How Early Wage Access Programs Increase Employee Retention
If there’s something almost every employee, in any given workplace, has in common, it’s their desire for financial freedom. Unfortunately, the ability to distribute paychecks to employees is dependent on payroll calendars. It’s a process that makes sense.
Increasing the cadence of your regular payroll process could lead to negative side effects. And, you likely don’t want to spend any more time, energy or money on things like reconciliation or payroll processing. But what if one didn’t have to come at the expense of the other? Service contractors can help promote employee financial wellness and grant early paycheck access without heaping extra work onto their back-offices plates. By doing so, you could see other positive side effects, like increased employee retention and employee satisfaction.
What is financial flexibility?
The definition of financial flexibility can vary. Depending on the individual, it could mean limiting how much you depend on loans or another kind of debt. Or, it could mean having all your ducks in a row when it comes to retirement savings. In most cases, though, financial flexibility means having the ability to take care of unexpected expenses.
As an employer, your workforce agrees to work for a certain wage corresponding to work delivered at the time of hire. It’s understood that payout for services rendered comes at a standardized timeline. That doesn’t mean you can’t reevaluate processes to help modernize the way your employees access funds.
You could make things easier for your workforce by lessening the amount of time they need to wait between paychecks to make ends meet. And, as the result, you’re able to help your employees gain the cash flow flexibility they need to meet everyday demands.
Employee retention and early wage access programs
One of the biggest reasons service contractors might be wary of implementing an early wage access program is added processes (and associated costs). But most financial wellness programs are built so all that extra work happens outside of your current payroll processes.
Typically, an employee pays a small fee to access earned pay on-demand. They can do this down to the day, with balances updating after each shift worked. When the program includes a paycheck advance app, employees can gain access to funds even faster no matter where they are.
Studies have shown positive results after introducing early pay models, including:
- Reductions in turnover as high as 90%.
- Decreased hiring costs related to turnover.
- Increased interest from job applicants.
- Decreased employees experiencing financial stress.
In today’s crazy labor market, we know hiring is not matching up with applicant volume. And, retention rates are taking a hit. We have several theories about why, plus action items to help you get it under control. An early paycheck program could be just what you need to strengthen your employee retention strategy and keep your contracts staffed.
How to get your paycheck early: what employers can do for their staff.
Establishing early wage access programs is a means of investing in your employees. Future employees reap the benefits of a better benefits package, which could help attract applicants. Here are some tips on what you can do throughout program set up, to ongoing strategy:
- Evaluate the interest of early paycheck access with your workforce. TEAM partners regionally with different providers to make early paycheck access even easier.
- Educate your workforce on how early paycheck access works. Not everyone’s financial goals are the same. If saving money is important to one employee, they can divert pay into a savings account. Others may want to have pay put into a checking account for cash flow. Or, it could be a mix of both.
- Use your goal of promoting employee financial wellness as an engagement opportunity. Measure metrics like employee satisfaction, retention, and turnover. Gauge any new applicant volume and adjust accordingly.