Alternative payment methods are a key piece of the puzzle when it comes to retaining young employees.
More and more businesses want to know how to retain young employees. Many organizations are using alternative payment methods (APMs) as a retention tool because they know that by offering them they can appeal to these employees specifically. Here's why this is the case.
APMs Help Meet the Expectations of New College Graduates
In the past, businesses used alternative pay methods such as paycards to target unbanked employees, a group which generally consisted of individuals going through divorce or bankruptcy. But today, this is no longer the primary motivation. New generations (particularly Gen Z and millennials) are choosing not to have bank accounts, even though they could obtain them. This is mainly due to the convenience factor of APMs. By making APMs an integral part of your payroll strategy, you can therefore increase your chances of attracting and retaining your youngest employees, especially new college graduates.
Most new college graduates use apps to shop or pay bills online and are less likely to go to brick-and-mortar locations for their personal shopping or banking needs. This is largely due to technology simplifying a range of tasks — for example, ordering food has been streamlined through apps like Uber Eats and Postmates. Furthermore, many parents are now sending their children off to college with paycards instead of bank cards.
It is evident that the habit of using APMs has already been developed, so businesses should adapt to the rising popularity of APMs to meet the expectations of younger workers and keep their top talent.
APMs Help Meet the Values of New Generations
Gen Z and millennials value convenience unlike any generation before. Baby boomers, for instance, might still pay tolls the old-fashioned way, prefer traditional point-of-sale experiences, or favor paper paychecks. Conversely, younger groups are paying tolls going 70 mph, using apps that deliver goods like groceries directly to their homes, and requesting paycards instead of direct deposits.
The younger generations also value nontraditional financial products, such as financial wellness programs and early access to accrued wages. There's also a demand for digital wallets due to the simple fact that few people carry cash today. As a result, businesses will see more movement of money digitally and will need to be prepared to offer nontraditional solutions to their youngest employees, who will expect as much.
APMs and Financial Wellness Programs Help Increase Employee Retention
APMs, coupled with financial wellness programs, can help keep your entire workforce satisfied. Research shows that today's employees value financial wellness programs as well as financial tools and tips from their employers.
Younger generations in particular are looking to their employers' HR and payroll offices for financial advice, unlike previous generations, who would call on accountants or retirement plan providers for their financial needs. Consider also that, on average, workers are not becoming financially independent until age 29. To account for this, establishing financial wellness programs at your business that include opportunities for younger workers to learn how to manage money better and understand their tax benefits can be a great retention move.
Offering financial wellness programs can also lead to fewer missed work days when emergencies come up in your employees' lives, as doing so can better prepare them to handle situations of financial strain. Furthermore, financial wellness initiatives can be especially helpful for younger workers who are living paycheck to paycheck and hoping to change their situation.
Employers must take the initiative to attract and retain top talent with APMs, as almost all employers say that employee financial wellness affects their organization. If you can help your young workforce establish greater financial stability, you can increase your organization's chances of improving retention rates.
More info can be found in this guide: Employee Financial Wellness Programs: Employer Guide
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