Forward-thinking companies are therefore gaining competitive advantage by introducing employee benefits that can have real impact on recruitment and retention. One of these is Pay On-Demand, also known as Earned Wages Access (EWA). The concept is revolutionising payroll – and for these corporate leaders and their employees, the future of work has already arrived.
What is Pay On-Demand?
While traditional payroll involves workers waiting for fortnightly or monthly pay runs, Pay On-Demand gives them access to some or all of their salary as it is earned. It is something that the Gen Z employees joining the workforce in the 2020s will take for granted, expecting to be able to draw and spend a proportion of their pay as soon as they have done the work.
The most nimble and flexible companies will be those future-proofed to attract the right people. The crisis in talent is one of business analyst Gartner’s Top 10 Strategic Predictions for 2023 and Beyond. As highlighted above, Gartner expects 40% of organisations to show a business loss “of significant financial consequence [that] must be explained on financial disclosures” due to labour volatility by 2025.
Earned Wages Access increases loyalty
In this context it is all the more important to understand that among the key drivers of employee retention are recognition, appreciation and flexibility. Earned Wages Access makes staff feel more valued and it increases loyalty. It is the counterpart to equitable and fair pay (equal pay for equal work) identified by the Harvard Business Review as “among the greatest drivers of employee satisfaction” and a top technique for winning the war for talent.
Rather than facing constant staff churn and time-consuming, stressful and expensive recruitment, companies offering Pay On-Demand can make their employees happier, more productive and more likely to stay with the business.
A fascinating LinkedIn Employee Well-Being Report has noted the paradox that while today’s job candidates rank good work-life balance and excellent compensation and benefits as their top two factors when considering whether to join an organisation, these very factors are where organisations score the lowest when it comes to delivering on their promises. LinkedIn People Science Principal Consultant Ia Ko reported: “It’s hard to ignore that employees who feel their organisation is meeting their needs for flexibility are more than three times happier than their peers.”
Flexibility of On-Demand Payroll Solutions
On-Demand Payroll Solutions meet this demand for flexibility, with both employees and the employer reaping the benefits. Employees gain the freedom to meet unexpected expenses and the flexibility to spend what they have earned, improving their financial visibility and stability instead of being at the mercy of exorbitant interest rates, bank charges and loan sharks. The company not only gains a powerful recruitment incentive and engagement tool, but avoids the debilitating effects of absenteeism and lower productivity.
In the current economic climate, this is no small matter. The International Monetary Fund is forecasting global inflation to run at 6.5% in 2023, putting substantial pressure on individuals and corporations alike. Employees find a long wait for their next payday more difficult to bear, while employers need to run as efficiently as possible. Earned Wages Access Providers, such as Zalaris, can work with companies to design a Pay On-Demand system that suits their business, ensuing a balanced approach with a reasonable cap on the frequency of withdrawals so as not to disrupt financial planning and cash flow.
Pay On-Demand for the gig economy
Another factor turning traditional payroll on its head is the rise and rise of the gig economy. Once understood to be limited to the likes of Uber and Deliveroo, this term now covers the whole freelance world – approx. 1.2 billion people, from delivery drivers to graphic designers, programmers to Airbnb hosts, handmade crafts on Etsy to C-suite executives. By this measure almost one third of the global workforce are part of the gig economy, and four in ten of them earn more than $100,000 a year, according to the Gig Economy Index.
Flexibility when it comes to payment underpins the gig economy, notes Mastercard, with these freelancers expecting rapid, if not instant, payment: “One way is to offer on-demand wages; allowing workers to access pay when it’s needed, helping to alleviate income volatility – a major pain point.” Earned Wages Access Providers and On-Demand Payroll Solutions have a central role to play.
The way we work is changing dramatically. The future has already arrived, and the payroll and HR teams who adapt the fastest will be those who are primed to thrive, not just survive.
Zalaris offers a fully customisable and compliant Pay On-Demand solution through our PeopleHub portal.
At Zalaris, our goal is to provide a fast, efficient, and customisable payroll on demand solution for your business through our PeopleHub portal. We provide a flexible system that can make the entire payroll journey seamless, and most importantly, help you thrive in this competitive talent market. Get in touch with us and let us revolutionise payroll for your business.