It’s no secret that economic challenges are impacting millions of people on both sides of the Atlantic and across the world. In fact, new research shows that a significant proportion of the working population in the US and UK are facing major financial challenges, which could have long-term ramifications for their physical and mental health, as well as their performance at work.
 

However, a potential solution is at hand, and many human resources (HR) teams are, often unknowingly, sitting on a goldmine of data-backed insights from across their businesses that could be leveraged to better support their staff in these challenging times.

Financial Stress

Research by financial corporation CapitalOne revealed that a staggering 77% of Americans are anxious about their financial situation and that 73% say it is their single biggest source of stress. But the problem is both global and local and is certainly being felt in the UK. A study by London-based news outlet City AM showed that 18% of adults are unable to pay an unexpected £500 bill, categorizing them as being in ‘high financial stress’. In addition, 35% said their finances were troubled, while only 30% said they felt comfortable or confident with their current resources.

Rising interest rates and the wide-felt cost-of-living crisis are clearly taking their toll, and many employers in both the US and UK are concerned this could impact staff well-being and, in turn, performance.

Employees experiencing financial difficulties are twice as likely to take sick leave compared to other colleagues, and the issue could cost UK businesses up to £120 billion and the US $225 billion—every year—in lost productivity. Almost 40% of HR professionals report that managing financial stress among employees is a rising concern, signaling the mission-critical status of this issue. Ultimately, employers would like their workforce to show up as the happiest and healthiest versions of themselves, but this becomes a challenge when financial woes seem insurmountable.

Earned Wage Access

One means of supporting staff with their finances has been for organizations to offer earned wage access (EWA) models. This enables users to access their accrued earnings as and when they are needed, rather than waiting for traditional monthly or weekly pay cycles. The model has been praised for aligning with the more immediate financial needs of modern citizens and matching the technological flexibility and immediacy seen in other walks of life.

After all, if anyone can access a film, TV show, song or book at the touch of a button, why should they have to wait weeks to be paid for their work? EWA naturally aids employees who gain from greater financial flexibility; however, it also enables HR teams to offer more joined-up, relevant benefits packages.

Tech-Powered Insights

These models, which are built on modern, unified and tech-backed payroll systems, offer far more data and insights to businesses than the older systems with which many employers still report facing challenges.

Modern platforms aid payroll teams by offering services powered by what has become known as the three A’s: artificial intelligence, automation and application programming interfaces. Combined, these can collectively reduce errors while expediting previously lengthy, drawn-out and manually managed processes.

Organizations that do offer EWA to staff via these platforms can access data highlighting trends around increases in early withdrawals as well as an idea of the types of payments these are being used for (where the workforce is comfortable sharing this information). This creates insights that can be leveraged to identify workforce trends that flag the early warning signs of financial distress in the workforce.

Identify Red Flags

These insights allow businesses to identify potential red flags before they become more serious and then act to protect each employee’s mental, physical and financial well-being. Aside from demonstrating that the employer cares and is equipped to support its staff during difficult times, tapping into these insights and feeding them into benefits packages can also be valuable for HR teams.

Such data can identify what EWA funds are being used for, and if, for example, their employees are regularly accessing wages early to cover gym membership costs, benefits packages can be tailored accordingly. This adds greater value to these perks for the workforce, creating a stronger accord with staff and ultimately leading to better retention rates. In the current skills-short climate, this can only be a boost to organizations and HR teams.

With access to improved data and more time, as a result of payroll technology automation, employers and HR teams can better meet the needs of their workforce. Rather than being confined to the back office and focused solely on paying salaries, the modern payroll specialist acts as a strategic advisor to businesses and can offer cross-functional insights that add real value and support employee well-being during periods of financial distress. The HR teams that tap into this now will be the ones in the best possible position to attract and retain top talent in the immediate future.

Author Bio

John Pearce is Chief Customer Officer at CloudPay, where he leads their Implementation Teams, focusing on successful customer onboarding experiences. As Chief Customer Officer, he champions the voice of the customer throughout their journeys towards the Modern Pay Experience and supports all customers to drive the maximum potential and value from their CloudPay solutions.

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