By Michelle Young, Vice President of Operations — Employee Financial Solutions, ADP Ventures and
Jeanniey Walden, Director of Innovation and Marketing, DailyPay
As the new world of work continues to take shape, employees are reevaluating their priorities and we see the dawn of a new era in employee engagement. Impacted by the pandemic, employee expectations have changed. As they reflect on their needs, employees are reassessing their priorities and demanding a work experience that embraces and supports them. To meet these ever-changing talent demands, employers are reassessing the culture and the benefits they offer. Among these offerings is the financial counseling they provide, a benefit that many employees expect and appreciate when focusing on financial wellness.
Today’s employees, especially younger workers and those with flexible work schedules, are looking for financial wellness tools, including flexible compensation options. As businesses and individuals look to move forward, it’s in leaders’ best interests to invest in the financial well-being of their team and provide tools to promote financial confidence.
Financial stress is bad for business
More … than 70 percent of people say they worry about their personal finances at work. One in three people say they worry more than once a week. These concerns were front and center even before the pandemic – imagine how employees are feeling now with the costs of goods and services reaching new heights.
In recent years, approximately 34% of Americans are either unbanked or underbanked – sometimes by choice, but more often not – which limits easy access to basic financial options that many take for granted, such as affordable credit, bill payment, online shopping, access to ATMs, etc. This leads to friction and expense for those who can often least afford it. Paying more than $1,000 a year in check cashing fees, payday loans and other predatory financial products only adds to financial stress. And these realities have an impact on businesses.
Financial wellness tools can make a difference
Financial well-being has a profound impact on employee productivity, engagement and turnover. According to a study by the ADP Research Institute, employers believe that companies should take an active interest in the financial health of their employees. And employees agree, with 78% of employees saying their employer should care about their employees’ financial well-being, and 79% saying they want to work for a company that cares about their financial well-being. This leads directly to improved hiring and retention, which can be so critical in a tight job market.
Offering financial wellness tools to employees isn’t just the right thing to do, it’s good for business. Help is needed, and employers are in a unique position to provide valuable resources. Employers have a real opportunity, especially in the current environment, to show employees that they are looking out for them.
New technological solutions are changing the game
Too often money is not in the right place at the right time when it is needed. Fortunately, new technological solutions have been developed to change the way money is moved. When we think about a brighter future and better financial health, the source of compensation can be a solid way to foster financial confidence. By leveraging technology to make the payroll process simple, seamless, and turnkey, employers can make it easier for employees to access their payroll when and where they need it.
Offering digital compensation methods to underbanked and unbanked employees is essential — for their primary jobs as well as a way to receive gig income, government benefits, or tax refunds — to help avoid fees like than check cashing fees. Digital budgeting tools that provide real insights on how to cut expenses and save more can also be extremely helpful. Flexible compensation methods – outside of standard payroll cycles to align unexpected expenses with income – can eliminate the need to spend money on overdraft fees, overdue bills and payday loans, further increasing the ability to an employee to save and reduce financial stress.
DailyPay recently partnered with Aite Novarica Group to dig deeper into the impact of the on-demand payment financial wellbeing benefit:
- 95% of those who previously relied on payday loans in any way have stopped using payday loans.
- 97% of those who said they had overdrafted their bank account before using DailyPay now rarely or never incur overdraft fees.
knowledge is power
True financial confidence starts with access to information – knowing your net worth as you create it. In a traditional environment, workers often have to wait until payday to see how much money they have earned, but with new technological advances such as the Daily Pay App Where ADP Wisely payment card, they can see their salary as they earn it. This helps build employee confidence as they begin to see how they can save for the future. For employers, this is a profitable benefit that can have such an influence on a person’s life.
As unemployment continues to fall and consumer demand continues to rise from the uncertainty of the pandemic, the American worker finds himself in a position of strength with a tight labor market. To keep the business running smoothly, it is important that employers listen and respond to the needs of their employees in order to maintain a strong and engaged workforce. And there’s no better way to demonstrate your commitment than by giving your team members the tools and support they need to reach their full potential.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.