Have you heard? The two-week payroll cycle is becoming obsolete. Why? Because ‘Pay-On-Demand’ is an entirely new category of payroll services that offers an increasing level of flexibility to employers and employees.
Numerous surveys have found that employers using pay-on-demand services see improved employee retention and find it easier to attract new talent.
Similar surveys show that employees also have overwhelmingly positive things to say about pay-on-demand programs, feeling more in control and empowered financially.
So, it’s not exactly a mystery. Pay-on-demand is a perk that employees want, and employers that deliver it experience better recruiting and retention results.
Understanding the Pay-on-Demand Economy
Bi-weekly payroll has been standard practice since the mid-20th century, following heavy periods of reform affecting how and when employees should be paid. For the last 50 years or so, this has been the status quo.
While this system works for employers, it causes unnecessary financial burden on employees. According to PwC, 42% of Americans live paycheck to paycheck, while even more suffer under the weight of financial stress.
Meanwhile, money that they’ve already earned is simply inaccessible to them while it is tied up in traditional payroll cycles. As the effects of struggling with finances ripple through the workforce, employers experience high turnover, low retention rates, poor engagement, employee burnout, increased mistakes due to inattentiveness, more workplace accidents, and so on.
The burden isn’t limited to the employees’ wallet. It’s a problem that continues to disrupt productivity and hurt profits. And therefore, it’s a problem that many employers are keen on fixing.
Driven by employee needs and facilitated by employers support, a pay-on-demand economy is taking shape and the charge is being led by workers that want more flexibility and control over their finances.
The Benefits of Pay-on-Demand for Employees & Employers
For employees, the real benefit is the absence of incurring added costs when depositing a check. In one survey, 78% of employees said that access to pay-on-demand programs helped them avoid late fees and significantly reduce their financial stress.
Common costs associated with more financial access are:
- Check cashing fees
- Higher-than-Market interest rates
- Loan flipping
- Late payment fees
- Overdraft fees
- Higher insurance premiums (Associated with Low Credit Score)
This reduction in financial stress benefits employers ten-fold. According to a Bank of America survey, 84% of employers report a positive correlation between pay-on-demand programs and employee retention.
Here’s why this instant wage access helps employees. Happy employees aren’t looking to make a change. Without financial stress clouding their emotions, employees are more likely to:
- Be focused
- Be easy to work with
- Be committed to staying long-term
- Be content with their responsibilities
- Be on time
This translates to enhanced productivity as employees are more likely to show up for work and get more done.
Practical Steps to Integrate Pay-on-Demand for Your Business
Pay-on-demand programs are a win-win for employers and employees. And the real-world data backs that up, with the majority on both sides solidly in favor of embracing this new payment option. So, how can your organization get on board with your existing payroll system and processes?
Step One: Survey Your Employees
Any successful program starts with your employees. Don’t make the mistake of assuming to know what they want – or need. Conduct a mass formal survey of your current workforce to better understand why candidates come, stay, and leave.
Step Two: Design a Program
Consider your current payroll and benefits programs. Then, brainstorm a wishlist of program features and benefits based on employee feedback collected in your surveys. Then, begin making the ends meet with lists of wants and needs, specifically identifying your non-negotiables. This will help direct your search for a provider.
Step Three: Find a Digital Platform Provider
Pay-on-demand programs are facilitated through third-party FinTech companies. Juice is one such provider, offering a number of ways to integrate with your current payroll processes.
Step Four: Focus on Implementation
Whether or not your pay-on-demand program works depends largely on how you utilize it. This means, there is added emphasis on planning for a smooth implementation. Make sure you have a plan for how you’ll implement with your own processes, and also how you’ll drive employee adoption. For example, Juice partners all new clients with a dedicated Customer Success Manager who helps every step of the way.
Step Five: Plan a Big Roll Out
Next, get everyone’s attention with a big roll-out that effectively communicates the changes. Utilize multiple channels to ensure that employees adopt the platform, and understand where to go when they have questions. Even the most well-intentioned programs can fail if the employees don’t understand what’s happening or how they can use it.
Step Six: Transition to Continuous Process Improvement
Once your program is in place, the workload shifts from implementation and rollout to ongoing management. Here, you’ll need to address how, when, and by whom the program is reviewed and updated. You should also address ongoing regular benefits communications to employees both during the onboarding process and periodically throughout the year.
The Future of the Pay-on-Demand Economy
Pay-on-demand has experienced widespread adoption, but this payroll model is still evolving.
With the push toward a new payroll ecosystem, now is the perfect time to reexamine pay and benefits within your organization to ensure that you remain relevant and positioned to attract and retain quality workers.
Juice Financial is a leading FinTech company specializing in zero-cost benefits. We provide a variety of solutions that work alongside your payroll program to the flexibility that your workforce needs the most.
Learn more about our flexible payroll platform today!