Poor cash flow is one of the primary drivers of financial instability among hourly workers in the United States.
Many employers still use antiquated payroll systems that deliver payouts via check or bank transfer once a month, bi-monthly, or — best case scenario — once a week. This means that workers have to wait days or several weeks just to get their hard-earned money, increasing the chances that they will miss due dates and incur late fees on everything from credit card payments to car insurance premiums. These issues, in turn, can make it even harder for employees to keep up with their bills in the near future, creating a potentially vicious cycle for the people you depend on to keep your business up and running.
Fortunately, employees don’t have to wait days or weeks just to access their earnings. Some large corporations like Walmart have already begun rolling out on-demand pay systems, in which employees can access the money they earn each day as soon as they clock out. According to Forbes, Walmart employees cite on-demand pay as the third-most important benefit after employer-sponsored healthcare and 401k options.
Improve employee morale
The advantages of choosing on-demand pay extend far beyond easier access to earnings. For example, companies that give employees instant access to their wages may see higher morale. This is because employees know that they will actually get paid as soon as their shift or workday ends, so they are often happier to come to work, knowing they will receive the “reward” for their efforts much faster. Alternatively, delayed gratification (i.e. long wait periods for payments) has the opposite effect, which may decrease both morale and filled shifts.
Increase employee productivity
Naturally, high morale and enhanced productivity go hand-in-hand. When employees are happy, they are more willing to put in the extra effort to meet the needs of your business and your customers or clients. Conversely, low morale can decrease productivity, increase absenteeism, and ultimately cost your business a lot more money. In short, doing things that keep your workforce content (like paying them instantly after each shift or workday) can actually increase your profits and create a healthier work environment for everyone.
Improve retention rates
When morale and productivity are high, and employee benefits actually fit workers’ needs, you can expect to see better retention rates. In 2021, roughly 47.2% of American employees left their jobs in the “Great Resignation.” There are a variety of reasons for the Great Resignation, but a major issue is the lack of benefits that directly affect personal financial wellness in a positive way. By providing the programs and resources employees need to be financially well, employers also increase the chances of keeping employees for longer periods of time, reducing the cost of hiring and training new employees.
Hire better talent
This also brings up the issue of scouting for the best possible talent. Since the start of the “Great Resignation,” many companies have struggled to fill positions with qualified applicants. This is largely due to businesses not offering the essential benefits prospective employees need. Adding on-demand payments to your benefits package can make your company more enticing, bringing in the best talent the labor market has to offer, especially in the face of the significant financial strain employee faced after years in a global pandemic.
Improve shift schedules
Finally, for businesses that run on shift schedules, on-demand pay could help keep the business running at full capacity. When employees in shift-based positions know that they will get their pay as soon as their shift ends, it encourages them to take on even more shifts. This reduces the risk of having understaffed shifts and increases employees’ willingness to pick up more shifts.
On-demand pay is not just a faster way to get money into the hands of your employees (though that is its primary function). It can also completely transform your business by helping your employees feel financially empowered and appreciated as essential parts of your organization. By offering on-demand pay, you can attract talent at a time when most businesses are struggling to keep a full staff on their payroll.
If you’re interested in learning more about on-demand pay for your employees, be sure to reach out to Clair today!