Earned Wage Access and Employee Incentives

By Paul Hughes, Head of New Business, EMEA August 7, 2024 Categories:

The job market is still tough for employers. However, hiring incentives, especially earned wage access, can help businesses attract talent and improve retention rates. 

Earned wage access or on-demand pay allows workers to access part of their paycheck in advance of their payday versus relying on other services like third-party payday lenders, who charge high-interest rates and oftentimes create a cycle of debt. 

In the cleaning and security industry where employers have to deal with traditionally high turnover rates, contractors are taking advantage of earned wage access and other employee incentives to keep them from losing qualified labour.

Benefits of earned wage access

Implementing earned wage access can make it easier for workers to better manage their finances. Since those hours have already been worked and logged, making access to those funds is a proven incentive for retention. 

According to data from a janitorial company, after implementing an earned wage access solution, employees were consistently withdrawing roughly £66 per paycheck. Employees left notes while requesting advances denoting that they were using the on-demand payment for necessities, such as groceries, transportation and utility bills.

That same company reported that after implementing earned wage access, their employees stayed with the company for twice as long, cutting hiring and training costs in half. So, instead of hiring every month, they are able to hire every two months which adds up in savings. If the earned wage access program is managed by an integrated workforce management system, other benefits can include:

  • Seamless process for payroll teams since an enrolled employee is simply accessing their direct deposit funds automatically
  • Integrated software can handle the calculations and available funds for employees while the normal payroll cycle continues without interruption
  • No risk of compensating for services not yet performed or reclaiming wages if an employee quits before completing duties

Employers who understand the job market and invest in decisive business plans are more likely to be ready for labour challenges. Some researchers believe that the job market will soon bounce back to its pre-pandemic self, and according to Goldman Sachs economists, the global economy could continue to cool and will outperform expectations towards the end of 2024.

If this year yields an increase in labour force participation, companies that focus on recruitment and retention efforts in the form of incentive programmes like earned wage access may be in a better position to offset some of the job market challenges

Other proven incentive programmes 

Part of the reason that earned wage access has been a successful employee incentive is that it’s rooted in showing appreciation to employees, which can increase employee motivation and raise retention rates. 

Additionally, earned wage access can make businesses more attractive to job seekers, because benefits programmes can reportedly boost job satisfaction, increase performance, instill commitment, promote work engagement and foster trust in management. Other examples of successful incentive programmes can involve 

  • Offering monetary incentives in the form of cash bonuses, financial rewards, profit-sharing and referral bonuses
  • Stipends for career development opportunities, such as professionals coursework
  • More flexible working hours or conditions
  • Added vacation days, incentives to travel

Research shows that businesses with increased levels of employee engagement reported profits that were 23% higher than businesses with low levels of employee engagement, according to a Gallup study. Encouraging employees to excel by creating a more ideal work environment can simply mean offering incentives that meet their needs and expectations.

Strengthening employee commitment to an organisation and its goals can help staffers feel an increased level of engagement with their work. At the same time, it also fosters trusting relationships between managers and their team, because employee benefits recognize and celebrate contributions made by workers.

Measuring incentive programmes and their effectiveness  

Although benefits programmes like earned wage access and other employee incentives have several proven benefits, employers encounter the challenge of measuring these tools. Traditionally, human resources professionals utilise the information gathered in exit interviews for feedback, in addition to other methods. 

A more straightforward way to evaluate the effectiveness of an employee incentive programmes is simply leaving the door to communication wide open. Encourage employees to communicate more directly with supervisors. Taking this step helps to make sure that employees have the opportunity to voice concerns.

Routinely scheduled coaching sessions are a common way for managers to listen to feedback. It gives employees a chance to gain constructive feedback in areas where they may improve. Scheduling a specific time and possibly a place aside where workers can get coaching minimizes areas of confusion, as responsibilities are clear and employees can then better approach responsibilities and priorities.

Implementing earned wage access

For companies in the cleaning and security industries, where employee retention and turnover are common challenges. However, offering earned wage access and other employee incentives can have a positive impact on the work and work environment. These steps can also establish a company as a top employer of choice, which can attract more talent in the immediate future. 

At TEAM Software, our earned wage access provider is Wagestream. To learn more about how your business can benefit, schedule time with one of our representatives.