwC on millennials in the workplace sets the stage for understanding the way this demographic impacts the way an enterprise functions.
This generation, the report stated, “will shape the world of work for years to come” — and in more ways than the obvious factor of their familiarity with technology. Millennial workers, PwC said, have different demands in today’s market.
“Millennials tend to be uncomfortable with rigid corporate structures and turned off by information silos,” analysts concluded. “They expect rapid progression, a varied and interesting career and constant feedback.”
One way this mindset presents itself is in how millennial workers demand their time off. According to PwC, work/life balance is more important to this population than the financial reward of their work, but more than a quarter told researchers that the work/life balance offered by their jobs is worse than they expected.
Namely’s own survey uncovered similar patterns and dove deeper into how millennial employees’ vacation habits are forcing change in the payroll department.
Short Vacation Bursts
Namely found that the average duration of vacations taken by workers — largely shaped by a “growing millennial influence” — is just 2.34 days, with 40 percent reporting that they are willing to forfeit a higher salary or stock options for more vacation days.
In a statement, Namely CEO and Founder Matt Straz highlighted what these findings mean as a whole and how they create new challenges for payroll and HR executives.
“What this tells us is that, despite the best intentions to take large chunks of time away from work and unplug from technology, employees are feeling confined and are using vacation time differently than previous generations,” the executive said. “The result is shorter, more frequent bursts of vacation time requested last minute, which means it’s even more critical for today’s employees and HR departments to effectively communicate to mitigate any business impact.”
The Payroll Challenge
In an interview with PYMNTS, Namely VP of Client Success and Senior Professional in Human Resources Debra Squyres elaborated on what this phenomenon means for payroll and corporate cash flow.
“Shorter, more frequent time off requests tend not to be planned so far in advance, so it’s important for companies to be able to quickly review, approve and process paid time off through payroll so that pay and pay stubs are correct and time records reflect accurate time worked, time off and overtime,” she explained.
Mobile payroll solutions can be one way to ensure that a paycheck is accurate, especially as millennial workers continue to integrate smartphones into every aspect of business operations.
It’s no surprise, then, that Namely launched its mobile app for payroll and HR managers the same day it released its survey findings.
“Mobile is simple and easy; we live in a mobile world,” said Squyres. “For an HR or people manager, being able to manage and approve time off as you walk from one meeting to the next or on your way down to the elevator as you head out to lunch means more time to focus on people strategy, attracting and retaining top talent.”
The millennial influence on mobile payroll adoption cannot be ignored.
PwC’s report found that 41 percent of employees surveyed would prefer to communicate electronically instead of face-to-face or over the phone.
Squyres echoed a similar conclusion. “Employees have a growing expectation that their employers will meet them where they are, and that increasingly means on a mobile device,” she said.
Apart from employee satisfaction, there are other reasons why, Squyres explained, mobile payroll tools can help an employer. One of the biggest is compliance.
Under the Fair Labor Standards Act (FLSA), for example, there is a greater impact on overtime compensation by non-exempt employees that take these short bursts of paid time off, explained the executive. That’s not the case, though, for employees that take traditional, longer vacations lasting a week or two.
But millennials aren’t dictating the path of payroll technology and solutions altogether, said Squyres. Advancements like virtual payments, she said, are likely to gain traction as millennials embrace a way to get paid more easily.
Regulation and the tradition of the pay cycle — that is, getting paid weekly or biweekly instead of every day — is probably here to stay, however.
“There is value in paying in arrears in order to allow for proper audits and validation and thus accuracy in people’s pay,” said Squyres. That accuracy is even more critical among today’s millennial workforce, one that leans towards unexpected mini-vacations.
“While I can see the use of virtual payments and other up-and-coming technology to make getting paid easier,” the executive continued, “there will always need to be a balance to ensure proper controls are in place so people are paid properly as well.”