Now Is The Right Time For On-Demand Pay

Happier employees = increased productivity and loyalty

Work is changing as employers reevaluate traditional models of scheduling, company culture, and compensation. But while much of the conversation about compensation focuses on increasing wages, many employees are also calling for the ability to access earned wages at their convenience.

The current push for improved access to earned wages is at least partially driven by inflation. With gas, rent, and food prices on the rise, employees find themselves increasingly vulnerable to unforeseen expenses. When disaster strikes, many don’t have time to wait two weeks for their next paycheck.
 

Offering employees an on-demand payment option helps alleviate financial insecurity and frees employees up to be more engaged workers. In many cases, the added flexibility of on-demand pay can even create opportunities for improved loyalty and productivity. 

Traditional Pay Periods Don’t Provide Flexibility

From fresh-faced interns to the CEO, every worker in your company probably gets paid at the same time. Although there are obvious logistical benefits to standardizing pay periods, this system ignores the financial realities many of your employees are up against. 

For example, 36% of Americans are unable to pay an unexpected $400 expense with cash or savings. When emergencies arise, employees need to take action immediately. But biweekly and monthly pay cycles mean that employees who lack adequate cash or savings are forced to either take out a payday loan at an exorbitant interest rate (leaving them further in the hole) or wait until the next payday rolls around to deal with urgent needs. 

This waiting game can be detrimental to your business — 84% of workers spend time thinking about or dealing with personal finances at work. The bottom line is that it’s unreasonable to expect peak productivity from a worker who’s worried about making ends meet — let alone loyalty. 

Why On-Demand Pay Is So Effective

On-demand pay offers significant benefits to your workforce, especially during periods of financial uncertainty. Employees can access on-demand pay at their own discretion. Although a small usage fee incentivizes them to only make early paycheck withdrawals when necessary, knowing that it’s available provides the peace of mind your workers need.

As many American workers continue to struggle with financial insecurity, the peace of mind employees gains from on-demand pay can improve engagement and reduce turnover. Nearly 8 out of every 10 U.S. employees say that having access to on-demand pay would increase their loyalty to their employer. 

But despite the benefits, it’s key to identify the right provider. Narrow your search to a provider with technology that integrates seamlessly with your current payroll system, ensuring regulatory and financial compliance. Additionally, you’ll want to make sure your provider offers an earned wage access app that makes it easy for employees to manage their own pay access.

On-Demand Pay is a Win-Win for Employers and Employees

Better pay access benefits both your employees and your organization. By providing on-demand access, you give employees peace of mind and greater control over their financial security — and happier employees translate to increased productivity and loyalty to your business.  

Calvin Sun is the Senior Director, Compensation, Benefits, and Talent Analytics, at Paylocity. Connect Calvin Sun