3 Ways Payroll Decisions Impact Employee Satisfaction

Running a business these days can be fairly straightforward thanks to the plethora of advice, resources, and helpful information available on the internet. However, there are still unpredictable factors that are tricky to work around, such as your employees! When your employees are happy, fulfilled, and have a strong sense of purpose in your workplace, they have higher rates of productivity and lower turnover, which result in lower costs, and generate higher customer satisfaction, which increases revenue. This isn’t really new and we’ve talked about the importance of employee satisfaction before on this site. But, did you know that your payroll decisions have a significant impact on employee satisfaction? Well, they do. Today, we’ll discuss three ways that payroll decisions impact employee satisfaction.

People often feel a lot more appreciated and are more willing to go the extra mile for your company if you make them feel like you’re investing in them. So in this post, we’re going to cover one of the most important aspects: how to start paying your staff correctly and showing them that you care about properly managing their pay.

payroll decisions

In today’s post-COVID world where many industries suffer from staffing shortages, it’s even more important to ensure your workers feel valued so they don’t look for other opportunities.

How payroll decisions impact employees

Pay is one of Herzberg’s hygiene factors from his theory of motivation in workers, as shown below. According to this theory, hygiene factors don’t so much improve satisfaction as decrease satisfaction when employees view them as a negative factor at their company. The first step in motivating employees is to reduce the negatives that lead to job dissatisfaction.

Low pay is just one of those negatives, although it’s a highly impactful negative. Other negatives include:

  • lack of pay increases over time, which erode the buying power of workers
  • not offering competitive pay
  •  onerous policies for receiving accurate paychecks such as long lags between submitting hours and receiving a check or making clocking in or out troublesome
  • poor working conditions. For instance, in the oppressive heat of this summer around the globe, employers that don’t offer sufficient breaks, provide easy access to water for hydration, and install equipment to make the heat more bearable, such as misters, show workers they aren’t valued.
  • supervisors who are not qualified, apply policies unfairly, are lazy, or are unavailable
  • using workers on an as-needed basis or cutting hours so workers don’t feel job security
hertzberg's theory of motivation
Image courtesy of Expert Program Management

Until you fix these problems, your business will face low employee satisfaction that will impact every aspect of your operation to make it harder to succeed. But, providing for hygiene factors, especially those related to wages, is easy. Read on to learn more.

Don’t leave things up to guessing–track their hours properly!

You should never leave things up to guesswork when it comes to the hours worked by employees. You need to ensure that they’re being paid correctly for their work! Guessing their hours will only lead to problems, and you want to establish a sense of trust so that your staff won’t question you about how you’re paying for their hours all the time. The moment that they notice some kind of discrepancy that you can’t even object to, they’re going to start losing faith in your business and will have a hard time trusting you.

That’s why you should start using tools like agency time tracking software, or have straightforward and infallible check-in and check-out systems such as a time clock that accurately collects hours worked. This will make it so much easier for you to keep track of their hours, and you’ll have records to show your staff should they ever have questions or disputes.

Show that you care about payroll compliance

Managing payroll compliance involves many different tasks and is essential when running a successful business. The big things you need to focus on include keeping accurate personal records of all of your staff and also communicating any kind of compliance plans with them. The whole purpose of compliance is to show that you are following the recommended guidelines and laws regarding how to pay your staff and manage their records. Everything from offering workplace pensions to keeping track of your finances will help to create a smooth audit should there be any problems in the future.

Showing that you care about payroll compliance makes your staff happy because it shows that you’re willing to cooperate with them on these kinds of technical matters, but it also shows that you’re not doing anything shady under the table in regard to your finances.

Offering benefits can really make a difference

It’s normal for workplaces to offer various kinds of benefits as a way to keep their employees motivated. It could be a great pension scheme, childcare for parents, or even discounts for various products that you sell. In the US, the only major industrial country without a health insurance scheme, offering this as a benefit not only have value to employees but helps keep your staff healthy by covering preventative healthcare that’s often overlooked when employees must pay out of pocket for healthcare costs. A healthy staff means less absenteeism and offering this benefit helps you recruit the best candidates.

If you’re not sure where to start with these benefits, then don’t be afraid to ask your staff for suggestions! As long as your budget allows for it, this can be a great way to keep your staff happy when it comes to pay and benefits.


Ensuring the hygiene factors reduce dissatisfaction helps your company become or remain successful, especially in an environment where hiring workers is very competitive. Payroll decisions are a big piece of that strategy.

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