Many businesses have welcomed their employees back in a range of different ways, and others have changed operations significantly. As a result, job openings reached unprecedented levels in the last twelve months, with the labor shortage becoming a significant problem.
Employers need to offer a more attractive package to entice new workers and satisfy those already employed. Flexible paydays are a crucial element of the improved packages employees are coming to expect. But what does the next-generation payday look like and how can employers provide their workers with more control and freedom to manage their money effectively?
What do your employees want?
To create a more content and effective workforce, employers need to deliver what their workers want, not what employers think they want. Financial stress is a hugely overwhelming problem, and your workers' chance of effectively completing their jobs is hampered if they have financial concerns on their minds.
Expenses and emergencies are not confined to a neat weekly, two-weekly or even monthly cycle. For example, if an accident happens, your employees need to access their wages immediately, and traditionally this hasn't been possible. Research by Bankrate found less than 40% of Americans could afford an unexpected $1000 expense. So while flexible paydays don't increase your worker's cash flow, it makes it easier for them to manage expenses in an effective way. It gives your workforce the freedom to use their own money to pay for emergencies rather than falling into unnecessary debt.
Offering pay flexibility helps you to support your employee's financial freedom, and it can also attract more workers to your business. A survey conducted by the ADP Research Institute found 60% of workers would consider a job offer more readily if there was more payment flexibility. Flexible paydays can attract new employees and improve retention rates too.
7 benefits of flexible paydays
Flexibility, both in their working hours but also their financial management, is something deskless and shift workers crave. Flexible paydays can ensure emergency situations are dealt with quickly. Employees no longer have to consider drastic and high-cost credit alternatives to make it from one paycheck to the next.
On-demand paydays can be easily achieved through Earned Wage Access (EWA). EWA with Payactiv allows workers to transfer their earned wages to their bank account, debit or prepaid card, or pick up cash at a participating Walmart store whenever they need them. Payactiv has introduced an even more flexible payday option so employees can now automatically get paid up to 90% of their net income on any day of the week that they choose at zero cost. Employees just have to select a percentage of the wages and the days of the week they want to be paid, and their earned wages will be automatically transferred to their reloadable Payactiv Visa® Prepaid Card.
There are multiple benefits of flexible paydays for employers to consider:
1. Universal access
Flexible pay can be rolled out across your organization for all employees with ease. It may only be suitable for certain employees, but everyone can easily use the straightforward enrollment system. Similarly, flexible paydays are optional, and individuals can choose to access their funds in line with their needs any day of the week or even daily.
2. A more committed workforce
Satisfied employees with financial control of their earnings give more back in terms of effort and focus. Research by Visa even found 89% are willing to work for a longer time where earned wage access is available. Workers can direct their efforts towards their job more easily with lower financial stress. Similarly, offering the incentive of flexible paydays is appreciated both by workers and job applicants.
3. Improved retention
Our research shows retention increases an average of 30% in companies specifically using Payactiv. Workers who can plan their money more effectively and even access same-day payments will not want to risk this by moving to a less flexible employer.
4. Reduce financial pressure on employees
The 10th annual Employee Financial Wellness Survey by PwC found 63% of employees believe financial stress has increased since the start of the pandemic. Financial stress quickly becomes a problem that can overwhelm not just an individual's personal life but also their ability to work. Struggling towards payday each month puts huge pressure on workers, with the potential to negatively impact their work ethic and productivity. Flexible paydays hand control back to the individual and minimizes the stress that builds up between paychecks.
5. Avoid expensive debt solutions and overdrafts
FHN's 2021 FinHealth Spend Report found that 43% of financially vulnerable households reported having repeatedly used their overdraft in the last year. The average reported 9.6 overdrafts. The cost of overdrafts and other bank charges can quickly become overwhelming, and workers can avoid these costly overdrafts with flexible pay. Daily or weekly access to a percentage of their net earnings removes the pressure of short-term debt and the cycle of always relying upon expensive forms of credit in between paydays.
6. Promoting financial wellness
Employee wellness should be a concern for all organizations, and it doesn't stop at their physical and mental health. Empowering your workers with the tools to improve their financial wellness helps alleviate this stress from their daily lives. The ability to pay bills when they're due to avoid late fees can reduce stress and stop the domino effect of using credit to pay off debt, resulting in even more debt.
7. Stand out from the competition
While every day pay is becoming more popular, it’s still not commonplace. It acts as a real differentiator from your competition and helps organizations gain a recruitment advantage. Job seekers are looking for much more flexibility and expect more from their employers. Flexible paydays are a real incentive that many candidates would consider a priority or at least a significant perk, helping your organization stand out and attract more talent.
The future of pay
Paydays are no longer a bimonthly or a monthly event that people have to creep slowly towards. The next generation of pay offers workers the flexibility they need to effectively manage their money, alleviate financial stress, and minimize credit utilization and debt.
Flexible pay has multiple benefits for individuals and their employers. As more organizations adopt flexible paydays and Earned Wage Access, your organization needs to keep up with the trend and enhance workers' experiences through better financial support.
*The PayActiv Visa Prepaid Card is issued by Central Bank of Kansas City, Member FDIC, pursuant to a license from Visa U.S.A. Inc. Certain fees, terms, and conditions are associated with the approval, maintenance, and use of the Card. You should consult your Cardholder Agreement and the Fee Schedule at Payactiv.com/card411. If you have questions regarding the Card or such fees, terms, and conditions, you can contact us toll-free at 877-747-5862, 24 hours a day, 7 days a week.