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Daily Pay: Discount it at Your Own Peril As an HR Leader...

Most readers of this blog are blessed in many ways, including financially.  As HR and recruiting pros, many of us live our lives and really don't consider things from our workforce's point of view often enough.

Case in point: The concept of Daily Pay as a tool for retention. IMG_2818

Daily pay is something that doesn't feel natural to HR pros. After all we've long since settled into our 2 week cycles for payroll.  Payroll is due!! What's our error rate on Payroll?  Are the transactions getting done in a systematic way?

Our 2-week payroll cycles make the concept of Daily Pay foreign to a lot us.  I was reminded of this when P Hall, a reader of the Capitalist, sent me the picture you see at the right (email subscribers click through if you don't see the photo) from a Taco Bell in the Carolinas.  My reaction to it was mixed, which underscores what a lot of HR pros and TA leaders would say about the concept of Daily Pay.

"Nobody really needs daily pay."

"Daily pay would cause anarchy in our department"

"Our employees need to wait until payday. We're not the bank"

But our own perspective and experience isn't shared with the rest of the world.  For those of you with large hourly populations, you've got a workforce with a high number of people living paycheck to paycheck. And that means that disruptions in your employee's lives can cause bad things - absenteeism, lower focus on their job at your company via second jobs, moonlighting and turnover.

Payroll technology in the app world makes the transition to daily pay easier than you might think.  More from SHRM:

"We're seeing a lot of traction for instant pay apps in companies with large hourly workforces where employees live paycheck to paycheck and unexpected expenses can cause big disruptions to their lives," said Ron Hanscome, a research vice president at Gartner in Minneapolis who specializes in HR technologies. "It can be a differentiator in markets where turnover is high and organizations are looking to create a more stable workforce." The ability to draw pay right away can keep some hourly workers from jumping ship to competitors for a 25-cent or 50-cent per-hour pay increase, Hanscome said.

Organizations including Outback Steakhouse, McDonalds, Dial America and Maids International are using some version of the pay option, with some saying it has contributed to a reduction in turnover among hourly workers. Walmart has announced it will begin allowing its workers to use an app called Even to access a portion of their wages before standard paydays.

Just as importantly, we're in a peak economic cycle, and your hourly workforce has more options than ever before.  You've got employees who live paycheck to paycheck, and being able to tap into their wages before you decide to pay them every two weeks might be a contributing factor moving forward to you being able to attract hourly workers - or keep them.

Turns out, you might need to be the bank in today's world.

Comments

Karen

This is an interesting concept and one to watch. It seems like it would put pay-day cash advance places out of business, and save employees who use pay-day cash advance stores from paying the interest that those places charge (which would help reduce financial burdens for employees).

Billkutik

Right again, KD. Ceridian already offers daily pay functionality in payroll, and ADP promised it recently and may already have customers using it.

Sehrish Sayani, Marketing at DailyPay

Bill,

You are right! DailyPay announced the partnership with ADP back in November. This integration gives all Marketplace users the option of offering a daily pay benefit.

https://www.prweb.com/releases/dailypay_joins_adp_marketplace_to_equip_workers_with_instant_access_to_earned_wages/prweb15900143.htm

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