The Herman Trend Alert
May 26, 2021
On-Demand Pay
As I have reported in the past, financial stress for employees is a huge issue. In fact, according to a study by the service supplier Even, 60 percent of employers said financial stress affects their employees' ability to focus and 65 percent of workers believe employers should do more to address financial insecurity. As if employers didn't have enough to worry about trying to bring their workers back into congregate workspaces, now, they have a new benefit called "On-Demand Pay" to think about and use to their advantage.
What is On-Demand Pay?
The definition of on-demand pay is that the employee gets paid on the day that the work is performed. Most of us already provide on-demand pay to a variety of workers. Think about babysitters, snow-removal, and lawn maintenance. We pay for these services once they are rendered---often in cash.
A Highly Valued Benefit
In October 2019, the Workforce Institute of the Human Resources software giant Kronos conducted a study of over 1000 adult workers. More than half of those surveyed said on-demand pay is a more attractive benefit than extra paid time off.
Why On-Demand Pay is So Popular
Amazon's same-day delivery and streaming services have accustomed consumers to "instant gratification." The idea of delayed gratification is not so well-liked as when my friend Joachim de Posada wrote his book, Please Don't Eat the Marshmallow. Plus, when money is needed for an emergency, on-demand pay can eliminate the need for pay-day loans and over-draft fees, meaningfully saving your valued employees hundreds of dollars.
How On-Demand Pay May Be Delivered
One avenue is provided by the payroll giant Paychex through an existing partnership with the on-demand pay service PayActiv. Paychex offers their customers the ability to give workers access to their net pay through a mobile application. Alternatively, Ceridian's DayForce creates a wallet where employees can request pay in advance of a regular weekly or biweekly pay date. The payment platform Even offers their customers a similar service, via debit cards, to the employees of their customers.
Big versus Small Companies
Even serves Walmart, Pitney Bowes, Humana and other Fortune 500 companies. For obvious reasons, this concept may be easier for large companies to implement. Understandably, there are many challenges for smaller companies who want to provide this benefit. Among those difficulties are cashflow and logistics; clearly, cash must be managed carefully.
Ways Small Employers Can Get Creative
Given the labor shortages facing small businesses today, there is no alternative to finding innovative perks like on-demand pay. Here is a quick list that worked for The Herman Group once upon a time: AAA Memberships, Entertainment Books, Subscriptions to community theatre, city symphony, and local sports teams; Time off when we were very slow; celebratory lunches once or more/week; fully paid health insurance. And let me not forget about Best Money Moves which can help workers manage their financial stress!
No matter what size your organization, innovative perks can be your competitive edgeÑ--and well worth the investment!
Special thanks to Gene Marks writing in The Guardian for his coverage of this important topic. To read the whole article, visit here.
Next Week's Herman Trend Alert: Re-Orientation
As employees return to the workplace, business leaders will have a unique opportunity: Re-Orientation. In the past, as a consultant, I have urged employers to conduct re-orientations for their long-tenured employees. Next week I will discuss the benefits of this re-orientation, along with how to do it right.
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