On-Demand Pay: A Strategic Lever for Employee Recruitment and Retention
On-demand pay, also known as earned wage access, instant pay and early wage access, has been proven to be a valuable benefit for both employers and employees. Today’s workforce is quickly moving to a 75% concentration of millennials and Generation Z employees who have come to expect “instant experiences” in everything they do, from ordering an Uber and a hot meal to selecting a playlist on Spotify or a product on Amazon. And they are coming to demand the exact same experience in the way they are paid.
But to be fair, the way employees have been paid hasn’t changed in centuries. The global COVID-19 pandemic was a wake-up call for companies nationwide to examine the antiquated way businesses have paid their employees. Offering an on-demand pay benefit was no longer just a nice benefit to have — it became an absolute necessity.
And with good reason. Not only does it benefit the financial health and well-being of employees, it’s a game-changer when it comes to employee recruitment and retention, whether we are talking about pre-pandemic times, when we experienced the tightest labor market in decades, or as we begin to reopen the nation’s businesses six months later.
On-demand pay as a key recruiting tool
Offering an on-demand pay benefit has become a strategic differentiator for employers, and according to a recent DailyPay survey, 1 in 6 respondents applied to their current job because it offered DailyPay. This speaks volumes about the value of this benefit, especially during times of heavy recruitment, as the post-pandemic rehiring blitz is proving to be for many businesses.
In a post-COVID world, employers are all scurrying to rehire laid off and furloughed workers, often from the same labor pool. So, offering an on-demand pay benefit that provides the opportunity to receive one’s earned pay on Day 1, especially when a worker has been unemployed for months and the federal unemployment benefit has dried up, is gold. Having to wait a week, two weeks, or even a month for the first paycheck is simply unfathomable.
In addition, 1 in 4 U.S. workers is unable to meet an unexpected expense of $400 because they lack adequate savings. Allowing employees to access their earned income before payday helps them not only to pay bills on time, but also to meet unexpected expenses, such as medical care, car repairs, emergency home repairs or appliance meltdowns. By accessing their earned pay on demand, employees can avoid overdraft fees, late fees on credit cards and predatory payday loans.
These are just a few of the reasons why companies receive twice as many applicants for roles that advertise a daily pay benefit, making it faster to recruit qualified candidates.
On-demand pay reduces turnover, increasing a company’s bottom line
It’s simply a fact that when employees are happier in their jobs, they are more productive and naturally tend to stay with their employers longer.
Allowing employees to control how and when they get paid creates a simple, intuitive experience within the workplace that mirrors the same experiences that employees are having outside the workplace. Offering an on-demand pay benefit helps employees to create a stronger financial future and strengthens the employer-employee bond.
According to the same DailyPay survey cited above, 56% of employees that use DailyPay were motivated to pick up more shifts and 90% of employees shared that having access to DailyPay during the pandemic reduced their financial stress. When companies provide benefits that decrease an employee’s financial stress, employees become more productive at work and they want to stay longer.
When employees stay longer, companies benefit from a healthier bottom line due to a reduction in all the costs associated with higher turnover, including recruiting, onboarding and training.
On-demand pay: Good for employees, good for employers
There are very few zero-cost-to-the-employer benefits out there that are equally beneficial to both employees and employers, but on-demand pay is certainly one of them. Many benefits that employers offer to their employees come with a steep price tag, and do little to differentiate one employer from the next.
This is not the case with an on-demand pay benefit. Both employers and employees benefit from this offering, as shown in the following graphic that summarizes DailyPay’s findings when we have surveyed our employer partners and their users.
It's no longer a question of whether companies will adopt this life-changing benefit, but when.
The content from this blog is courtesy of Kendall Collins, Channel Marketing Manager- DailyPay. It's time to Pay Different. With a $0 cost to the employer, a benefit your employees will love!