The key is opening the door to payment options that go beyond the traditional.
The world of work is changing as emerging technologies transform everything from how people collaborate and perform to get work done to how workers expect to get paid. This digitization of the workplace is fueling workers' expectations of immediacy when it comes to payment options. The growing trend is evident as consumers look for more ways to add convenience and ease in their lives, from ordering ahead on mobile apps to quickly moving money through peer-to-peer payment sites. Faster, digital payments are becoming the expectation and organizations must evolve to attract and retain talent.
Driven by this evolution, workers today are looking for more flexibility with the traditional pay cycle. Workers want faster and more convenient access to their pay. Digital payments (including mobile wallets) often replace cash and paper checks, but traditional pay delivery is still largely based on access to a bank account. In fact, 28 million people in the US still get paid by a paper check each month!
Not only is this often less convenient for some, it can be a serious cost for workers who are underbanked or unbanked altogether, which is the case for more than 25% of U.S. households. Traditional pay delivery methods force these workers to use expensive options like check cashing stores to get access to their money. We owe them better.
The future of pay must be faster, digital and more connected. Workers are eager for this change, and it is up to the payroll industry to evolve to meet these modern demands.
Educate Your Workforce on the Digital Economy
As human capital management professionals, we have a responsibility to develop solutions that will define the future of pay and educate workers on what that means. Workers need financial management tools that will give them access to their pay when they need it, but more importantly provide financial wellness education that can help them down the road.
Financial wellness is a top priority for today's workers as they increasingly welcome the role of their employer in providing tools to help them better manage their finances.
Empower Workers with Choice
Employers can already offer new pay delivery options such as a digital reloadable accounts that comes with a mobile app. On payday, workers who pick these options will get their money loaded on their card, which they can then use to pay bills, shop online, make ATM withdrawals, or transfer funds to other accounts, like those of family members. The key is opening the door to payment options that go beyond the traditional.
While this system is currently based on cards, it is quickly shifting to digital accounts, enabling workers to manage their funds online or from a smartphone. Suddenly, managing their pay and other sources of income could become all mobile, automatic and as easy as sending a text message--- and they're willing and ready for that digital shift.
Create Accessibility for All
Sometimes workers looking for alternate pay methods are either unbanked entirely, or underbanked, which limits their access to financial options that many take for granted -- ATM access to get cash, the ability to do online bill pay, the ability to shop online, and access to affordable credit. In fact, in 2017, there were approximately 51 million Americans underserved by the banking community, 15.6 million of whom did not have a bank account at all. Many unbanked workers face the added challenges of finding transportation to a pay cashing facility, paying high fees to access their money, and having to determine a way to budget the remaining funds. Workers exhibiting signs of financial insecurity are often more likely to have higher absence rates and lower productivity as a result.
In addition to unbanked and underbanked workers, access to non-traditional pay methods can encourage engagement among digital-native workers. For example, millennials have grown up in the digital age and prefer more accessible options like online banking and peer-to-peer payment apps.
Employers have a responsibility to provide access to and educate on what tools can help their workers improve their own financial wellbeing. The result can ultimately impact the business as a whole.
In many ways, the future of pay is here.
Payroll is already moving into an integrated model where people can connect their wages and other sources of income to different accounts. To help employers and employees navigate these changes, an important piece of the puzzle includes prioritizing financial wellness. For workers, this offers an everyday hub to start improving their financial wellness. For employers, this can translate to a more productive and engaged workforce.
As we look ahead at the evolution of pay, there are ample opportunities for the HR industry to evolve and better support the needs of a modern workforce.
Learn more about people and pay. Download the ADP Research Institute® report: The Evolution of Pay
Re-printed by permission of Human Resource Executive.