W. Edwards Deming once said, “A bad system will beat a good person every time.”
The two-week pay cycle isn’t necessarily bad, but a lot of very good people need their hard earned wages sooner. Though you may not realize it, many of your employees may be suffering from money related anxiety right now. Some people simply aren’t equipped with the skills or resources to manage their finances adequately. It might begin with a late or missed payment, and then escalates to constant worry about low funds, producing a dull ache in the pit of one’s stomach until the next paycheck comes. This downward spiral is overwhelming for your employee’s wellbeing and results in lack of focus on the job. According to an International Foundation of Employee Benefit Plans survey, 80% of employers report that personal financial issues of employees impact job performance. These issues manifest as: Increased stress (reported by 76 percent of employers), an inability to focus at work (60 percent) and absenteeism and lateness (34 percent)..
A paycheck is an expectation, not a universal motivator. But what if getting that paycheck, ahead of time (when you really need it), actually motivated you! Financial technology allows employers to disrupt the antiquated two-week pay cycle, and savvy employees are loyal to employers who have their best interest at heart. Half of all employees say they want more current technology at their fingertips, yet less than one-third say their employers offer up-to-date tools. Friends, times are changing. In this instant access world, shouldn’t your staff be able to access their earned wages as easily as they can access the internet, make a purchase at Amazon or Venmo their friends?
Having a shock absorber, such as instant access to earned wages, can help employees feel more confident and secure about their finances. It makes a great deal of sense to empower your staff with financial tools they can use. Anyone with a smart phone can take advantage of a wide range of products making it much more convenient to control saving and spending. By encouraging your staff to use these apps and integrate them with their current employee benefits you can help them shake off financial stress and achieve their financial goals. There’s so much more to financial technology than merely tracking your checking and savings accounts. Your employees can use apps to keep abreast of their budgeting, tap into their earned wages to pay bills on time or cover an emergency. These apps are user friendly, so even people who haven’t used them before will easily get the hang of them.
Paying employees on demand leads to loyalty, better productivity, less employee turnover and bigger profits. Yes,compensation is built on more than money, but when bills are due, liquidity is king. Companies focusing excessively on offering benefits and perks that rank far below cash on employees’ priority lists are out of date. It’s all well and good to play pool or enjoy a free lunch with your co-workers, but when push comes to shove, providing for your family and making your mortgage payment far outweighs a few minutes of fun at the office.
With the cost-of-living rising faster than most peoples’ incomes, coupled with employers struggling for growth, staff retention is a vital issue. Not all organizations can easily increase the salaries of their workforce and thus need to identify other ways to build loyalty with their staff and prevent employees from being tempted by higher offers elsewhere. It’s estimated that for every employee that leaves an organization, the replacement cost is roughly equivalent to one year’s salary in terms of recruitment and training costs combined with the lost productivity that occurs throughout the resignation and replacement process, amounting to huge losses every year. Employee benefits packages — particularly those that offer financial security such as medical insurance and paid time off, are proven to have a positive impact on employee attitudes, thus greatly improving staff retention.