Payroll is Your Biggest Expense: A DIY Guide to Increasing ROI

Published January 2, 2023

2023 promises to be a year in which employers compete to retain and maximize engagement from the talented people on their teams. Economic stress is shifting the attention from talent attraction and hiring to employee retention, engagement, development, and satisfaction. 

In a previous article, I discussed the concept of culture as a collection of experiences rather than a single thing to pursue, a transaction, or an event. Founders and executives want a great culture but getting there can be overwhelming. Add the logistics of a hybrid, remote, or distributed operating system to the mix, and many are left wondering where to start.

Culture not perks

I was recently asked by a friend whose entire career has been on-site in hospitals, “It must be hard to have a company culture without a game room?” 

Building a culture you can be proud of is hard work, but it’s not for a lack of ping-pong tables. Anything worth doing usually comes with difficulty, and building a thriving culture in a remote or hybrid business is no exception. More than dart boards, card tables, or billiards, your job as a leader is to provide exceptional values-aligned experiences that draw people together wherever they are. 

If you’re a leader in your organization and you’re wondering how your culture stacks up, this DIY audit guide is a great place to start. Doing an internal audit of the cultural experience will help you identify areas of strength and areas of opportunity. Working with an objective partner to lead you through a comprehensive audit is ideal, but a self-guided assessment looking into the three areas below can produce a valuable yield. 

Define the foundation of culture

The best cultures are written down. Without documentation, company culture is only as defined as each individual’s opinion. 

This might seem elementary, but many organizations lack clarity on their mission and values. I’ve been surprised when working with organizations as large as 2500 people that haven’t identified a mission or values for their business. 

If this foundational piece is missing from your business, at least you know you’re not the only one. Now is the perfect time to sort it out. Work with a facilitator to take your leadership team through a workshop to identify a mission, vision, and values that will inform and guide the company in its quest for culture. This isn’t an area to look for shortcuts or workarounds.

Of the many businesses that do have clarity on their mission and core values, many fail to translate those values into guiding principles that are measurable in daily operations. If “teamwork” is a value, what are the activities that reinforce this value, and how are they measured? What would that look like for a value like giving, service, or excellence?

For example, XWP, a globally distributed WordPress development agency, champions its value of giving through its WordPress+ program that pre-approves every team member for 25 hours of annual contribution to the WordPress community.

It’s essential to identify measurable and observable ways that culture is distributed from the text on a document or web page into people’s experiences.

Ask yourself:

  • Are our company mission and values defined and documented?
  • Could any employee tell us what the mission and values are?
  • What business or departmental KPIs are directly tied to our company values?
  • Can a new employee find and understand this information independently?

Ask the end user

One way to find out if the company culture is something to be proud of or if it’s falling short of the mark is to simply ask. 

An anonymous survey using a simple Google form or Typeform is a great way to start. Alternatively, a representative focus group led by a third-party facilitator can unearth a wealth of knowledge about what your culture really feels like, in contrast to what you imagine it to be. For a leader to claim that the organization embraces high levels of transparency is one thing, but for a representative selection of employees to give the company a high rating in regard to transparency, is another thing entirely. 

A major benefit of going through this exercise is that it gives employees to make an impact on the culture of their company. Giving ownership and empowerment to the end user is always a positive experience. Creating space for people to be heard on such an important matter is a great opportunity to build trust. 

Tip: Communicate the purpose of the survey or focus group clearly and broadly so employees will see the value of participating versus this being just another task handed down from leadership. Internal messaging is just as important for internal users as the external equivalent.

Run the Numbers

Doing an evaluation of some key numbers is a non-invasive way to take a pulse check. Assuming there is tooling in place to capture the data, have a look at what’s going on under the hood. Laying out the culture-related data points will give you insights into the cultural experience you’re providing. If the results don’t align with or exceed industry norms, you’ll have some ideas on where to focus your attention and resources.

Some of the places you might look for clues are:

  • Offer acceptance rates for candidates
  • Average employee tenure and churn numbers
  • Compensation rates vs industry averages
  • 3rd party evaluations or reviews
  • Percent of new hires from referrals
  • Team diversity stats
  • Data from any periodic pulse checks or tools in place to measure employee wellbeing

A quantitative investigation isn’t a stand-alone approach, but paired with the qualitative research suggested above, it’s a powerful combination. 

Many organizations do not collect all (or even some) of the data suggested here. If you aren’t collecting this, you’re trusting your gut to tell you the facts about the cultural experience at your company. Spoiler alert: It’s not a reliable source of truth. If you’d like to have more answers than you do when it comes to people ops intelligence, asking for a little help can go a long way. 

Here’s why this matters to your business

Payroll is the single largest expense for nearly all employers. On average it represents 70% of all business expenses. Strong cultures have higher levels of engagement and satisfaction, less absenteeism, and less employee turnover. 

Greater engagement and satisfaction mean greater levels of productivity per payroll dollar spent.

Longer tenures and reduced attrition rates mean fewer resources invested in onboarding, training, and ramp-up for new team members. It also means reduced operational expenses involved in backfilling open positions. Finally, it means greater opportunity realization through adequate staffing levels. 

If you’re looking for a comprehensive guided culture audit and report, reach out now to start a conversation. An employee experience executive can lead you through an audit and help with implementation via a fractional engagement.