In today’s work landscape, HR and payroll managers encounter a myriad of challenges in navigating employee demands while also ensuring operational efficiency. Offering earned wage access (EWA) can act as a great solution to these challenges. By offering employees the flexibility to access a portion of their earned wages before the regular payday, EWA not only streamlines operations, but also contributes to increased employee satisfaction and retention.
Combating Widespread Burnout and Employee Turnover
With more than half of U.S. employees reporting that they are experiencing burnout, this is a major challenge facing managers, and the groups with the most financial struggles are experiencing the highest levels. Burnout is strongly linked to decreased job satisfaction and loyalty – so, as employee burnout increases, so does turnover.
There are many factors that contribute to burnout, and poor financial wellness is a key factor. Because of this, HR and payroll managers have the ability to promote change from their levels, improving employee financial wellness, productivity, engagement, and retention.
One way to combat burnout and ultimately turnover is by advocating for earned wage access. According to Instant Financial’s Wages and Wellbeing study, more than 50% of all U.S. workers would be able to avoid major financial pitfalls if they had access to their earned wages after each day’s work. By improving their financial wellness and avoiding financial pitfalls through earned wage access, employees are more likely to have lower rates of burnout and higher rates of retention. For example, 56% of U.S. workers reported they would stay a month to over a year longer at a job if they had earned wage access.
Encouraging Employees to Utilize Payroll Benefits
Encouraging employees to take advantage of their payroll benefits is another often overlooked challenge for HR and payroll managers. Although the benefits may be available, they aren’t adding value for employees who aren’t using them. Some employees may be unaware of their options, while 85% of workers do not fully understand their benefits.
To address this challenge, managers can implement educational initiatives and communication strategies to ensure that employees are well-informed about the benefits they have access to. Once employees understand their benefits, they may be more willing to take advantage of them.
However, it’s unlikely that education will cause a noticeable uptick in the adoption of difficult-to-use benefits. The biggest factor in adoption is how easy they are to understand and use. Earned wage access, for example, is easy, both to understand and use. When partnering with a responsible earned wage access provider, experts are on hand to educate employees and managers about the product and walk them through the steps to get started. By choosing products that are easy to understand and dedicating resources to educating employees on their benefits, employees are more likely to take advantage of the benefits their employer offers.
Assisting Employees that Struggle Between Paychecks
For some employees, waiting for payday can cause extreme financial stress, especially when unexpected expenses arise. Respondents to the Wages and Wellbeing study reported attending work while sick (35%), skipping meals to save money (32%), and taking out high-interest loans to pay bills (25%) in between paychecks.
This stress transfers to HR and payroll managers if there is ever a delay in payment processing, or when an employee makes an impassioned plea for an early payment. Managers can’t guarantee there will never be an issue with direct deposits, and they can’t pay employees early based on their needs, but they can advocate for another option.
Earned wage access solutions can play a crucial role in addressing this issue. With this benefit, employees are able to reduce frequent late and overdraft fees, reliance on loans, heightened financial stress and anxiety, credit score decreases, etc., providing financial flexibility and reducing their reliance on physically and emotionally harmful cost-saving efforts.
Attracting a Younger Workforce
Younger generations, particularly Gen Z and younger Millennials, have higher expectations when it comes to benefits, valuing innovative solutions that cater to their financial needs. According to the Wages and Wellbeing study, 33% of millennials (27-35) and 26% of Gen Z (16-26) report worrying about making their money last until their next payday at least once a day.
This is another issue that feels like it might fall more in the recruitment and HR bucket, but managers still have the power to be a part of the solution by advocating for updating the payroll structure to include EWA. Earned wage access is an attractive benefit for employees of all ages, with 79% of American workers report being more interested in applying in a job that offers earned wage access. But, this percentage is even higher among Millennials (84%) and Gen Z (87%). Implementing EWA as part of your payroll benefits package can be a strategic move to appeal to this demographic and stay competitive in the job market.
Implementing Complicated New Payroll Systems/Technologies
Transitioning to new payroll systems or technologies can be a daunting task for HR and payroll managers, with the fear of complicated implementation deterring companies from exploring innovative solutions. In the case for earned wage access, these solutions are designed to be user-friendly and easily integrated into existing payroll systems. With the right solution and support, the transition can be a straightforward and beneficial one for HR leaders, payroll managers and employees.
At Instant Financial, implementing earned wage access into your existing payroll system is a seamless process. Our team conducts a thorough examination of a company’s existing payroll and banking processes, working together with the payroll team to ensure that all necessary processes are in place prior to launch. Additionally, we provide training sessions with key departments and stakeholders and ongoing support post-implementation.
To learn how you can implement EWA into your organization’s payroll with Instant Financial, schedule a demo today.