Why should you should integrate on-demand pay solutions into your existing payroll platform? Learn more below.
On-demand pay is an employee compensation method that enables users to collect their wages as they earn them. In practice, this allows employees to access a portion of their wages ahead of their scheduled weekly, bi-weekly or monthly pay cycle.
Employers can integrate on-demand pay solutions into their existing payroll structures and platforms. Employers continue to cut checks at their accustomed intervals, while the on-demand pay solution automatically calculates daily earned wages and automatically withdraws the previously received amount from the employee’s account on payday. Added financial empowerment without added steps.
Employee experience describes the interactions, pressures, emotions, and other circumstances within and without the workplace that shape the full lifecycle of an employee. Employee experience has emerged as a watchword in the post-pandemic world of work.
Employers are increasingly anxious about and attuned to the relationship between employee wellbeing and work performance. In Willis Towers Wilson’s 2021 global survey of 1550 employers, 92% of respondents cited improving employee experience as a priority, up from 52% prior to the pandemic. Likewise, the “2020 Workplace Benefits Report” by Bank of America found that 62% of employers feel responsible for their employees’ financial wellbeing. Even so, Gallup reports that only 24% of employees in 2022 felt that their employers cared about their overall wellbeing.
Offering on-demand pay can bridge the experience management gap. While 50% of employees in a recent PwC survey reported that financial stress negatively impacted their work performance, while Harris found that offering on-demand pay would improve employee-employer relationships for 78% of respondents.
On-demand pay improves employee experience by empowering employees with flexibility. It’s become trite to refer to the current moment as unprecedented, but that’s the truth. We live in unpredictable times. But workers have always lived with an element of uncertainty. A surprise medical bill here, a blown radiator there. Unexpected expenses come in various shapes and sizes, but they always come unexpectedly.
On-demand pay solutions enable employees to address everyday financial troubles. Here are some examples:
Nate is a bartender at a college bar. He gets paid every two weeks, including his tips for that period. His friends want to go to a concert, and the tickets go on sale tonight at midnight. Nate doesn’t have enough money to cover the tickets and his rent ahead of payday next week. Nate either has to borrow money from a friend, risk his landlord’s wraith, or miss out on the fun.
Tarini is an accountant at a mid-size shipping company. She earns a fine salary, paid monthly. Heading to her car in the morning, she notices a chip in the paint. She wants to address the chip before it starts to rust, but her savings are depleted from the recent holidays. She feels uncomfortable having to choose between straining her safety net and letting her car corrode.
Sho wants to propose to his girlfriend on her birthday, but he doesn’t have enough on hand to pay the deposit on the ring. This is a once-in-a-lifetime moment for them - maybe the most important night of both their lives. He considers going to his boss to ask for a pay advance, but feels awkward and embarrassed.
What these case studies have in common is that crisis could have been averted if the employee had more flexible and immediate access to the money they already earned.
On-demand payroll solutions empower employees with control over their financial situation by removing a potential blocker between workers and their wages. On-demand makes money accessible. Being able to access their money any day and any time puts control back in the hands of those who have earned it.
Some may opt to take their wages every day. Others may maintain the standard payroll, happy to collect their compensation on a regular cycle. What they do with the system doesn’t really matter. What matters is that they have the choice to work with it in a way that best suits their diverse lifestyles.
If the pandemic has made one thing clear, it’s that employees are struggling to manage amidst a sea of unknowns. Employers have an opportunity in on-demand pay services to meaningfully improve employee resilience. And by improving employee experience, employers can directly impact their own experience and business outcomes.
Positive employee experience correlates with positive trends in key performance metrics, including productivity, retention, and profitability.
Leaders have a significant influence on employee experience. According to a recent SHRM survey, 84% of U.S. employees feel that managers create unnecessary stress in the workplace, while 82% of respondents in a 2022 GoodHire study said they have considered leaving their job because of bad leadership.
At the same time, good leadership can have a proportionately positive impact on employee morale and performance. A 2020 McKinsey study reported that trust in leadership improved work effectiveness by 23.7%, engagement by 47.6%, and well-being by 45.4%. This same study found that financial security improved the same metrics by 17%, 53%, and 53% respectively.
Employers can bridge employee concerns over trust and financial security by offering benefits that empower employee resilience. Providing meaningful, impactful benefits like on-demand pay demonstrates a commitment to employee wellbeing: by putting financial power and control in the hands of their employees, employers can actively and tangibly show they care. In a working landscape increasingly characterized by worker dissatisfaction and resentment, going the extra mile for employees can make all the difference in the world, especially when it comes to their money.
On-demand pay connects employee and employer experience, improving organizational outcomes by improving organizational wellbeing through financial empowerment.
When considering an on-demand pay solution, it’s important to weigh its benefits against its costs and risks.
Fees are one consideration. Most on-demand providers charge employees per use. This often involves a flat rate fee regardless of how much money is accessed. This further burdens already strained wallets. Delays are another. In the case of some providers, requested funds can take anywhere 1 to 3 business days to hit an employee’s account.
For providers that offer payroll cards, most do not transfer beyond the current employer, instead acting as a gift card when the employee leaves. This can disrupt automatic payments.
On-demand pay solutions can also present risks for employers. They can be a hassle to implement and onboard, especially if the provider doesn’t integrate or partner with existing payroll systems. Some providers also require employers to pay for the service, sign multi-year contracts, or to maintain a minimum number of employees.
The more flexible and accessible a solution is, the more effective it will be at improving employee and employer experience. Clair excels in both.
Clair is a market-leading on-demand pay solution that offers instant pay access, integrates with HR software and PEOs, provides a full-service debit Mastercard, and empowers users with a suite of financial tools and services, all with no fees for employees or employers. Learn more about Clair here. To get started with Clair, sign up here.
How does on-demand pay work?
How on-demand pay improves employee and employer experience
At Clair, you’ll do more than fill a role—you’ll find a role that fulfills
What does financial freedom & Clair mean to you?
Improving the hourly employee experience with scheduling tools and on-demand pay
How On-Demand Pay is Transforming Earned Wage Access