Direct Deposit Has Killed Compensation Motivation

Do you open your birthday cards and simultaneously do the “money grab”/catch, knowing-wanting something to fall out of your card?  Or do you play it cool and let it fall to the ground, acting like you didn’t expect it!?  That’s what I trained my kids to do – and act really surprised at the same time.

Seriously!? Don’t lie.  You do it.  How do I know you do it?  Because everyone does it!

There’s something emotional about opening a birthday card and finding money or a gift card in the card.  When there isn’t something in there, you almost feel the need to explain to the person – “oh sorry, we didn’t have time, here’s $20!”

One of the great traditional HRish things we use to get to do was to hand out paychecks on payday!  Don’t worry kids, ask someone over 30 to explain it to you.  It was a piece of paper you carried into a bank and would sign the back of this piece of paper and the bank would give you money! Yeah!  Anyway, direct deposit, paycards, etc. have almost completely killed paychecks and the need to go around on payday and hand deliver them to your employees.  That’s right kids – you had to meet face to face every other week with real employees! Sounds crazy, uh?

Paycheck delivery did a number of very motivating things, that in our rush to be ‘more efficient’ we have lost:

1. Payday euphoria!  Every payday when checks were being handed out you could almost feel the energy building in the organization.  Your boss or someone in HR/Payroll would walk around and hand out check, make small talk, give words of praise – “Have a great weekend!”, “Don’t spend it all in one place!”, or my personal favorite – “Can I have a loan?”

2. Leadership connections.  It really forced a ton of leaders to go out and deliver the ‘pay’ for the week.  Which really put them in a situation to have to say something nice to each employee! Crazy how motivating that is for employees after a long week!

3. A trophy for everyone.  When you got that paycheck in your hand, you felt like you accomplished something.  Here’s what I did all that work for.  I can look at it, I can see it, I can smell the ink! (don’t judge, I was born in the 70’s)

There is a definite emotional and some would say, physical, response to being handed a week or two’s worth of pay.  For most people, it feels good.  It feels like accomplishment.

Direct deposit takes that all a way.  On Friday afternoon, you don’t get a visit from your boss or HR. You don’t get to know your local banking people and get fresh new bills and those little money envelops from the teller and DumDum sucker for the kids.   Direct Deposit, while great in its efficiencies, has effectively killed one of life’s great joys.  Cashing your paycheck.

So, what do you think HR Pros – would you ever go back to handing out physical paychecks each week?



31 thoughts on “Direct Deposit Has Killed Compensation Motivation

  1. eventhough I just hand out paystubs people love for me to come around on Tuesdays (thats when we get pd) They always say they love me on Tuesdays!

  2. Payday was one of my favorite days as a HR Manager with my previous company. We utilized direct deposit, but still issued paper statements. I enjoyed the conversations I had with all of my associates as I walked around handing them out like HR Santa. For some of them it was the only time they would see me or think to ask a HR related question. It may be an unnecessary “HR task” but I felt it added value…. Great topic

  3. Good point Tim, the book “Priceless” talks a lot about the psychology of physically handling money and how much easier it is to spend with plastic than it is with paper – because you don’t experience the “pain” of spending immediately. As you’ve pointed out here, that concept applies when you’re receiving money as well as spending it – if it’s an electronic transfer, you don’t experience the euphoria of receiving it.

  4. I absolutely agree with the heart of the article. Although coming from a banking background, physical checks would not be financially responsible to the operation expense of the company. However, managers sure could be the bearer of pay slips, a handshake, and a thank you.

  5. You make a really good point. When I directed Comp for a couple of big companies I would get the occasional request for “manual checks” for spot awards. Regular pay and bonuses were mail or direct deposited. I always tried to accommodate those requests – because it indicated to me that the manager was actually taking an interest in the value of the attendant conversation. I would actually get some employees who would complain about manual checks though – “an inconvenience” they said…. I remember the dum-dums but also the treats for dogs from the drive thru teller. Ah, the good old bad days.

  6. I loved being the one to pass out paychecks. There was a palpable sense of goodwill and gratitude on payday. No, I wouldn’t go back, but your post reminds me to look for ways to give employees that feeling. Thanks!

  7. Like Steve, my company hands out paper checks for bonuses. American Fidelity gives the opportunity for an annual and holiday bonus and both are distributed by the leaders of each division, usually along with a thank you note and treat of some sort. I would never want to go back to paper checks for regular paychecks, but I see what you’re saying. We try to find other ways to get leaders involved with team members they may not see each week.

  8. I remember when I was about ten years old, my dad took me with him to his plant to pick up his paycheck one Friday morning. HR had set up in a common areas to hand out checks.

    At my last plant, where the majority of my employees still received a paystub in spite of being on direct deposit, I handed out checks on Fridays, especially when I first started. This helped me learn everyone’s name and gave me a chance to say “hi”.

    At my current plant, most employees have their paystub delivered electronically, thanks to my company’s maniacal attempt to force environmental-consciousness and cost-cutting. I miss the days of handing out checks and connecting with my employees. Unfortunately, my management team is entirely too comfortable avoiding personal contact with their people, so this hasn’t helped (I am coaching them through this…constantly!).

    With that said, I can also see where it might be inconvenient to some employees (such as those that work the night shift or not scheduled to work that day at all) to have to come in just to get their check, especially if they have a longer commute.

    Two sides to every coin I guess. I just look for other ways/excuses to get out and say “hi” and encourage my leadership team to do the same.

  9. Indifferent managers & HR staff did not hand out the paper checks. They just delegated (aka dumped) this task onto the lowest ranking staff member. The upside to playing mail man was you got to see your paycheck before anyone else.

  10. After six years, we changed our payroll to a web-based model. Everyone gets access to a splendid, information-rich dashboard of how the government is eating up their salary. As part of that, paper pay stubs are no longer handed out every two weeks. I no longer stuff them, lick the d*mn envelope, and drop them personally off at everyone’s desk.

    And I think for exactly the reasons you outline above, it sucks. It’s a missed opportunity, albeit a small one, to ponder the small wonder which is the small business making money and paying it and having a few seconds as employer and employee to appreciate the effort.

    • Craig,

      There’s something to say about our ‘rituals’ – delivering pay checks was one of those rituals that had some added value that is definitely missed in some aspects.

      Thanks for the comments –


  11. Tim, interesting piece. Receiving a ‘live check’ would be a hassle for many employees. Instead, I like to hand out any BONUS comp in the form of a paycheck “card”. It allows for that personal touch you’re commenting on, can be done in a more formal way (all-hands meeting, etc.), and still gives the employee the ‘ease’ of using a credit card. SL

    • Steve-

      I like that idea! I think everyone is different, you are right, some folks would find the paycheck a hassle – others actually would like it! Just like paycards – I know people who can’t stand them – for some reason they seem restrictive to them. What I do know is HR mostly does what is convenient for them, not what would necessarily motivate the employees!


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