As payroll systems become more digital and automated, employees are increasingly disconnected from understanding their paychecks.
This is a timely concern for HR leaders, as financial stress continues to affect workplace wellbeing and engagement. In fact, a PwC survey of over 3,600 full-time employees revealed that those experiencing financial stress are nearly five times more likely to report being distracted at work by personal finance concerns. This suggests that HR needs to ensure employees are paid correctly and fully understand the details of their compensation.
Related: HR’s next key opportunity: Help improve frontline workers’ financial health
Deel’s recent payroll research provides insights for HR leaders, especially regarding employee confusion and concerns about paycheck transparency. Despite the availability of banking apps and access to pay stubs, Deel found that nearly 30% of employees admit to being unclear about paycheck deductions. Many workers are more confident that they understand their streaming subscription or mobile bills than their federal tax deductions, health insurance or retirement contributions.
This confusion is especially pronounced among Gen Z and Millennial workers, according to Deel. These generations report struggling more with paycheck components than Boomers and Gen X, who said they feel more confident with items like FICA and income tax withholdings.
Payroll precision is another major concern. Deel reported that nearly one-third of employees have discovered errors in their paychecks and 17% experience stress related to payroll accuracy. The growing role of AI in payroll systems also raises anxiety, with around half of workers expressing concerns about AI managing their payroll data. Although 80% of employees check their bank accounts on payday and many review their pay stubs regularly, these habits don’t always lead to a deeper understanding, Deel researchers suggest.
Global employee engagement remains low, with Gallup reporting only 23% of employees feeling engaged at work. Researchers say that financial stress and a lack of understanding about compensation are significant contributors. For HR, this presents an opportunity to build employee trust and engagement.
Deel advisors provide several tips. Improving payroll transparency through clear, easy-to-read pay stubs, offering educational materials like “How to Read Your Paycheck” guides and hosting regular payroll Q&A sessions can make a measurable impact. Deel also recommends integrating financial literacy training into onboarding and annual processes, empowering employees to feel more in control of their compensation.
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