Study after study demonstrates that employees who believe that their job is important are happier and more productive. Contented workers also tend to feel like they have some control over how they do their jobs. That’s what we call empowerment.
For example, giving cashiers sufficient autonomy to give a disgruntled customer a discount or refund encourages them to deliver top-notch customer service. Asking a team member to take over a meeting while you leave the room to take a call inspires added confidence.
These are some obvious ways to empower employees, but can the payroll process also improve overall job satisfaction? Although this one might not sound as intuitive, it does make sense. Having some say over matters regarding compensation allows employees to better control their lives. Listed below are five ways you can involve employees in the payroll process to make them happier and more productive.
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1. Let them choose and track where their paychecks go.
The greatest tangible reward for employees is their paycheck. Plenty already gets deducted from those checks — including Social Security and Medicare — which is 100% out of their control. Still, there are some things they can influence, such as the amount of income tax withholding and their employee benefits.
Some payroll solutions place one-stop control squarely in the hands of employers and their employees. For example, small business payroll solution Gusto offers an app that employees can use to control where their paycheck goes. They can designate certain amounts to be routed from every paycheck into various accounts. Employees name those accounts whatever they like, perhaps a savings account, rainy day fund, or travel account.
Most small businesses can afford to offer employees some benefits, such as health insurance or a modest 401(k) retirement plan. Give employees the option to decide how much to contribute or opt out entirely and pocket more of their pay. There’s a feeling of satisfaction that goes along with earning a check, but a sense of empowerment when you get to decide what happens to it.
2. Demystify your paychecks.
Employees shouldn’t need to become codebreakers to decipher their paychecks. Nonetheless, poorly designed stubs often prove to be a riddle shrouded by a mystery wrapped inside an enigma. Empower your troops by demystifying line items on their checks.
During onboarding, assume that new hires know nothing about paycheck practices. That way, you treat everyone the same. Provide a visual of a sample paycheck along with a key deciphering its myriad abbreviations. Even if your company pays its employees by direct deposit, you should still provide them with copies of their pay stubs.
Devote the time necessary to explain to employees not only what the abbreviations mean, but how they work. Knowing how Social Security is withheld from their gross pay and matched by the employer shouldn’t be a mystery. Even if they don’t have deductions for certain benefits yet, tell them where they’ll show up whenever they do qualify or opt in.
Education is empowerment, so teach your employees the language of your paychecks. If you don’t, that little slip of paper might as well be printed in a foreign language. Once they know how to translate it, they’ll have the confidence to make their own decisions as to where it goes.
3. Establish goals for pay and benefits.
Employee compensation involves a lot of moving parts. Besides the basic hourly wage or salary, there may be overtime, shift differentials, bonuses, commissions, and incentives. There are also benefits to factor in such as insurance, retirement, and paid time off.
You can empower your employees by helping them grasp a bit more than just where they stand when they arrive. Take some time to explain the goals and milestones they could work toward to increase their compensation.
Discuss with them the duration basics attached to certain benefits. Advise them as to what they need to do to move to a shift or position with a higher hourly wage. Inform them about educational opportunities or training requirements for a higher-paying job as well as what they can do to merit a raise.
Some employees may be content with the status quo. Others will be driven to work toward greater compensation. Empower them with knowledge and help them set goals. That way, you stand a better chance of retaining a productive and motivated employee.
4. Keep compensation reviews separate from performance reviews.
This recommendation may sound slightly counterintuitive at first glance. After all, compensation is tied to overall performance, right? Yes, in general, this is true, although the relationship doesn’t work the same for all employees.
For some positions, it’s easy to give a high-performing employee a raise. For others, such as those in tiered positions similar to Amazon’s “level” structure, there are more limitations to raising wages. When tiered structures are in place, there’s typically less freedom to maneuver.
Different companies have different compensation frameworks. What’s important to employees is knowing what the framework is and why it’s structured that way. Take the time to explain the limitations of rewarding commendable performance in certain jobs.
But don’t stop there. Talk to the employee about available routes they can take to move to a different category. Understanding the structure, as well as how to move within it, gives a good employee the power to rise.
5. Give your employees some useful payroll tools.
Scheduling employees for work and monitoring when they clock in and clock out is part of a manager’s job. However, that doesn’t mean employees might not be more productive if they had some tools of their own. For example, one employee asks for time off. Typically, you then find yourself chasing down other staff to locate someone who can take their shifts while they’re gone.
Why not empower your employees to do that legwork for you … while retaining the power to deny or approve the request?
Software such as When I Work allows employees to request time off, sign up for open shifts, or switch shifts with co-workers. Similar software allows them to clock in and out on a mobile device. Everyone can communicate with everyone else throughout the process from the app. Managers can monitor everything in real time so they’re always up to speed. However, the tedium of figuring out who works when someone else gets time off is mostly handled by employees themselves.
Empowering employees by involving them in the payroll process may not be as obvious as the nose on the face of the time clock. It nonetheless provides a ripe opportunity for letting workers make informed and highly personal decisions for themselves. Regardless of their pay grade, empowered employees will better understand the importance of their work. And those will be the ones you want to keep punching in.