While it is true that associates may choose to leave for various reasons, it’s hard to argue that an antiquated payroll strategy puts most associates in a stressful situation. Globally, approximately 70% of all associates are either paid monthly or bi-weekly. 1 According to Ernst & Young, on any given day, roughly a trillion dollars is locked up in payroll systems waiting to be paid to employees.1 For the employer, the ability to hold on to payroll funds positively impacts cash flow. However, it can create an incredible amount of financial angst and frustration for their workforce.
Nearly 42% of U.S. full-time workers find it hard to meet household expenses on time.1 This need to manage cash flow is the primary driver behind the payday lending industry. In 2018, more than 15 million Americans took out payday loans2 – and at interest rates as high as 300% – so it’s no wonder there are now more payday lending storefronts in the U.S. than there are McDonald’s Franchises1. Some financial institutions have leveraged the need for payday loans and created unique solutions that allow access to payroll funds one to two days before they are deposited into their checking accounts as a way to attract new customers.
With the creation of real-time payment applications like Zelle, Cash App, Venmo and PayPal, the average consumer has grown to expect – and frequently demand – a faster way to move and access their money. Payroll streaming isn’t necessarily a new concept, as many businesses have “cashed out” employees at the end of their shift for years. But when companies like Lyft and Uber used it as a recruiting tool, the opportunity to allow a real-time payroll payment through an electronic means became a reality.
Today, there is no shortage of companies that have developed tools to allow payroll streaming to their employees. Each solution operates slightly differently than the next, but they all perform the same essential functions, allowing the employee the power to control where, when and how they are paid.
A payroll streaming solution is not only a powerful recruiting tool but also a mighty employee retention tactic. A recent poll conducted by the human resources organization, Ceridian, found that:
- 78% of employees indicated free on-demand access to earned pay would make them more loyal to their employer.3
- 79% said they would feel more valued by their employer.3
- 80% said they would accept a job with an employer that offers wages on demand versus companies that don’t.3
The evidence is clear. The expectation surrounding payroll is changing whether companies like it or not. If companies want to stand out from their peers to attract and retain talented individuals, the antiquated method of leveraging employee wages to improve business cash flow has to change. Deploying a payroll streaming solution will certainly impact organizations financially. But when that investment is aimed at an organization’s greatest asset – employees – can you really afford not to?
(1) Ossip, D. (2021, October 30). Pay streaming is about to upend salaries as we know them. Fortune. https://fortune.com/2021/10/12/pay-streaming-salaries-pay-cycles-paychecks-real-time-payments/
(2) Milanovic, N. (2020, July 28). Now Is The Right Time For Streaming Wages. Forbes. https://www.forbes.com/sites/nikmilanovic/2020/07/28/streaming-wages/?sh=1837aed06202
(3) Guzman, J. (2021, September 14). More than 80 percent of Americans want their paycheck the day they earn it. The Hill. https://thehill.com/changing-america/respect/572137-more-than-80-percent-of-americans-want-their-paycheck-the-day-they