Alternative payment models will prove essential to businesses satisfying the increasing demands of the modern workforce says Simon Draper, co-founder of Hastee Pay.
Forward-thinking businesses understand that today’s workforce demands more in terms of workplace perks and rewards. While flexible working hours and remote working are generally considered perks, these are becoming more widespread and could soon enough be considered as standard as free teas and coffees. The question is, will these benchmark rewards really be enough to satisfy the younger, more demanding generations rising through the ranks? Will they be able to really promote the financial wellbeing at work? Will they be really capable to foster financial wellness?
Millennials – and now centennials too – expect flexible, transparent, fast and mobile initiatives from employers. In all work environments including the growing gig economy, the duty of care that employers are obliged to deliver must change. Employers must extend that duty of care and consider how they can nurture financial wellbeing at work and outside it.
According to the Employee Wellbeing Research report by the Reward & Employee Benefits Association, the implementation of carefully-formulated financial wellbeing strategies in UK workplaces grew by 20% between 2016 and 2017 and it looks likely that this trend will continue to grow.
So why should employers care, and how far should the duty of care extend of o? Some might argue that providing paid employment with fair workplace policies and a comfortable working environment should be enough to keep workforces satisfied. Ultimately it comes down to how much the employer wants to keep up with the evolution of workplace trends and see the correlation to help them attract, retain and motivate the best talent and demonstrate greater levels of productivity.
Some employers might be content with simply following the best practice trends as they emerge, but others will want to be seen as the leaders at the forefront, driving new trends in terms of financial wellbeing and employee satisfaction. For those that wish to be known as the leaders of the charge, it will be crucial to recognise the most pertinent daily struggles of their employees and explore proactive and practical ways to help provide some form of relief.
On the money
By extending their duty of care to cover the financial wellbeing of the workforce, employers can increase their appeal to new talent, retain existing personnel and ensure the best possible engagement from their workforce. Research from debt charity Step Change shows that financial troubles have a significant impact on mental health with 5,000 users of the charity’s online debt counselling service over one year showing signs of anxiety or depression.
The charity’s research also uncovered more worrying findings, showing a steep 34 percent rise in the number of under-25’s seeking help with high cost credit in the last two years. With experts at Manpower Group predicting that by 2020 millennials (now aged 21-35) and Gen Z (aged 20 and younger) will make up more than half of the entire workforce, the financial wellbeing of employees has never been a more important factor.
Challenging the payroll cycle
Money is undisputedly the number one concern and driver on the minds of most employees. A study done by the American Psychological Association shows that 61 percent of respondents face poor mental health due to stress strictly linked to a lack of financial wellness. Whilst free drinks and a nice working environment can improve our work life experience (and a little PR), for most people money is understandably the reason to get out of bed in the morning.
However, the rising epidemic of financial insecurity has led to a reliance on risky payday lenders, with one in every ten UK employees utilising payday loans every year and 70 percent of those relying on payday loans on a regular basis according to research by The Guardian and Pews. And that’s before you take into account overdraft fees and the even more worrying and costly alternatives. Employers that can promote financial wellbeing can offer a safer, easier and more ethical solution built around those principles will find it easier to recruit, retain and engage talent.
By offering an alternative to payday loans, employers not only can increase the financial wellbeing at work, but they can encourage and reward productive behaviour, creating a positive multiplier effect for all parties to win; workers feel less stressed, resulting in greater productivity for employers. While many could be left scratching their heads over how this can be achieved, the answer is plain and simple. It’s time to disrupt the way people are paid and start to promote financial wellbeing.
While monthly payroll works for the employer, it doesn’t always serve the worker. Beyond the demanding expectations and requirement for instant gratification within younger generations, employers must acknowledge the financial burdens that can so quickly intensify, even for the steady earners. Research from The Times shows that, at a time when both consumer debt and the cost of living are high, and real wages and savings are down, 33 percent of middleclass families are struggling to pay the bills and couldn’t cope with an unexpected £500 bill.
Employers still wondering why any responsibility should fall on them should take note that 38 percent of workers would move to a company that prioritises financial wellbeing within its workforce according to research by Barclays. Those that employ full time workforces and those that rely on shift, variable, gig and seasonal workers could see huge benefits from offering workers quicker and easier access to their pay. It has also been shown that there is a direct link between effort and reward that benefits both employer and worker which needs to be stable in order to keep alive the financial wellness.
Removing the struggle of individuals waiting long periods for pay that they have already earned no longer has to rely on businesses changing their payroll cycles and risking cashflow dilemmas. With new HR technologies available, businesses can embrace giving workers instant access to the wages that they have already earned with zero impact on companies’ cashflow. This means promoting financial wellness.
All of the evidence in favour of disrupting existing pay-cycles is there in plain sight but it’s down to employers to decide whether they want to adapt to the necessary demands of the modern workforce giving them the financial wellbeing that they want or sit back and watch as other businesses take strategic advantage and flourish through a stronger, happier and healthier workforce. We can’t help but suspect that within a few years, we’ll look back and laugh when reminiscing on monthly pay the same as we do with CDs, Blockbuster video rentals and landline phones.