During this period of uncertainty, today’s workforce is looking toward their employers more than ever to provide more financial management tools and new pay methods to create a better financial future. In this article, Belinda Reany, division vice president/general manager, employee financial services venture at ADP, outlines ways employers can help their employees better manage their finances and achieve greater flexibility, envisioning a reconfigured future of pay.
Current global events have changed the way we work and increased the need for advanced, alternative pay technology for workers across all industries. Even prior to COVID-19, research from the Federal ReserveOpens a new window showed 40 percent of people in the U.S. didn’t have $400 saved for unplanned emergencies. To better manage their finances and achieve greater flexibility, people today are looking to their employer to provide more financial management tools and new pay methods to create a better financial future.
In the past, benefits and workplace perks were defined by such fringe benefits as a full snack bar, catered lunches or a game room, and while these can be helpful offerings to attract talent, many businesses are instead shifting their benefits packages to offer true financial partnership to their employees. As workers navigate times of change and uncertainty, there is a clear urgency to deliver on these evolving pay demands
The Future of Pay Reimagined
Pay has and always will be a top concern for employees, but a transforming economy and evolving work trends have shown that employees are now in search of new and better options. For some employees, getting paid by their primary job is only part of their concern. Increased access to wages from side gigs, stimulus checks and beyond, are also a focus for many.
Speed has always been ranked high for payroll, but because of our current climate, this need has become even more important. Employees not only want to be offered more variety when it comes to getting paid electronically but now require this option. The COVID-19 global health event has underscored the limitations of paper checks, and experts are now forecastingOpens a new window the U.S. prepaid card market value to reach $475.3B in 2024. Â
These revised pay options are particularly important during challenging times, as employees relying on paper checks are finding themselves without access to their wages. In this age of social distancing, there are new concerns that did not previously exist – giving employers an opportunity to provide safer measures and alleviate their employees’ concerns. In the toughest times, direct access to funding proves critical.
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Personal Finance and Its Impact on the Future of Pay
Consumers admit that they have struggled with managing their own money. In fact, only 19%Opens a new window of Gen Z consumers report feeling that they had a solid grasp on credit and finances in general. Â
As workers deal with more financial challenges than ever, they are increasingly rethinking how they engage with their money. Workers are looking into how they account for spending on regular purchases and bill payments, along with the ways in which they budget and save. This means that workers, now more than ever, are carefully examining their purchasing decisions – especially as many of them are working fewer hours and may be experiencing rising costs.
As these same workers social distance and work from home, options like payroll and general reloadable prepaid cards have become increasingly popular. This digital payment method helps employers move closer to fully compliant electronic pay by offering employees who may be unbanked, prepaid reloadable cards that wages can be loaded to each pay period. Employees can receive access to funds immediately, which can help provide a way for those employees to avoid any additional charges they were facing. Additionally, unlike paychecks, pay cards and general reloadable prepaid cards can negate issues such as postal delays or the issue of not being able to get to a bank, especially during an emergency. This option can provide a more real-time approach to money management, proving frequency and customization is often as imperative as access.
Learn More: 10 Return-to-Work Compensation Strategies for Remote & Furloughed WorkersOpens a new window
Tying It All Together
Overall, workers want workplaces to provide a holistic and thoughtful approach to financial wellness, customization, safety and reliability, all of which proves imperative under current circumstances. Furthermore, not doing so may neglect the incoming class of new professionals who place great importance on financial security.
Employers have the power to help employees build a stronger financial foundation during this time by offering flexible pay options and intuitive budgeting tools, including short-term savings tools, underpinned by financial education.
Awareness and preparedness are also vital. If employees need payment options they have never had to require before, being able to provide backup payment methods is key. As technology evolves, digital should become table stakes. Employers should look to adjust outdated payroll systems that do not account for unbanked employees, and provide a way for all employees to access their wages, without delay, in the case of an emergency. As payroll cards and digital payment options in general become the norm, paper checks can now serve as that backup function.Â
As peace of mind continues to be a daily concern during this period of uncertainty, employers must do more to ensure their employees have the tools they need. In navigating the path forward, companies will start to reconfigure the future of pay, allowing them to get ahead and better prepare for unexpected circumstances.Â
Which financial management tools are you using to help your employees better manage their finances? Tell us on LinkedInOpens a new window , TwitterOpens a new window , or FacebookOpens a new window .