But while leaders understand the consequences of attrition, many also largely ignore indications of future voluntary turnover – or don’t even have processes in place to monitor those warning signs.

Below is an in-depth guide with strategies from the frontline to help prevent voluntary turnover and create a company culture that motivates people to stay.

What is Voluntary Turnover?

Voluntary turnover occurs when employees choose to leave a company for their own reasons, such as better career opportunities, higher pay, or personal circumstances. 

Sometimes, voluntary turnover happens sporadically or is caused by a global event (looking at you, Great Resignation). However, if your company consistently sees a high turnover rate, there are most likely organizational issues lurking beneath the surface. 

It’s no surprise that high voluntary turnover can have serious consequences for organizations. Beyond losing institutional knowledge, it can also negatively impact team morale and productivity, disrupt workflows, and increase recruitment costs.

Voluntary Turnover vs. Involuntary Turnover

While voluntary turnover happens when employees choose to leave, involuntary turnover occurs when the employer makes the decision. Layoffs, downsizing, and terminations due to performance or misconduct all fall under involuntary turnover.

The key difference? Voluntary turnover is often preventable. 

Luckily, employers can influence factors like employee engagement, career growth opportunities, and workplace culture to reduce the chances of losing valuable team members. However, Gallup reports that 42% of employees who left voluntarily in the past year said their manager or company could have done something to prevent them from leaving – shining a light on a huge misstep by organizations and room for growth.

In contrast, involuntary turnover, while sometimes necessary, can indicate issues like poor hiring practices or inadequate performance management if it happens too frequently. Both types of turnover come with costs, but voluntary turnover—especially among high performers—can leave lasting impacts on morale, productivity, and team dynamics.

First: Know Your Turnover Rate Data

Improving your employee experience is always a good idea, but smart leaders collect baseline data to track their programming success. While there are many HR metrics to track, two of the most important are turnover rate and turnover cost. 

Calculate Turnover Rate

Turnover rate is a people metric that calculates the percentage of employees who leave your organization within a specific period, typically a year.

Calculate Turnover Cost

Turnover cost is the total expenses associated with an employee leaving your organization and being replaced. This includes direct costs such as recruitment, training, and onboarding of new hires, as well as indirect costs like lost productivity, decreased morale, and the time managers and HR teams spend in the hiring process.

Turnover By Reason and Tenure

You should get even more granular in your turnover data by running reports on turnover by reason and tenure. The best (and easiest) way to do so is within your HCM, which brings HR and payroll data together, ensuring data accuracy and consistency.

How to Mitigate Voluntary Turnover

No matter your company size, employee retention is a major indicator of your employee experience and helps you understand what’s working and what isn’t. 

Below are nine strategies to combat voluntary turnover, all of which fit into three main categories: focusing on company culture, reviewing your compensation strategy, and encouraging career growth.

Company Culture

1. Lean Into Your Company Values

Building a culture that prioritizes inclusion, recognition, and collaboration should be a top priority for HR leaders. Besides the fact that it’s the right thing to do, Gallup reports that employees who feel connected to a company’s mission and values are less likely to leave. 

Unfortunately, only 30% of employees feel connected to their company’s mission. The good news? You can double down on this initiative to stand out and provide a stellar employee experience. 

Over at Aper, Head of People Guiliana Zara did just that: She aimed to ensure the company’s culture evolved alongside its growth. To achieve this, Aper integrated its core values into every aspect of the organization. 

She explains: “We include the Aper values in every process that we launch or modify, that way it serves as the roots for everything we do (including feedback surveys, salary reviews, and onboarding). We also feature our values front and center during company-wide events like Town Halls and when we recognize our people’s achievements.”

And the results spoke for themselves. By implementing surveys to gauge employee experience initiatives, Zara’s team saw a remarkable 70% increase in their eNPS score from 2020 to 2021.

Pro Tip: Celebrate wins—big or small—through company-wide recognition programs, shoutouts, or appreciation events. To ensure the efficacy of your programming, regularly ask for feedback (through surveys, one-on-one meetings, or Town Halls), then act on the feedback to show employees their input matters.

2. Promote Trust in the Workplace

Employees are more likely to stay in environments where they feel psychologically safe. That vulnerability and open dialogue often starts with honest conversations between managers and employees. 

The problem is that many organizations promote employees to people leader roles because they’re good at their job, not because they’re qualified to manage a team. Daniel Hooman of Agile Partners believes that an “executives first” mentality isn’t sufficient enough to provide support or close gaps. 

Instead, he says that “the biggest growth opportunity is in ‘moving the middle,’ which is often managers. Evidence shows a strong correlation between training managers and employee engagement. Uplifting the capability of managers helps to align values and tremendously impacts company culture.”

Pro Tip: Train managers on active listening and empathy to help employees feel heard and supported. Leaders who acknowledge challenges and share their own experiences foster trust and loyalty. Additionally, managers should focus on being better communicators, motivators, and career advocates to create a culture of care.

3. Handle Offboarding with Care

You may feel a range of emotions when a valued employee turns in their two weeks, but terminations should always remain respectful and professional.

Two ways to offer the departing person a smooth transition – and help them feel valued until their last day – are:

• Offering a standardized offboarding process. Only 42% of HR leaders report that their offboarding process is standardized, meaning departing employees receive the same documents, processes, and exit surveys. These organizations position themselves a step above their peers since standardized processes make it easier to gather accurate data about employees’ positive and negative experiences. The result? Gaining insights to improve the employee lifecycle for the remaining team.
• Finalizing a transition plan. When an employee chooses to leave, it’s critical to realize that how you handle their departure impacts those who stay. Your other employees are watching not only how you treat the exiting employee but also how you support the remaining team. Make sure all work, ongoing projects, and processes are documented for the new hire, or, if you’re not backfilling, consider how the team will absorb the work without feeling overwhelmed.

Pro Tip: Categorize exit interview data into actionable themes and adjust policies accordingly. Look for patterns: Are people leaving due to a lack of career growth, poor management, or uncompetitive pay? Identifying trends allows you to fix systemic issues.

Compensation and Benefits

4. Ensure Pay is Fair and Equitable

Do you remember a few years ago when job offers included everything but the kitchen sink? It was a great tactic to attract candidates but a lousy way to retain top talent.

The issue? Many companies at the time didn’t adjust tenured employees’ salaries, so new hires came in earning more for the same role. It’s no surprise that many teams saw resentment build fast, leading to poor organizational health and high turnover rates. 

Now that numerous cities and states have passed pay transparency laws, people are beginning to expect transparent salary bands, compensation conversations, and clear steps to the next level.

HR industry analyst Josh Bersin says, “Organizations that embrace pay equity not only align with societal expectations but also set themselves up for long-term success by fostering a culture of trust and fairness.”

Pro Tip: Create data-informed pay bands for each department and position within your organization. Not only will this keep pay equitable, but doing so will also make it easier to write accurate job descriptions and offers for applicants. Just make sure you review these pay bands annually to stay competitive. 

5. Revisit Offered Benefits

Benefits are a top reason people stay with their employer, so it’s important that HR teams stay on top of offered benefits and don’t just stick to the “status quo.” 

Revisiting benefits looks like:

• Reviewing benefits usage data. You should do this annually and make strategic adjustments based on employee preferences. If employees aren’t using certain benefits, consider reallocating resources to those that add more value. 
• Sending out employee surveys to gauge what employees truly want. 
• Take your multigenerational workforce into consideration. Your benefit packages should acknowledge the (potentially) five generations in your workforce. Author Kimberly Abel-Lanier states that “the multigenerational workforce requires flexible leadership, policies, and programs. Today’s leaders must familiarize themselves with the perspectives, needs, and influences of each generation.”

Pro Tip: Communicate your offered benefits and discounts throughout the year, not just during open enrollment. Metlife’s Employee Benefit Trends Study found that 76% of workers who understand their benefits are happy, and 82% believe their benefits give them a greater sense of overall stability—versus only 47% and 52%, respectively, who don’t.

6. Reconsider Your Bonus Structure

A well-designed bonus structure keeps employees engaged and motivated, but it can lose effectiveness if outdated or misaligned with company goals. 

Best practices for an effective bonus structure include tying incentives to clear, measurable goals to ensure transparency around how bonuses are earned.

If your company budget doesn’t allow for traditional performance-based bonuses, consider getting creative, such as offering:

• Stipends for wellness programs
• Extra paid time off
• Recognition-based perks, like gift cards or a subscription service
• A one-time signing bonus (which Indeed reports are up nearly double in job descriptions since 2019)

These flexible bonus options allow employees to choose benefits that best support their career growth and personal needs.

Pro Tip: Leaders should audit their bonus structures at least once a year to ensure they remain competitive, fair, and sustainable. Gather employee feedback to refine and improve your bonus offerings based on what motivates your workforce most.

Career Growth

7. Provide Career Transparency

McKinsey reports that “lack of career development and advancement” is the top reason employees quit their jobs. You may think, “We offer professional development stipends, so we’re all set!”

Not so fast. Professional development doesn’t necessarily translate into career advancement, especially if you haven’t built out a clear employee journey map that communicates what skills employees need to earn promotions.

A structured employee journey helps employees visualize their growth within the company. Your journey map should clearly define role expectations, career progression, and upskilling opportunities so employees can see a future with your company. 

Pro Tip: Develop an internal career framework for employees to plan their career growth. Work with managers to create personalized career development plans for each employee. Outlining clear paths from entry-level roles to leadership positions helps employees feel confident about their work and career trajectory. Moreover, house them in a central location to provide easy access. 

8. Lean Into Succession Planning

Leaders avoid succession planning for many reasons, including the fear that they’ll equip their people with the right skills, only to see them leave for another role. 

The problem with this theory is that you can’t control your employees. People are going to switch jobs no matter what, so you might as well make decisions that positively affect the future of your company and your people. 

One way to do so is to champion your people’s growth – and not just the ones that you’re grooming to become executives. Employees of all roles internalize the investment their company makes in them. If it’s done authentically and intentionally, encouraging professional growth will increase loyalty and retention. Specifically, one report found that 94% of employees would stay at a company longer if it invested in their learning and development (L&D). 

Brandon Mohaupt, Marketing Strategist for the Board of Certified Safety Professionals (BCSP), says that his company’s stance on development – seeing them “as people first, employees second” has had a massively positive impact on his career. 

Mohaupt explains: “I am often reminded by my boss that he is happy to support me in any way, even if it’s something that would eventually lead to me leaving the company and pursuing other opportunities.”

He’s been with the company for five years but didn’t start with a background in marketing. He furthers, “I believe the experience I’ve gained as a result has opened a whole new set of career advancement opportunities that I would not have had if not for BCSP wanting and encouraging their employees to grow and learn.”

Pro Tip: Build a learning-focused culture to upskill employees and create a strong leadership pipeline. Make sure the process is transparent and inclusive so that employees understand growth opportunities and how to qualify for promotions and leadership roles. 

9. Strengthen Your L&D Programming 

Here’s some hard truth: Providing learning stipends or other opportunities without a direct tie-in to closing skills gaps or working toward promotion is just a waste of time and resources. 

That’s why Monica Bright-Hill, Director of HR for the National Society of Black Engineers World Headquarters (NSBE WHQ), continuously works to build learning tracks and offer intentional learning opportunities for her organization’s various roles. 

Bright-Hill selects multiple courses for everyone to take (that align with NSBE WHQ’s core values), and also reviews performance evaluations to determine skills gaps and plan future programming.

One group of people she focuses on – and encourages other leaders to do the same – are employees promoted to people management positions. She explains, “We have a lot of people managers who’ve never people managed. They’re great individuals and great contributors, but that’s a different skill set.” Bright-Hill helps these employees learn how to delegate down, report up, and hold ongoing conversations – that don’t necessarily “involve getting in all the weeds.” 

Pro Tip: Take into account that employees have different learning styles and plan accordingly. Bright-Hill says, “Some may need structured courses, while others may benefit more from mentorship or hands-on experience. HR has to build programs that are flexible enough to meet people where they are while still moving the business forward.” 

Conclusion

By focusing on strategies to reduce voluntary turnover, you can retain top talent and foster a more stable, engaged workforce. Your efforts will also help create an environment where employees feel valued, supported, and motivated to stay – perhaps even becoming advocates for your company and brand. In short, prioritizing retention efforts now will pay dividends in long-term employee engagement and business success.

The post 9 Ways to Combat Voluntary Turnover appeared first on PrimePay.

In this conversation, Head of People at OnSecurity and career coach Alan Wilson shares his insights on why clear communication, job alignment, and HR’s role in workforce adaptability are essential for reskilling and upskilling efforts.

Q: How does transparency from leadership impact workforce engagement and motivation?

Alan: Clarity is crucial. When leadership openly communicates the challenges and direction of the business, it prevents employees from filling in the gaps with their own assumptions. If leaders don’t tell people the value of something or what’s going on—especially when it’s uncomfortable—employees will create their own projections, which can be counterproductive.

For example, if a company is facing financial constraints and needs to cut spending, leadership might hesitate to be upfront about it. But if they instead say, “We’re on a spending moratorium to extend our runway for another 12 months, and here’s how each department plays a role in ensuring our success,” it aligns everyone with a clear goal. 

When employees understand how their work connects to the company’s survival and growth, they’re more likely to mobilize and collaborate effectively. But when you aren’t transparent, people will just continue on as if everything’s fine.

Q: How does aligning job roles to business outcomes improve engagement?

Alan: When people see how their job contributes to larger business objectives, it shifts their mindset from just completing daily tasks to driving meaningful impact. Instead of simply “doing your job,” you’re part of a coordinated effort to improve sales, enhance products, or strengthen retention strategies.

This kind of alignment is motivating. It turns work into something with a tangible outcome, making employees feel like they’re contributing to something bigger rather than just ticking off tasks on a list.

Q: What challenges do leaders face in being transparent?

Alan: Many leaders worry that being too honest—especially about tough realities—will cause panic or disengagement. We’re afraid to educate our organizations on the power of transparency because, a lot of the time, it’s felt like if we tell employees this, it will scare them off. Leaders are afraid to lose people, but it’s actually the opposite. You’re losing people because they don’t know the truth.

In reality, people often respond better to transparency than expected. It builds trust. Employees would rather hear, “Here’s where we stand, here’s what we need, and here’s how you can help,” rather than being left in the dark. And it’s super important that they hear it from you. It’s not effective if they hear it second-hand. 

Of course, transparency should be coupled with a clear action plan. If you just drop bad news without direction, it can lead to uncertainty. But when leaders provide context and possible solutions, they create alignment and motivation.

Q: That’s a great tip. In what other ways can leaders lean into creating more transparent practices?

Alan: This idea of transparency isn’t just rolling up on the All Hands meeting and delivering it. It’s a moment-by-moment practice. People Teams would do well to remember that. Transparency should influence every bit of coaching, mentoring, and guidance that’s given. 

And practicing it should always be top of mind. You should consider: How will that be perceived if we get this communication? If we do this thing, how do we explain that to employees?

But transparency isn’t necessarily just about the moment when you can be transparent. There will be conversations that you can’t be open about, like going for another round of funding. You need to consider how you shape that message while still being honest. For example, “We need a little bit more runway, but there is a lot of good stuff happening, too.” It’s transparent, honest, and may also put out some fires.

Q: What role does HR play in supporting workforce adaptability?

Alan: People Teams are key players in helping the C-Suite understand where the company stands on things like compensation, rewards, and retention—especially in times of change. They can bridge the gap between business needs and employee engagement by using data and ensuring that workforce strategies align with company goals.

For example, if leadership says, “We need to retain top talent without putting the company at financial risk,” HR can develop creative solutions, such as upskilling programs, internal mobility strategies, or incentive structures that drive performance without excessive spending.

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The post Q&A with Alan Wilson: The Role of Transparency and Leadership in Workforce Reskilling appeared first on PrimePay.

In this conversation, Monica Bright-Hill, Director of HR for the National Society of Black Engineers World Headquarters (NSBE WHQ), shares insights on building upskilling programs while considering the needs of the organization and employees.

Q: How can HR create reskilling and upskilling programs tailored to business needs?

Monica: It starts with understanding both employees’ skills and what the business actually needs. That means doing skills assessments, having conversations with leadership about future goals, and identifying gaps before they become a problem.

This year I chose six trainings that align with our core values and provide benefits to all people, like respectful communication. But beyond that, training can’t be one-size-fits-all. Different employees need different types of support. You have to take into account how people learn and what works best for them. Some may need structured courses, while others may benefit more from mentorship or hands-on experience. HR has to build programs that are flexible enough to meet people where they are while still moving the business forward. 

It all comes back to three things that are really important: 

1. What does the employee need? 
2. What does the department need?
3. What does the organization need?

Once you find the balance between those three things, you can build a training program and provide what everyone needs to be successful.

Q: In your experience, how should HR prioritize who receives upskilling programming?

Monica: You invest in your top performers, especially when you’re thinking about succession planning because it’s easier to train and keep than to hire new. As for bottom performers, HR should think, “How do I give them the skills to become a top performer?” You find training opportunities because you want them to know their job, perform well in their role, and give them the necessary skill sets. On top of that, they’re now slowly improving their performance.

But here’s a question I don’t think enough people ask: How do people describe leadership? You can be the janitor and be in leadership. You don’t have to have direct reports. Your title does not have to be “manager.” I expect every single person in the organization to be a leader. 

At NSBE WHQ, I expect every employee to exude leadership because we’re a student-run organization. That means that the majority of those we’re helping to move along in the engineering space are 25 and under—who are still in college and still figuring it out. Some have jobs in big companies, others are just in school. You have some students who are working on their Ph.D.s. So they, the members, have experience, but we should all take leadership roles, and it doesn’t matter their title. 

Q: How does company growth play into reskilling initiatives? 

Monica: HR must consider that every decision matters – especially when you’re thinking about growth. For example, “We’re 40 people today, but what happens when we’re 100? You must set that foundation and groundwork for the current 40 that will make the company successful and be able to grow.”

HR also has to think about what happens next because not everyone will stay. There are some people who are going to say, “You know what, I got all that I could from this particular role and now I have to go.” As an HR leader, you should hope that they take all of the things you were able to provide as an organization and be their best at the next company. 

Q: Let’s say HR creates a new reskilling program. What’s something that can go wrong?

Monica: You can’t just assume employees will seek out development on their own. HR has to take an active role in guiding that process. Just like with benefits, people often forget about upskilling resources unless HR continuously reminds them and makes it easy to engage.

And that communication can look like, “We’re investing in you. We want to make sure you’re successful. We need you to take the time to invest in yourself and pay attention.”

HR has to make reskilling and upskilling accessible and visible—whether that’s through regular reminders, tying it into performance reviews, or having managers actively encourage participation. Otherwise, those opportunities get overlooked. 

Q: HR is clearly a critical driver in upskilling initiatives. What makes a strong HR team?

Monica: It’s all about having a great staff and leadership team that genuinely cares about doing the right thing. That’s actually one of our core values: We do the right thing. It’s not easy—HR is heavy work—but when you have a strong team and leadership that prioritizes people, it makes all the difference.

I also think about my role as, “What can I do for my people?” Whether it’s ensuring they’re supported mentally, professionally, or financially, HR should always advocate for employees in ways that align with business success.

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The post Q&A with Monica Bright-Hill: How HR Can Bridge Skills Gaps and Improve Employee Support appeared first on PrimePay.

It’s therefore astounding that 36% of HR leaders say their organization doesn’t have a succession plan in place nor has plans to develop one in the future. 

Maybe the process seems overwhelming, or they think it’s something they’ll get to eventually…and we all know how that goes. 

Below is a list of five succession planning best practices to help you get started (or continue) your planning process and mitigate any hesitations you may have.

1. Start Succession Planning Early 

Many companies wait until a leadership vacancy arises to think about succession planning. By then, it’s often too late to find the right hire in a short time frame. According to research, “the longer it takes a company to name a new CEO during a succession crisis, the worse it subsequently performs relative to its peers.”

That’s why early succession planning is crucial, as it ensures your business stays stable, even when key leaders leave. Long story short, identifying and developing future leaders well before transitions occur can prevent disruptions and create a seamless shift in responsibilities.

Why It Matters: According to a Deloitte survey, 86% of leaders believe succession planning is an urgent priority, yet only 14% feel confident in their succession plans. Without early preparation, companies risk losing institutional knowledge and facing leadership gaps that could slow down operations.

How to Identify and Develop Future Leaders

• Assess leadership potential: Use holistic performance reviews, leadership assessments, and employee feedback to pinpoint high-potential employees.
• Invest in leadership development: Offer mentorship programs, executive training, and stretch assignments to groom future leaders.
• Create career growth pathways: Give employees clear steps for advancement to increase engagement and retention. A CEO of a large financial services company noted in a Deloitte study: “Succession management is often done in too passive a way. Most companies just ask, ‘Is that person ready?’ as opposed to, ‘How do we get them ready?’”
• Promote a knowledge-sharing culture: Encourage senior leaders to document processes and mentor potential successors.

Real-World Example

Forbes reports that over 75% of Gen Z employees believe they should receive a promotion within the first year of a role. Ladders, Inc., a job search firm, decided to create a promotions program that included performance hurdles, title increases, and pay bumps to encourage retention and progression toward expertise. CEO Marc Cenedella says, “We learned that more frequent career feedback, with better chances for getting ahead, and some self-direction were actually very effective tools for building morale and contributing to the success of our company.”

Key Takeaway: Be proactive in identifying the right people for your succession planning needs. It’s never too early, but it can be too late.

2. Align Succession Planning with Business Strategy 

If you think succession planning is just about replacing leaders, think again. It’s more about ensuring leadership transitions align with your company’s long-term goals. 

Why? The right successors should be able to drive business strategy forward, not just fill an empty seat.

Why It Matters: According to McKinsey & Company, companies that align succession planning with their strategic objectives are 2.2 times more likely to outperform their competitors. When leadership changes aren’t guided by business priorities, companies risk losing momentum, damaging their culture, or failing to adapt to evolving market conditions.

How to Ensure Succession Planning Supports Business Growth

• Define future leadership needs: Conduct a skills gap analysis to identify the skills and experience leaders will need based on where your company is headed, not just where it is today.
• Integrate leadership development with business strategy: Build leadership programs that develop the competencies required to achieve long-term company goals.
• Engage leadership in the process: CEOs, CFOs, and HR leaders should collaborate to ensure succession planning reflects both operational and financial objectives.
• Establish a communication plan: Outline how leadership changes will be communicated to employees, stakeholders, and customers. Employees deserve to know major personnel and business changes, and should hear the message from you and not through a game of telephone.

Real-World Example

Family-owner supermarket Foy’s SuperValu recognized the importance of proactive succession planning to maintain business continuity. John Foy and his daughter, Kelly (who has worked full-time in the family business for over a decade), collaborated for years to develop a comprehensive succession plan that included open communication, legal and tax planning, and clear agreements to prevent future disputes. John believes the extensive preparation was critical not only for managerial purposes but also for the staff and shoppers. He says, “It’s important the foundations are there to protect the employees and make sure that the community is served too.”

Key Takeaway: Successful succession planning is about preparing leaders who can execute the company’s future strategy.

A drag-and-drop org chart lets you see how your succession plans impact various teams and reporting structures to reflect workforce planning and future company goals. 

3. Plan for the Future of Your Budget

Leadership transitions can have major financial implications. According to SHRM, replacing an employee can be three to four times the positions salary – and that number only grows when financials and hiring plans aren’t solidified beforehand. 

Therefore, without a clear budget strategy, companies risk costly hiring mistakes, training inefficiencies, and operational disruptions.

Why It Matters: Without a financial plan in place, companies may struggle to fund leadership transitions while maintaining business stability. Ankit Shah of Columbus State Community College explains, “When all of these professionals are meeting with potential candidates, screening applications, scheduling a few rounds of interviews, and making final decisions, it takes away time from accomplishing organizational goals/outcomes, which then certainly ties to ROI.” 

How to Budget for Succession Planning

• Estimate transition costs: Consider expenses such as executive search firms, leadership training, onboarding, and temporary coverage.
• Invest in leadership development: Allocating funds for mentorship programs and professional development can reduce reliance on external hires. While the debate and nuance of internal vs. external hires will always be present, HBR shares some dramatic data: “in only 7.2% of instances will an outside CEO hire have a 60% chance of outperforming an insider, and in a mere 2.8% of cases will he or she have a 90% chance of outperforming an insider.”
• Leverage HCM technology for cost efficiency: An integrated Human Capital Management (HCM) system can unify workforce and financial data and help HR and Finance teams make strategic, budget-conscious decisions.
• Plan for compensation changes: Leadership changes often come with salary adjustments, incentives, and retention bonuses. Budgeting for these ensures smooth transitions.

Real-World Example

PrimePay uses its own HCM platform to reflect on past budgets and workforce needs to help plan for future scenarios. Suzanne Fohl, CFO, says: “By using our own platform daily, we benefit from its advanced integration capabilities, unifying people and financial data in a single system. This technology enables our HR and Finance teams to collaborate effectively, leveraging real-time insights to drive data-informed, strategic decisions that enhance organizational performance.”

Key Takeaway: Budgeting for leadership transitions is a financial necessity and strategic move that protects business continuity and long-term success.

4. Foster a Culture of Continuous Learning 

Hiring top talent is critical, but you should also create internal programs that prioritize professional growth and skill-building. As a result, you’ll create a strong leadership pipeline and build a culture of continuous learning. With these assets in place, organizations can upskill and reskill employees to make leadership transitions smoother and more strategic.

It’s also important to remember that even the best-laid succession plans can be disrupted by sudden departures. A culture of continuous learning helps you better build an emergency succession strategy, which ensures your business can quickly adapt when key leaders leave unexpectedly. 

Why It Matters: A LinkedIn Workplace Learning Report found that 94% of employees would stay at a company longer if it invested in their learning and development. Additionally, businesses that focus on upskilling and reskilling reduce hiring costs and improve retention rates, making leadership succession more seamless and cost-effective.

How to Build a Learning-Focused Culture

• Encourage upskilling and reskilling: Provide opportunities for employees to develop leadership skills, learn new technologies, and adapt to evolving organizational needs.
• Make the process transparent and inclusive: Communicate the company’s succession plans to employees, ensuring they understand growth opportunities and how to qualify for leadership roles. An added bonus? Your people will better understand how their job relates to the bigger picture, giving them a stronger sense of purpose. 
• Plan with diversity in mind: Most leadership teams are still composed of white men, which can actually be a disservice to companies. Travis Osborne, VP of information technology at Apache Corporation, suggests organizations view succession planning as “an opportunity to find a new set of perspectives in leadership, not just a carbon copy of the person who held the position before.” He reasons that companies need to “freshen the perspective periodically” and hire people with other skill sets and views the leadership team doesn’t have. 
• Cross-train employees: Ensure multiple people are familiar with critical job functions so no single departure cripples the company. Because you’re losing institutional knowledge as well as an employee, you don’t want everything they know walking out the door with them without additional documentation in place.

Real-World Example

Talent management firm CCI Consulting worked with a privately-held family of companies in the residential real estate sector to prepare the next generation of leaders. Recognizing the need for leadership development, CCI designed a High-Potential Leadership Development Program. The initiative led to a robust internal leadership pipeline, reduced the need for external hires, and strengthened the company’s culture.

Key Takeaway: Although professional development programs are an employee benefit, they’re also a strategic investment in the future of your company. Businesses that prioritize professional development retain top talent and build stronger leadership teams.

5. Test and Refine Succession Plans 

Even the most well-thought-out succession plans need real-world testing. Conducting trial runs, temporary role transitions, or job rotations helps businesses assess leadership readiness and refine their strategy before a critical leadership change occurs.

But that familiarity goes both ways, says Laura Miller, CIO at Macy’s. She believes the leadership team also needs working relationships with potential successors to help build confidence in future transitions. She furthers, “When you’re trying to groom successors for your role, it’s not just about their growth and development. It’s also about giving them that exposure.”

Why It Matters: Actively testing your succession plans more likely ensures a successful leadership transition. Without testing, companies risk placing underprepared employees into key roles, leading to instability and performance declines.

How to Evaluate Leadership Preparedness

• Conduct trial leadership assignments: Allow high-potential employees to take on leadership responsibilities temporarily to gauge their readiness.
• Use job rotations to expand experience: Moving employees across departments broadens their skills and prepares them for leadership roles. Miller does this with her own team by inviting high-potential talent to observe and participate in decision-making. She explains: “It’s important to say, ‘I’ve got a couple of successors here, and I’d like to rotate them through so that they can understand what the job looks like. If you have a successor that you’re grooming, you’ve got to create those moments.”
• Implement acting or interim roles: When possible, appoint interim leaders before a permanent transition to assess fit and performance.
• Gather feedback and adjust: Regularly review succession test results and refine leadership development programs accordingly. It’s also smart to have different versions of your succession strategy to account for turnover and business shifts. 

Real-World Example

Microsoft’s leadership transition from Steve Ballmer to Satya Nadella in 2014 was a prime example of succession planning best practices in action. Nadella had been with the company for over two decades, working in various leadership roles before being named CEO. His deep understanding of Microsoft’s vision and culture allowed for a smooth transition and an eventual company turnaround.

Key Takeaway: A succession plan is only as strong as its execution. Testing leadership readiness through trial runs and temporary assignments helps businesses identify gaps and refine their approach before making a permanent transition.

The post 5 Succession Planning Best Practices appeared first on PrimePay.

That’s where state programs step in. Unlike FMLA, several states have implemented their own paid family leave (PFL) policies, ensuring employees receive partial wage replacement during their time off. 

Navigating the differences between state and federal leave can be challenging for HR and finance leaders. Policies vary in terms of eligibility, duration, and benefits offered. Understanding which states have paid family leave programs—and how they work—is critical to staying compliant and supporting your workforce effectively.

State vs. Federal Leave

When it comes to paid family leave, it’s essential to understand the difference between state and federal policies. FMLA has existed since 1993 and offers eligible employees up to 12 weeks of unpaid leave for family or medical reasons.

While FMLA is a significant protection, it’s unpaid, leaving many employees unable to take advantage of it.

While federal protections offer consistency, state-level programs often provide more robust, employee-friendly options. 

In 2025, these state programs are more important than ever. According to the National Partnership for Women & Families, “state-level paid family leave programs improve access to leave for low-income workers, who are least likely to have access to paid time off.”

Unfortunately, not all states have their own programs to support residents. However, those like California, New York, and New Jersey have already set a standard, and new states are joining the list to provide broader access to paid leave. 

Paid Family Leave vs. Paid Family and Medical Leave

State laws and opt-in programs can offer Paid Family Leave and Paid Family and Medical Leave. 

While the terms “Paid Family Leave” (PFL) and “Paid Family and Medical Leave” (PFML) are sometimes used interchangeably, they’re not the same. The distinction lies in the scope of coverage.

Paid Family Leave typically focuses on family-related events, such as:

• Bonding with a newborn, adopted, or foster child
• Caring for a seriously ill family member
• Supporting a family member during active military duty

Paid Family and Medical Leave expands that coverage to include the employee’s own medical needs. This could mean taking time off to recover from a major surgery, undergo treatment for a chronic condition, or manage other personal health issues.

For example, Washington State’s PFML program combines both family and medical leave under one umbrella, offering up to 12 weeks of leave for qualifying events (or 16 weeks if both types of leave are used). Contrast that with New York, which provides Paid Family Leave but does not cover an employee’s personal medical leave under the same program.

Why does this distinction matter? 

From an HR and financial perspective, understanding these nuances can help employers prepare for the costs and administrative requirements associated with leave programs. For employees, knowing what’s covered ensures they can plan effectively for time away from work without financial stress.

As states continue to evolve their programs, the line between PFL and PFML may blur, but for now, it’s a key detail worth noting when reviewing policies and compliance requirements.

States Offering Paid Family Leave

As of 2025, several states and territories have implemented Paid Family Leave programs. This ensures employees have access to wage replacement during critical life events. Below are key details for each state.

California

California has been a leader in paid family leave since 2004. The state provides up to eight weeks of partial wage replacement to eligible employees through the Paid Family Leave program. Funded by employee payroll contributions, this program covers bonding with a new child, caring for a seriously ill family member, and military exigency. Benefits replace approximately 60-70% of wages, depending on income.

Colorado

Colorado’s Family and Medical Leave Insurance (FAMLI) program launched in 2024. Employees can take up to 12 weeks of paid family or medical leave, with wage replacement of up to 90% for lower earners. Like Oregon, this program is funded through shared contributions.

Connecticut

Connecticut began offering paid family leave in 2022 under the Paid Leave Authority. Employees can take up to 12 weeks of leave at a wage replacement rate of up to 95%, capped at 60 times the minimum wage. Events covered include child bonding, caregiving for family members, and personal medical needs.

Delaware

Effective in 2025, Delaware’s Paid Leave law offers up to 12 weeks of paid family leave for bonding with a child, caregiving for family members, or military-related needs. The program will be funded by payroll contributions, specifically on wage replacement and caps varying by income.

Washington, D.C.

The District of Columbia offers one of the most robust programs, providing up to 12 weeks of paid family leave, 12 weeks of medical leave, and two weeks for prenatal care. Benefits replace up to 90% of wages for lower-income workers and are funded by employer payroll taxes.

Maine

Maine’s paid family leave program will take effect in 2025. Employees can receive up to 12 weeks of paid leave, covering family caregiving, child bonding, and personal medical issues. The program will be funded through shared payroll contributions, with wage replacement percentages to be finalized.

Maryland

Maryland’s Family and Medical Leave Insurance (FAMLI) program, effective in 2025, will provide up to 12 weeks of paid leave for eligible events, including caregiving, bonding, and personal medical needs. Wage replacement will range from 50-90% based on income, funded by joint contributions from employers and employees.

Massachusetts

Massachusetts’ PFML program offers up to 12 weeks of paid family leave and 20 weeks of paid medical leave for personal health conditions. Benefits replace up to 80% of wages for lower-income workers, with a cap for higher earners. The program is funded through contributions shared between employees and employers.

Minnesota

Minnesota’s Paid Family and Medical Leave program begins in 2025, offering up to 12 weeks of family leave, 12 weeks of medical leave, or 20 weeks combined. Wage replacement rates range from 55-90%, capped at $1,256 per week. Funding is through shared contributions split between employers and employees.

New Hampshire

New Hampshire offers a voluntary Paid Family and Medical Leave Insurance program, providing up to six weeks of leave with 60% wage replacement. While employers aren’t required to participate, employees in non-participating companies can opt-in directly through the state’s private insurance partner.

New Jersey

New Jersey provides 12 weeks of paid family leave under its Family Leave Insurance program. Funded by employee contributions, it offers a benefit of up to 85% of the employee’s average weekly wage, capped at a maximum amount. Eligible events include child bonding and caregiving for a seriously ill family member.

New York

New York’s Paid Family Leave program offers up to 12 weeks of leave with wage replacement at 67% of the employee’s average weekly wage, capped at a statewide average. The program, also employee-funded, supports bonding with a new child, caring for a family member with a serious health condition, or helping during a family member’s active military duty.

Oregon

Oregon’s Paid Leave Oregon program is relatively new. It provides up to 12 weeks of paid leave, with an additional two weeks for pregnancy-related medical issues. The program replaces up to 100% of wages for low-income workers, with a sliding scale for higher earners. Funding comes from a combined employee and employer contribution model.

Rhode Island

Rhode Island’s Temporary Caregiver Insurance (TCI) program provides six weeks of leave for caregiving and bonding purposes. Benefits replace approximately 60% of wages and are funded by employee payroll contributions. While the duration is shorter than in other states, Rhode Island remains a pioneer in paid leave policies.

Vermont

Vermont is launching its first paid family leave program in 2025. Employees will be eligible for up to six weeks of wage replacement, with benefits covering caregiving and bonding events. Funded by payroll contributions, the program aims to expand coverage and duration in subsequent years.

Washington

Washington State’s Paid Family and Medical Leave (PFML) program combines family and medical leave benefits. Employees can access up to 12 weeks of paid leave, with an additional four weeks for pregnancy complications. Wage replacement is up to 90% of weekly earnings, funded by both employer and employee contributions.

Know the Laws to Stay Compliant

Understanding FMLA and state family leave programming is essential for employers and HR leaders to stay compliant while supporting their workforce. Even small businesses must comply with certain FMLA requirements and should ensure they fully understand them.

Each state has unique laws, contribution requirements, and benefit structures, making it crucial to stay updated on regulations where your organization operates or your employees live. 

Non-compliance can lead to penalties, legal issues, and employee dissatisfaction. Partnering with experts, using compliance and payroll tools, and maintaining open communication with employees can help you navigate these laws seamlessly. By staying informed, you can foster a supportive workplace while meeting your legal obligations.

The post States Offering Paid Family Leave in 2025 appeared first on PrimePay.

The result is shocking, but maybe not surprising: Employee engagement has fallen to a national 11-year low. 

So how can leaders meet the demands of their organization and clients to increase team productivity and improve the employee experience?

Enter the Pareto principle, otherwise known as the 80/20 rule. Vilfredo Pareto’s observations originally concerned land ownership (and allegedly the fruit output in his garden), but they also apply to the business world. The Pareto principle states that 80% of outcomes come from 20% of causes. 

Because the principle can be applied broadly, leaders from any department should utilize the 80/20 rule and the seven strategies below to increase workplace efficiency. 

As a reminder, workplace efficiency emphasizes enhancing productivity at the team or individual level, whereas operational efficiency takes a wider view and concentrates on improving an organization’s overall processes and functions. (Long story short: While different, both are important!)

1. Model the Ideal Behavior

This strategy earns the top spot because no one wants to be a “do as I say, not as I do” leader. 

Unfortunately, we’ve all probably had that boss: one who says you can leave the office early but then stays through dinner, suggests you take PTO but never personally does, or encourages you to be a team player but prefers to work siloed. 

At best, this hypocritical behavior confuses employees, and at worst, it creates an atmosphere of distrust and toxicity.

But does not promoting trust in the workplace really affect employees and the bottom line? Absolutely, according to the American Psychological Association’s 2024 Work in America Survey. 

In fact, it leads to something alarming for companies and employees: a lack of psychological safety.

Specifically, employees experiencing low psychological safety:

• Experience lower job satisfaction (85% vs. 95% of those with higher psychological safety).
• Struggle with productivity (38% give themselves a “high” rating vs. 62%). 
• Feel tense or stressed on a typical workday (61% vs. 27%). 
• Plan to look for a new job within the next year (41% vs. 19%). 
• Aren’t satisfied with their compensation (32% vs. 11%).

The bottom line: Use your influence as a leader to create a positive team dynamic and culture by modeling and promoting the ideal behavior. 

2. Set Priorities, Not Just Goals

It’s tempting to list out everything you want to achieve, but not all tasks are created equal. 

Remember to use the 80/20 rule: Identify the 20% of tasks that will yield 80% of your results.

Some leaders call these the “big rocks” and use visual tactics on their OKR spreadsheet to keep them top-of-mind (think numerical ordering, highlighting, or literally inserting a rock emoji next to them). 

The 80/20 rule forces a mindset shift because quantity doesn’t equal quality.

Neuroscience researcher, surgeon, and author Dr. Mithu Storoni explains: “Today, a company’s success hinges much less on the quantity of work done by humans as AI and automation are taking over the territory of ‘lower level’ cognitive work. The quality of mental output – of ideas, solutions, and innovation—is now key to productivity. Today, efficiency is not about getting things done, but about getting things done well.”

Stuck on which tasks are your 20%? Focus on the areas that will have the most impact. You’ll most likely need to review previous quarters, collaborative efforts, and time spent on older projects to determine if, as they say, the juice is worth the squeeze. 

3. Break It Down

There’s a reason most people don’t keep their New Year’s resolutions past January. They set themselves up for failure. 

And we get it – big goals can feel daunting. Can you imagine seeing “launch a new product” on your to-do list? It’s enough to make anyone curl up in the fetal position. 

That’s why it’s advisable to break your objectives into smaller, actionable steps and know what each step encompasses. Because you’re prioritizing the 20%, your projects should be well-planned and the output should be top-quality. 

Executive coach and author Caroline Adams Miller suggests using her six-step BRIDGE approach to conquer big goals: 

1. “Brainstorm every aspect associated with setting a specific goal.
2. Evaluate the relationships you will and won’t need to move forward.
3. Think about the investments you will need to make in yourself.
4. Discern what factors will matter in decision-making.
5. Decide whether or not you have the grit to proceed.
6. Settle on the definition of excellence you are shooting for and the timeline that will match it.”

4. Celebrate Small Wins

Numerous studies prove that showing appreciation for employees improves retention rates, attracts talent, and increases productivity. 

But while it may seem like a no-brainer to celebrate small wins and the people involved, especially within a big project, many leaders overlook this crucial step. Why? It may be that time is moving too quickly, there’s another round of to-dos, or – more likely – leaders think they’re showing recognition, but it’s not registering with employees.

In fact, a Gallup study highlights the striking disconnect between how often managers and employees think recognition is happening.

Ben Wigert, Director of Research and Strategy at Gallup, believes the problem stems from the fact that only 12% of employees are asked how they like being recognized. Therefore, he argues, “Managers need a better understanding of what meaningful recognition looks like for each team member to bridge this gap.” 

So before you schedule a pizza party or send a team-wide celebratory email, collect feedback from your team members. This intentional step will help establish you as a thoughtful leader and create a culture of celebrating other’s successes and small wins.  

5. Leverage Technology and Tools

Is your company remote, with employees scattered across time zones? Are you hybrid and still have to call internal and external partners virtually in meetings? Or are you in-person, attempting to work smarter and more collaboratively?

In any of these scenarios, creating a stellar digital employee experience (DEX) is a must.  

But DEX doesn’t mean signing up for a bunch of tools or giving employees new devices (although that may be welcomed!). Instead, it’s determining which digital processes and technologies allow team members to align strategically and foster a culture that’s beneficial to all.

That intentionality is critical in helping people reach their goals, says Srikant Chellappa, CEO of Engagedly. He explains, “When digital tools are integrated seamlessly, employees spend less time navigating technology and more time driving meaningful results.”

Moreover, granting your people access to different platforms – and even their own employee information – creates a better DEX. For example, seek project management software or automated tools that reduce busywork and allow you to focus on strategy and delivering high-value work.

Larry Nash, U.S. Director of Recruiting at EY, says, “Technology is enabling us to provide employees with a more consumer type of presence at work, with a greater ability to have richer digital experiences and find what they need 24/7.”

PrimePay’s Performance Management Pro offers a range of templates designed to support an effective, transparent, and communicative employee experience.

Note: While technology and automation can benefit teams, automation should “enhance, not replace, human judgment and empathy,” warns Bernard Marr, author of Generative AI in Practice. As you incorporate more tools into your processes, make sure you’re “balancing AI efficiency with the human touch in people management.” 

6. Review and Adjust Regularly

Imagine you’ve revamped your team processes to increase efficiency. It’s taken months to choose the right project management system, vet new tools, and slowly but surely change your team culture. Things are progressing nicely, right? Maybe not.

When you make significant changes – especially with a specific end goal in mind – it’s critical to review their impact to ensure they’re positively (and not negatively) affecting your team.

Consider:

• Choosing a cadence to review your processes (think mid-month, quarter, or project) is important. These reviews are different from a year-end analysis because the point is to pivot if needed. A flexible mindset will prevent you from feeling stuck and help you stay on track toward your goals.
• Deciding what metrics you’ll review to avoid what data scientist Seth Stephens-Davidowitz calls a “decision dilemma.” Because 86% of people say data volume makes decisions much more complicated, stick to a few metrics to see if you’ve boosted your workplace efficiency. Remember – stick to impactful ones that will produce the majority of outcomes.
• Asking your team. As a leader, you most likely have the final say, but that doesn’t mean you shouldn’t gather everyone’s input – especially if new procedures affect everyone on the team. You’ll also help create more buy-in; as the book Crucial Conversations puts it: “When people aren’t involved…they’re rarely committed to the final decision. They may say they’re on board, but then walk away and follow through halfheartedly.”
• Looking at work efficiency examples. Still not happy with your personal and team’s productivity? Seek resources and advice from other teams or your professional network to determine what additional steps you need to take to boost efficiency. 

7. Protect Your Energy

You’ve heard it before: Prioritizing mental health and finding work-life balance is critical for personal and professional happiness. 

But doing those two things is easier said than done, especially if you’re not in the habit of setting boundaries, getting enough sleep, and being honest with yourself (and others) about your workload. 

Because burnout is on the rise (and most likely here to stay), you can begin implementing two strategies—capacity planning and acceptance—to help protect your energy.

Plan For Your Capacity

Determining how much work your team can realistically manage within a given timeframe requires careful resource allocation and prioritization. This is where workforce capacity planning plays a crucial role, ensuring that staffing levels align with business demands.

While this concept sounds like a no-brainer, it can be difficult to implement if you usually say “yes” to every project and request. 

If you’re new to capacity planning, start slow and:

• Track current workloads to identify how much time is spent on specific tasks.
• Align workloads with the Pareto Principle so your team can focus on high-impact work.
• Leverage data and realistic forecasting to determine the time, resources, and technology required. 

Note that capacity planning also requires extensive communication and collaboration between internal and external departments. Mike Habeck, a director at Deloitte Consulting LLP, says, “For capacity planning to be effective, it should balance business needs with [team] capabilities within budgetary limitations. All three of these demands must be managed in concert, and no single tool does this.”

Embrace Uncertainty

Do you often feel pressure to solve every problem and control every outcome? If so, you’re in good (but maybe not desirable) company. 

Specifically, 64% of HR leaders say their organization has experienced change this past year, so it’s no wonder that leaders and managers feel they must have total control over knowledge and the narrative they share with their team. 

That feeling isn’t new, says Gianpiero Petriglieri of INSEAD, but can be detrimental to a company’s culture, leadership, and teams. He explains: “When we expect leaders to be knowledgeable and capable in precisely the moments in which everyone else is uncertain and paralyzed, we make it difficult for them to ask for help.”

To help protect your energy, consider who you can go to for guidance or support (professionally and/or personally). 

Additionally – and this is difficult – accept the things you can’t change. Remember, acceptance doesn’t mean ignoring challenges; it means recognizing when certain factors (like market fluctuations, client demands, or organizational constraints) are outside your control. It also reduces stress, frees up your mental bandwidth, and encourages a culture of adaptability and empowerment rather than frustration or defeat. 

Focusing on Efficiency in the Workplace

While there are many ways to boost efficiency, the above strategies offer a substantial start. If you’re a go-getter, you might try to zip through all seven in a quarter. Our advice: Don’t do it. 

Instead, take time to truly understand the needs of your team and your bandwidth before implementing a few (or even just one!) to promote productivity. By honing in on your personal and department’s weaknesses, you’ll be able to create a greater, more positive impact that will benefit both the company and the employee experience. 

The post The 80/20 Rule: How to Prioritize Tasks and Boost Workplace Efficiency appeared first on PrimePay.

Long-term, a poor digital employee experience (DEX) creates frustration, wastes time, and even leads to turnover. Alternatively, a well-thought-out DEX strategy removes friction from employees’ workdays and helps build a digital environment that drives engagement, efficiency, and long-term success.

What is the Digital Employee Experience (DEX)?

The digital employee experience (DEX) refers to how employees interact with their employer’s digital tools, platforms, and systems. A strong DEX ensures that employees can work seamlessly without unnecessary disruptions, and neglecting it can undermine even the best cultural or physical environments.

Digital Employee Experience vs. Employee Experience

While employee experience (EX) and digital employee experience (DEX) are connected, they focus on different aspects of an employee’s journey and are essential for creating a thriving workplace. 

EX refers to employees’ overall employee experience with a company, including culture, physical work environment, and processes. 

Alternatively, DEX focuses solely on the digital tools and systems employees interact with daily, such as email, internal platforms like self-service and performance management, and IT infrastructure.

DEX is a critical component of EX because digital tools are deeply integrated into modern workflows. Poorly functioning systems—like unreliable software or frequent IT disruptions—can frustrate employees and hinder productivity. Conversely, efficient and user-friendly digital tools enhance the employee experience, enabling people to focus on tasks without unnecessary distractions.

Why You Need a Good Digital Experience for Employees

Research shows that poor digital experiences significantly impact workplace efficiency and employee morale. In fact, 77% of employees feel frustrated with outdated or inefficient technology in their workplace, which can lead to burnout, disengagement, or even higher turnover rates. 

And get this – the same study reported that 67% of employees said they’d take a pay cut if it meant having access to better software and technology. Now, we aren’t advocating that you invest in better software and cut salaries; instead, this statistic shows just how frustrating clunky technology can be, especially for remote or hybrid employees.

On the other hand, when businesses prioritize DEX, employees feel empowered, leading to higher productivity, increased engagement, and better collaboration.

The Cost of Poor DEX

Technology issues are annoying at best (and that’s oversimplifying things). We’re talking about login issues, spam emails, or slow internal systems that always seem to break when you’re mid-presentation. 

And these technology disruptions are more common than you might think. According to Robert Half Technology, employees lose an average of 22 minutes daily due to IT or technology-related issues, which adds up to nearly two weeks of lost productivity annually per employee.

Additionally, a Workgeist report reports that using various point solutions takes its toll on employees’ ability to focus and align. Specifically: 

• 49% of employees say they spend “excessive time” switching between multiple tools.
• 60% say keeping track of information flowing across different applications is challenging.
• 49% are concerned that critical information will get lost among the software updates.
• 21% report that their mistakes result from difficulties accessing the different online tools.

Not to pile on the bad news, but because many employees are struggling with the pace and volume of their work, they look to their company’s DEX to help them navigate and solve their problems. 

Jan Erike Aasa, partner and global leader of ISG Provider Lens Research, explains: “Employees have greater expectations from the tools and services their employers provide them with now. If your organization lacks a DEX strategy, and employee experience isn’t improving, then from their perspectives, it’s actually getting worse.”

Benefits of Optimized DEX

Luckily, businesses that prioritize a seamless DEX see tangible benefits. ISG reports that companies prioritizing DEX and automating more intelligently “see results that are almost instantly measurable: reduced employee frustration, greater overall job satisfaction, higher morale, and increased engagement levels.”

We’ll add another benefit to that list: a higher eNPS score. Because many employees waste time navigating multiple tools—especially internal ones with essential data—employers should consider investing in an all-in-one solution to improve their DEX. 

As Srikant Chellappa, CEO of Engagedly, says, “When digital tools are integrated seamlessly, employees spend less time navigating technology and more time driving meaningful results. A unified system empowers leaders to align strategy with execution and foster a culture of continuous engagement and growth.”

If all roads lead to Rome, then all data should lead to one system. This software should serve as a “one-stop shop” for HR and Finance leaders to track various people, performance, and financial metrics and make better decisions for their people.

And the data doesn’t lie. Specifically, 57% of organizations with an eNPS score of 50+ use an all-in-one software system. That’s because an all-in-one system helps ensure data maturity and alignment, allowing leaders to better support their departments, engage more fully with employees, and collect data to improve the employee experience. 

Looking for more insights like this one? Check out The Current State of the Employee Experience research report.

How to Create a Successful Digital Employee Experience

Creating a seamless digital employee experience requires more than just investing in the latest technology (although that’s important, too, if it helps you meet your goals). You must understand employees’ needs, proactively address potential disruptions, and ensure that every digital tool contributes to a smoother, more efficient workday. 

Below are six steps to get started.

1. Conduct a Technology Audit

Start by assessing your current digital tools and systems. Identify which platforms employees use daily and gather feedback on their performance. 

Are they intuitive? Do they integrate well with other tools? Are they used by the majority of teams?

First, examine common frustrations—like frequent login issues, system downtime, or lost IT tickets. Then, consider tool alignment across teams, since 57% of employees report that they’re not sure all company departments use the same apps, leading to disjointed communication and lost information.

Pro Tip: Send out surveys or host focus groups to learn what employees like and dislike about their tech stack.

2. Streamline Tools and Reduce Redundancies

There’s a commercial where a woman discovers she’s still paying for a streaming app she thought she canceled months ago. The lesson of the clip is to analyze where your money is going consistently so you’re not accidentally paying for things you don’t need or use.

The same goes for business tools. Need multiple social media management software? Various AI subscriptions? Probably not. Look for opportunities to consolidate platforms or implement integrated solutions that reduce the need for constant app switching.

Even better: Determine which tools your teams deem most successful and consider implementing them across departments if they’re not already. For example, using the same project management software ensures deadline transparency and that all information is accessible for people to complete their tasks. 

Pro Tip: Work with your finance team or controller to get a list of recurring software expenses to find potential candidates for consolidation or removal. (Bonus points: Your CFO will love you!)

3. Invest in IT Support and Proactive Maintenance

Responsive and reliable IT support is critical for a successful DEX. In its Global Experience Benchmark Report, HappySignals recommends first “defining what experience means in the context of IT.”

Consider:

• What are the main objectives?
• How do those objectives support broader business goals?
• Who would be using the data?

Determining your IT’s reporting metrics and touchpoints (like the office environment, service portals, and business applications) will help give insight into employee happiness, productivity, and experience.

4. Prioritize Cybersecurity and Minimize Spam

Fraud—particularly payroll scams—continues to rise as more scammers attempt to hack email accounts, send lookalike domains, and make spoof calls to obtain sensitive employee information.

Of course, employees can’t perform their best if they constantly battle security issues or wade through phishing attempts. 

We suggest that you do the following to keep systems secure and help employees feel confident in their tools:

• Implement strong spam filters
• Set up multi-factor authentication (MFA)
• Conduct regular cybersecurity training
• Regularly audit payroll
• Use a safe and secure payroll provider

5. Offer Training and Support

Let’s say you’ve invested in the “best,” most robust tools, but your employees still aren’t using them. In all honesty, this probably isn’t a hypothetical situation, as 63% of employees report using tools they prefer versus company ones.

A large reason employees go rogue with software is that they haven’t received in-depth and ongoing training for new software. So, they stick with the tools with which they feel most comfortable. And it makes sense—learning new software can be time-consuming, frustrating, and confusing.

You therefore need to provide ongoing training and clear documentation for all digital platforms (even better: incorporate training into your onboarding process). Additionally, make it easy for employees to find answers to their questions through a knowledge base, live chat support, or IT helpdesk services.

6. Regularly Evaluate and Improve

As with most programs, a successful DEX requires continuous improvement. 

You should:

• Schedule regular check-ins and surveys to assess whether tools meet employees’ needs and adjust as necessary. 
• Analyze IT engagement and data to understand your company’s DEX.
• Prune any apps that are no longer helping people meet their goals.
• Stay updated on emerging technologies that could further enhance productivity and collaboration.

Digital Employee Experience Examples

A successful DEX is built on tools and systems that seamlessly support employees in their daily tasks. Below are a few real-world examples of how organizations can improve DEX by focusing on critical digital touchpoints:

Streamlined Onboarding Platforms

A company implementing a centralized onboarding platform makes it easier for new hires to complete paperwork, set up accounts, and access training materials. For example, HCMs that integrate with payroll reduce redundant data entry and ensure a smooth start for new employees.

Systems with integrated ATS also help recruiters sort and choose top candidates for a role, adding to the positive DEX for current and future employees alike. Choose a tool that allows you to message candidates right from the portal to save time and keep information organized in one place.

PrimePay’s ATS does it all: creates (and saves) job descriptions, posts roles to chosen job boards, and collects applicant information.

Proactive IT Issue Resolution

Companies implementing automated IT monitoring tools can detect and resolve issues before they impact employees. For instance, automated ticketing systems automatically route tickets to the correct IT team, reducing wait time. 

Additionally, IT teams can push proactive system updates during off-hours to present workday disruptions. Just remember to communicate any changes with employees!

Spam-Free Email Systems

Companies can invest in robust email security measures to reduce phishing attacks and spam. Examples include using AI-powered filters (like Proofpoint or TitanHQ) to filter out 99% of suspicious emails before they hit employees’ inboxes. 

Self-Service Portals

Self-service tools empower employees to handle simple tasks without IT or HR intervention. It’s best practice to give new hires access to their self-service portal during their onboarding (or even preboarding) process so they can sign up for benefits, direct deposit, taxes, and more.

A modern ESS allows employees to view and update information without the back-and-forth with HR, saving time and creating a stronger DEX.

Prioritize Your DEX Today

If you’re focusing on your employee experience but not considering the digital component, you’re most likely missing a big piece of the puzzle. That’s because a seamless DEX supports EX by removing barriers to productivity and fostering collaboration, especially for remote or hybrid teams. 

Reliable and well-integrated digital tools empower employees and demonstrate that the organization values their time and effort. Ultimately, companies can enhance employee experience and boost satisfaction, engagement, and retention by investing in reliable, intuitive, and integrated digital tools and processes.

The post How to Create a Digital Employee Experience for a Better Workplace appeared first on PrimePay.

A robust gap analysis is the foundation for doing just that. 

In fact, a well-executed skills gap analysis helps your organization not only respond quickly to new challenges (like market shifts or technological disruptions) by developing a workforce ready to pivot, but also helps increase employee satisfaction and productivity. 

Below, we discuss the benefits of performing a gap analysis, how to identify a skills gap, and ways to use your data to improve organizational success. 

What is a Skills Gap Analysis?

A skills gap analysis is a method used by organizations to identify the difference between the skills their workforce currently has and the skills needed to meet business goals. 

Think of it as taking inventory. By knowing your team’s strengths and areas for growth, you’ll help build a blueprint for staying competitive or adapting to new challenges. 

Whether you’re an HR leader planning for long-term talent development or a finance leader aligning training budgets with ROI, a skills gap analysis helps set the stage for better workforce planning and stronger business outcomes.

Key Terms to Know:

• HR gap analysis: A broader assessment that includes not just skills, but workforce planning and hiring needs.
• Training gap analysis: A focused evaluation of the skills employees lack and how training can address those gaps.
• Skills gap assessment: Another term for the overall analysis process of identifying missing or underdeveloped skills.

Benefits of Performing a Gap Analysis

Conducting a skills gap analysis is a strategic move that offers measurable benefits for your organization, employees, and overall business performance. Sounds like a win-win, right?

Below are a few reasons why performing a gap analysis should be a priority (if it isn’t already).

• Align workforce skills with business goals: A gap analysis helps you pinpoint whether your workforce has the skills to achieve organizational objectives. By aligning training and hiring efforts with business goals, you can focus resources on building a team ready to tackle current and future challenges. But don’t just take it from us; 87% of executives say their companies either have a skills gap now or expect to within a few years, and aligning workforce capabilities is a top priority to address this issue. 
• Boost productivity and performance: Closing skills gaps ensures your employees are equipped to work efficiently and confidently. Whether mastering new software or improving leadership capabilities, a skilled workforce leads to higher-quality outcomes and fewer costly mistakes.
• Plan for the future: Skills gap analyses, or the broader HR gap analysis, are crucial for future-proofing your workforce. As we know, workforce needs constantly evolve with industry trends and technology. In what they call “The Reskilling Revolution,” The World Economic Forum predicts that 50% of all employees will need reskilling and that 1.1 billion jobs are liable to be radically transformed in the next decade. 
• Optimize training investments: Rather than wasting training budgets on guesswork, a skills gap assessment enables data-driven decisions. Instead of assuming which programs to implement, you can use data-rich insights to focus on the most impactful areas and ensure your training budget delivers measurable ROI. 
• Improve employee engagement and retention: Employees want to feel valued and see growth opportunities. Focusing on upskilling your workforce does just that – and more. In fact, research from LinkedIn’s Workforce Learning Report found that 94% of people would stay longer at a company that invested in their learning and development. And, overall, companies with a strong learning culture benefit from that retention, too, as it builds a healthier management pipeline and better workplace culture. 

It’s clear that learning and development have a strong impact on retention efforts and the employee experience. 

How to Conduct a Gap Analysis

Performing a skills gap analysis involves several steps, and we’ll be honest – the first go-around, it’ll seem time-consuming and slow to start. 

Barry Marshall, founding partner of P5, explains: “This is critical work for any organization that wants to increase its ability to pivot and adapt to constantly changing market conditions. It is time-consuming, but its impact is broad. You will find applications for headcount planning, job descriptions, career mapping, succession planning, and so much more. So, to get things started, I always recommend piloting it first with a smaller part of the organization so you can learn and adapt your approach as you go.”

However, once you’ve conducted a few gap analyses, you’ll understand which steps to rework to best fit your schedule, goals, and company.

Here’s an overview to help you conduct an effective gap analysis for your organization.

1. Define Your Goals

Before diving into the skills gap assessment, clarify what you’re trying to achieve. 

Are you preparing for a major project, adapting to new technology, or addressing industry changes? 

For example:

• A manufacturing company transitioning to automation may focus on assessing technical skills among its workforce. 
• An agency planning to launch a company rebrand may focus on assessing storytelling and design skills among its team.
• A marketing team looking to improve its social presence may focus on assessing digital marketing skills, strategy, and partnerships among its people. 

2. Identify the Skills Needed

Determine the skills required to meet your goals. 

These skills may include:

• Technical skills, like software proficiency or machine operation.
• Soft skills, like communication or problem-solving.
• Emerging skills, like AI literacy or cybersecurity expertise.

To get started, review job descriptions, consult with department leaders, and research industry trends. Tools like the U.S. Department of Labor’s O*NET Online can provide insight into essential skills for specific roles.

Note that you’ll need to cross-collaborate with team leaders and project managers to understand exactly what skills are needed and what processes look like to develop a full list of necessary skills. 

3. Assess Current Workforce Skills

Evaluate the skills your employees already have to better understand the gaps (in the next step!) and help you pivot if need be. 

You can use:

• Surveys and self-assessments: Employees can rate their proficiency in key skills.
• Manager evaluations: Supervisors can provide insight into team strengths and weaknesses.
• Skills testing or certifications: Platforms like LinkedIn Learning, Skillsoft, or your learning management tool can assess employees’ capabilities.

PrimePay’s LMS is a user-friendly, scalable solution that allows you to easily tailor training programs to your teams’ needs and professional goals. 

4. Analyze the Gaps

Compare the skills you need with the skills your team currently possesses. 

Identify:

• Skill shortages: Areas where employees lack proficiency.
• Skill surpluses: Capabilities where your team excels and can share knowledge.
• Future gaps: Skills that will become essential based on trends or strategic plans.

For instance, if your HR gap analysis reveals that mid-level managers lack leadership skills, you might prioritize training programs for this group.

TIP: It’s also important to consider employee workload. Create a general (but honest) workforce capacity plan for your teams to help retain top talent and prevent voluntary turnover. You’re doing this analysis to maximize team output and upskill your people – don’t inadvertently drive them away by overworking them.  

5. Develop an Action Plan

Once you’ve identified gaps, create a plan to address them. 

This plan might include:

• Training programs: Upskill current employees through workshops, online courses, or certifications.
• Hiring new talent: Recruit candidates with the necessary skills to fill gaps quickly.
• Mentorship or cross-training: Leverage internal expertise by pairing skilled employees with those who need development. Mentorship programs benefit both the mentor and mentee, as Kevin McKay, VP of Sales and Operations at Flash Global. He explains, “For me, it’s a rewarding way to give back, share knowledge, and develop leadership skills, creating a culture of continuous learning and growth.”

6. Track Progress and Adjust

Regularly measure the effectiveness of your plan by tracking metrics such as employee performance, retention rates post-training, and the ROI of training investments.

Tools like performance management software, employee surveys, or your LMS can help you monitor progress and refine your strategy.

The right LMS will help you track completion rates and understand employees’ upskilling interests to better adjust your processes.

How to Use Data from a Gap Analysis

Once you’ve conducted a skills gap analysis, the next step is turning those insights into action. The gathered data should guide your workforce planning, training programs, and long-term business strategies. 

Here’s how to make the most of your gap analysis data.

1. Prioritize Critical Skill Gaps

It’s important to remember that not all skill gaps need to be addressed at once. Use your analysis to identify gaps that have the most significant impact on your organization’s goals. 

For instance, focus on technical gaps that hinder immediate productivity (such as software proficiency for remote teams) or prioritize leadership gaps if succession planning is imperative.

Example: If your analysis shows that only 30% of employees are proficient in data analytics but 70% of upcoming projects require it, you’ll want to prioritize training in analytics tools.

2. Develop Targeted Training Programs

Use your gap analysis data to design training initiatives that address specific needs. 

Consider:

• Group training sessions for common gaps.
• Individualized learning plans for role-specific skills.
• Upskilling programs to prepare for future needs.

Example: A financial firm that identified a training gap in compliance regulations implemented a series of workshops and e-learning modules, resulting in a 25% reduction in compliance errors within six months.

3. Refine Hiring Strategies

For gaps that can’t be resolved through training alone, adjust your hiring practices. 

Use your analysis to update job descriptions to reflect your needed skills, partner with recruiters specializing in hard-to-fill roles, and develop internships or apprenticeship programs to cultivate talent.

Example: A tech company used its analysis to identify a shortage of cybersecurity expertise and adjusted its recruitment strategy to target professionals with Certified Information Systems Security Professional (CISSP) credentials.

With PrimePay’s Applicant Tracking System, you can quickly see which candidates have the preferred training and qualifications for your workforce plans. 

4. Enhance Workforce Planning

Skills gap data provides valuable insights for workforce planning. 

Use it to:

• Align workforce development with long-term business goals.
• Plan for roles that will become critical as technology and industry demands evolve.
• Forecast future training and recruitment budgets.

Example: A healthcare provider used gap analysis data to predict an increasing need for telehealth expertise. They proactively upskilled their team in virtual patient care and onboarded additional support staff trained in telehealth software.

5. Measure ROI on Training and Development

Track the return on investment (ROI) of your gap-closing initiatives. 

Evaluate increased employee performance metrics, improvements in retention rates and employee satisfaction, and cost savings or revenue growth tied to newly developed skills.

Example: Companies that invest in learning and development see 218% higher income per employee than those that don’t. Use this type of benchmarking to gauge your efforts’ success.

6. Foster a Culture of Continuous Improvement

Don’t treat your skills gap analysis as a one-time event. 

Use the data to:

• Create a feedback loop where employees and managers regularly reassess skills.
• Encourage ongoing learning and adaptability within your workforce.
• Stay ahead of industry trends by monitoring emerging skill needs.

Example: Companies like Google and Microsoft conduct regular gap analyses as part of their continuous performance management strategies, ensuring they remain innovation leaders.

Improve Organizational Success with Your Gap Analysis

The insights, benefits, and steps above should solidify the need for a gap analysis for your company. But if that wasn’t enough, here’s the cherry on top – it’s low cost, high reward. 

Yes, it can take significant time at first, but conducting a skills gap assessment is something that can be done in-house and on your schedule. And by doing so regularly (whatever that means for your team or company), you’ll time it right to get the most out of your results to achieve organizational success. 

The post What Is A Skills Gap Analysis and Why You Need One appeared first on PrimePay.

You also want to keep your company and employee information safe. However, according to a study by MoorePay, there’s been a 67% increase in a return to outdated payroll service solutions that use paper, telephone, or email input. 

The issue?

These manual services make organizations susceptible to payroll scams, which are still on the rise (the FTC received roughly half a million reports of business and government scams in 2023, costing companies $1.1 billion). 

That’s why choosing a solution is incredibly important—it needs to align with your budget and organizational needs and be safe and secure, as it involves highly sensitive information.

Because there’s much to consider when adopting a new service, we’ve broken down the different types and recommendations according to business size. 

Types of Payroll Services

Businesses have several types of payroll service options. Which one is best will depend on their size, resources, and complexity. But we’ll be honest – there’s not a perfect payroll solution. Instead, each selection has benefits and drawbacks, and it’s up to you and your team to determine which is most appropriate for your business.

Let’s take a look at the most common types of payroll service solutions available today:

Manual In-House Payroll

This method involves handling payroll manually, often through spreadsheets or handwritten records. Employers are responsible for calculating wages, taxes, and deductions, ensuring they file everything correctly and on time.

Bookkeepers

Some small to medium-sized businesses outsource their payroll duties to a bookkeeper. Bookkeepers handle day-to-day financial tasks (including payroll), saving business owners precious time and reducing the risk of errors.

CPAs

Certified Public Accountants (CPAs) are often hired to manage payroll, particularly for businesses that combine payroll services with accounting and tax planning. CPAs are well-versed in tax regulations and can offer guidance on how payroll impacts overall financial strategy.

PEO (Professional Employer Organization)

A PEO offers a more comprehensive solution, co-employing your staff and taking over the management of payroll, HR, benefits, and compliance. Essentially, the PEO becomes the employer of record while you focus on running your business.

Payroll Software Providers

Payroll software providers offer a great balance for businesses wanting to streamline payroll while maintaining control. These platforms automate payroll calculations, tax filings, and direct deposits, reducing the risk of human error and ensuring compliance. Most payroll software is scalable, making them suitable for businesses of various sizes.

Payroll Companies

Payroll companies provide fully outsourced payroll solutions, managing everything from calculating wages and taxes to issuing payments and filing returns. This option takes payroll management completely off your plate, which can be a relief for business owners focused on growth.

How to Choose a Payroll Solution

According to a study by MoorePay, UK businesses reported 73% more frustrations with their payroll process in 2023 than in previous years, yet many are reluctant to switch providers due to the economic climate. Unfortunately, clunky or error-prone payroll processing can set finance teams up for failure, especially as the business grows and payroll needs become more complex. 

Therefore, whether you manage a small team or oversee multiple locations, finding the right fit can save you time, reduce costly errors, and ensure compliance with tax regulations.

Here’s a breakdown of which payroll options might work best for small businesses, medium-sized companies, large organizations, and franchises.

Small Businesses

For small businesses, cost and simplicity are usually top priorities. Manual in-house payroll might be an option if you’re running a very small team, especially if your payroll needs are straightforward. However, errors and compliance issues can become more frequent as your business grows.

A better option for small businesses is a bookkeeper or payroll software provider. Bookkeepers can manage payroll alongside other financial tasks, while payroll software automates the process, offering affordability and convenience. 

Medium-Sized Businesses

As businesses grow, so do their payroll needs. Medium-sized businesses usually need more robust solutions that ensure compliance with tax laws and reduce the administrative burden. CPAs can be a good fit for handling payroll while offering accounting and tax expertise.

Alternatively, payroll software providers are a scalable option for medium businesses. Software solutions can handle the increasing complexity of a larger workforce and multiple tax jurisdictions. Many payroll software platforms also integrate with HR and benefits systems, making managing payroll and employee needs easier in one place.

A system that integrates with benefits management increases enrollment accuracy and helps employees make changes easily, without assistance from HR teams. 

Large Organizations

Larger businesses often face complex payroll needs, including multi-state tax filings, detailed reporting, and benefits administration. Payroll companies offer fully outsourced solutions, taking care of every aspect of payroll, from tax compliance to issuing payments. This allows larger organizations to focus on their core operations while ensuring payroll is handled smoothly.

Large organizations might opt for a PEO for even more comprehensive HR support. By partnering with a PEO, businesses gain access to a full suite of HR, payroll, and benefits management services, helping them streamline operations and stay compliant with employment laws.

When your payroll and HR software integrate seamlessly, your data is centralized, and you gain deeper insights into your workforce. 

Franchises

Franchises have unique needs, especially when it comes to managing payroll across multiple locations. PEOs are often a great choice for franchises, as they can provide consistent payroll and HR services across the entire organization – confirming that all franchise locations remain compliant with payroll and tax laws, regardless of location.

Another option for franchises is payroll companies, which can handle multi-location payroll, offer detailed reporting, and ensure compliance with local and federal regulations. These complete payroll solutions for franchisors are perfect for those that want to centralize payroll while allowing franchisees to focus on business operations.

Chose the Right Solution for Your Current and Future Needs

While it’s not hard to switch your payroll provider, it’s also not a walk in the park, meaning you don’t want to do it every year as your business grows. Instead, forecast your budget, headcount, and overall expansion to ensure the payroll service you choose now will also be compatible with your needs down the road. 

Your best bet is to adopt a solution that grows with your needs and integrates payroll, HR, and compliance so checks and taxes are right, HR processes are fast and simple, and employees and candidates feel connected.

The post Types of Payroll Services: Choosing the Right Payroll Solution for Your Business appeared first on PrimePay.

No matter your involvement with payroll at your business or organization, we have broken down some of the most common payroll definitions and terms to know. We have also included some of the most common payroll acronyms.

1. Accrue

Accrue means to build up or accumulate. As part of a compensation package, many employers offer paid vacation, sick, and personal time. There are many ways to provide this time, accruals being one of them. Many employers choose to allow the employee to earn (or accrue) a certain amount of time per pay period they work. Other employers may choose to give a bulk amount at one time.  

2. ACH (Automated Clearing House)

ACH is an electronic network for processing direct deposits and other payroll transactions. It is a safe way to transfer money between banks and credit unions and reduces the needs for paper and checks. Direct deposit for your payroll is an ACH.

3. Base pay rate

Base pay rate is the wage that has been agreed upon to be the starting point for employee earnings. This can be an hourly rate, a daily rate, a piece rate, or salary per pay. 

4. Deductions

Deductions are amounts taken from the employee’s paycheck that are not for taxes. These can be voluntary amounts that the employee chooses, such as health insurance premiums, retirement plan contributions, and miscellaneous deductions. Salary deductions can also be involuntary, such as a child support order or a tax garnishment. These items can be considered pre-tax or post-tax, depending on the actual deduction.

5. EFTPS

EFTPS stands for the Electronic Federal Tax Payment System. It’s used for an employer to pay federal taxes online.

6. Employee’s Withholding Allowance Certificate (W-4)

Federal Form W-4 or state equivalent is where the employee states the number of withholding allowances claimed to determine income taxes to withhold from the employee’s compensation. Every employee will need to fill out a W-4 upon starting a job.

7. Exempt

Amounts that are not considered part of the taxable compensation. These amounts would be subtracted from the gross pay (total compensation) before the calculations of each applicable tax are completed.

Example:  Employee contributions to a 401(k) plan are considered exempt from federal income tax. The contribution amount for that paycheck is subtracted out before the calculation of the Federal Income Tax (FIT) is done.

8. FICA

The acronym FICA stands for Federal Insurance Contributions Act. It is the formal name for the combination of Social Security and Medicare Taxes. Employers are responsible for remitting FICA and FIT together in a payment known as the federal tax liability. This is reported on the quarterly form 941. 

9. Garnishment

Garnishment is a legal proceeding authorizing an involuntary transfer of an employee’s wages to a creditor to satisfy a debt. Child support is a garnishment that is often placed when couples divorce and one does not pay as agreed in a divorce decree.

10. General Ledger

A general ledger is a tool used to record a business’s financial transactions. It includes amounts for assets, liabilities, revenue, and expenses.

11. Gross pay

Gross pay is the total pay received by the employee before taxes and deductions are removed. This includes the base pay plus any additional earnings like bonuses, vacation pay, and commissions.

12. I-9

The I-9 is a form used to verify if an employee is legally eligible to work in the United States.

13. Income Tax

Income tax is a tax that only employees pay. There are several taxes that fall into this category:  Federal Income tax, state income tax, and local income tax. Federal income tax is paid with FICA as part of federal tax liability. This is calculated by considering taxable compensation on a wage-bracket method but can also be taken as a flat dollar amount or percentage. 

State and local income tax withholding methods vary, as do whether or not that tax is taken in that state.

14. Net pay

Net pay is the employee’s take-home pay. This is the amount the employee receives after taxes and deductions are calculated and subtracted from gross wages.

15. Social Security (OASDI)

Social Security is both an employee withholding tax and an employer payroll tax. The employer is responsible for remitting a total of 12.4% of an employee’s taxable earnings to the IRS. They are permitted to take 6.2% from the employee as a withholding tax and “match” the other 6.2% as a payroll tax. There is a wage base limit, which means that the tax stops at a certain amount of wages for the year. This wage amount varies per year.

16. Take-home pay

Take-home pay is the employee’s wages that remain after all normal deductions and taxes are taken out. This is also known as net pay.

17. Taxable wage base

Taxable wage base is the maximum amount of employee compensation subject to Social Security, FUTA, and state unemployment insurance taxes.

18. Third-party sick pay

Third-party sick pay is compensation paid by a third party (often an insurance company or state insurance program) to an employee because of non-job-related illness, injury, or condition (maternity leave). The payment is considered fully taxable for the first six months, then becomes exempt from FICA and FUTA if the payments continue into the seventh month and beyond. These payments need to be shared with the employer and recorded on the employer’s tax returns, including employee W-2s.

19. Withholding

Subtract amounts from an employee’s wages for taxes, garnishments or levies, and other deductions (like medical insurance or union dues). These amounts are paid over to the government agency or other party to whom they are owed.

Once you familiarize yourself with these key payroll phrases, you will feel like an expert next time you run your payroll.

The post 19 Common Payroll Terms To Know appeared first on PrimePay.