Pay on demand: Are we about to see a shift towards flexible pay?
As lockdown restrictions continue to be eased in the UK, many key industries will now be looking to rebuild and recover from months of little or reduced activity. For hospitality, salons and other service-led businesses, they have now reopened their doors, with strict social distancing measures in place.
Keeping people safe, while trying to operate as best they can is a real challenge for business leaders - but it’s not their only priority. They also need to implement and introduce strategies that will help them maximise revenue to build momentum on the road to financial recovery. Key to that recovery is productivity - and productivity is driven by the wellbeing of the team.
For sectors like hospitality, rebuilding and retaining the workforce is going to be crucial to long-term success. So businesses need to be thinking about what policies and perks they can introduce that will help look after their team, so they can do their role to the best of their ability.
Pay on demand might just be one of the answers.
Money is the number one stressor
For many people, money is the number one root of stress. And that’s during times when we aren’t facing economic uncertainty. According to a survey carried out last December, money was deemed to be the number one stressor, with more than a quarter of those responding saying they experienced money-related stress everyday.
It’s especially more prevalent to those who live paycheck to paycheck and often people working in the service-led industries like hospitality, fit within this bracket.
As individuals our outgoings are now more diverse and often stretched out further across the month. We have to pay for mortgages, rent, bills, car insurance, petrol, food, travel, entertainment and after all that, we still need money to treat ourselves and our families. This isn’t accounting for the unexpected bills and costs that cause us the most stress.
Yet as we pay for our more flexible lives, the way we are paid doesn’t reflect it.
Even banking apps now offer us much more detail on our outgoings. Providing us insights to where we spend our money, what on and how much. This all feeds into personal budgeting. It improves our financial wellbeing by making us feel more in control of our money. But for most, our wage is still restricted to one day a month - so as our outgoings change month-to-month, we can’t draw down our wage to reflect and cover our activity when we need to.
Pay on demand changes that. It allows employees to draw down the salary they have already earned throughout the month rather than having to wait. This can ensure people use their money more flexibly for when they need it. This could be for unexpected expenses such as a flat tyre or broken boiler. The phrase ‘I’ll have to wait till payday’ could be a thing of the past. It could also mean people have to turn to credit cards, overdrafts and payday loans less frequently to plug the gaps. Overall improving financial wellbeing and reducing stress around money.
As an employer, pay on demand could be your way to help.
Boosting productivity, retention and recruitment
Financial wellbeing has a key relationship with productivity, retention and recruitment. According to a future of pay study, 98 per cent of employers believe that their employees' financial wellbeing has a direct impact on productivity. Forward thinking businesses are going to be expected to do much more in the future to support their team through financial advice and perks.
For industries that rely heavily on rotas, employees can sometimes find themselves not being paid for a shift for almost a month. And at this time if someone is starting a new role, they might not be able to wait a month or even two weeks for their first payslip. Even if their household has another income, it could be reduced due to furlough or be under threat. It’s likely then that more people are beginning to look for roles with more flexible pay and ones that offer it are more likely to attract and retain them.
If you’re looking at more ways to support the wellbeing of your team, then maybe it's time to shift towards flexible pay.
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The Access Group provides integrated business management software.