What Are The Benefits or Drawbacks to Switching From Weekly Payroll to Bi-Weekly Payroll?

by Sharon

Our company is looking to save money by switching to bi-weekly payroll instead of our current weekly payroll. We are getting some push-back from employees, though.

Are the benefits worth the headaches of dealing with unhappy employees? And do you have any suggestions on how to present it to them so they will accept it?

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The Company Benefits, the Employees Resist Change
by: Best Business Payroll

Cost savings is one of the major benefits for companies switching from weekly to bi-weekly payroll. Since payroll outsourcing companies typically charge for each payroll which is run, the cost will be reduced significantly.

In addition, savings can be found by the reduction in the payroll specialist's hours since they will need to gather and transmit data half as often. The payroll specialist may work fewer hours, resulting in hard dollar savings, or they may be reassigned to other tasks unrelated to payroll, which may result in what is known as "soft" dollar savings (which is the benefit of reducing the time a valued employee spends on non-revenue producing tasks, like payroll, and frees them to perform revenue producing tasks).

The major drawback to switching from weekly to bi-weekly payroll, as you are finding, is the fact that employees LIKE to be paid every week. People tend to resist change can cause resentment if not handled well.

One way to combat this is to offer an interim paycheck during the first "off" week after going bi-weekly. This will help the employees deal with budgeting issues that naturally arise when changing pay periods.

Also, it is a good idea to give employees the "big picture" of how this cost savings not only benefits the company, but benefits them indirectly as well. With a leaner bottom line, the opportunity for raises or other benefits increases, giving employees a stake in owning cost savings.

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