In March 2014 I was interviewed by the Financial Times where I highlighted my concerns about the demographic shifts taking place in leading global economies. Shifts which will inevitably lead to a point where the demand for workers outstrips supply.
Today, this ‘workforce cliff’ is widely recognised and the ability of organisations to attract and retain key talent is moving rapidly up the agenda in boardrooms around the world.
Responding to the challenge of the ‘workforce cliff’ requires organisations to think differently about the workplace experience they are creating for their employees - and one area which stands out to me as being ripe for innovation is pay.
Payday has never been further away
As a junior Personnel Officer fresh out of university, I witnessed the aerospace company I was working for implement two fundamental changes to the way it handled pay. First, they moved from weekly to monthly payments. Second, they moved from cash in wage packets to electronic payments into employee bank accounts.
With hindsight it’s clear that these changes were primarily driven by an organisational desire to increase efficiency and to make payroll easier to administer. In other words, they were made to benefit the organisation, not the employee.
Rather, these changes created a range of financial, practical, and psychological issues employees have had to address as they tackle the unpredictability of lives and lifestyles which don’t always fit into an orderly monthly cycle.
So, at a time when every organization needs to demonstrate that it cares about the wellbeing of its people, helping employees to take control of their finances is a major opportunity.
That’s why I am excited about recent innovations in the area of income streaming technology which enables employees to access their pay when they need it, as they earn it.
Making an emotional connection
If you look at an organisation where employee engagement and productivity is growing, it’s typically the result of that organisation having delivered on a number of small innovations, each of which have a strong emotional connection with the employee. And is there no more an emotional employee benefit, than pay!
So when an employee needs an advance on their monthly wages to meet an unplanned or unavoidable expense, the impact on the employee of agreeing to this payment can be enormous - and their loyalty and engagement with the employer greatly enhanced.
This is highlighted in a recent survey where 57% of employees with access to income streaming said that they felt less financial stress as a result of being able to access the money they had earned when they need it. Furthermore, the organisations employing these individuals reported that employee engagement had increased, and staff turnover reduced.
As the latest income streaming technology can be simply and seamlessly integrated into the services offered by the majority of leading payroll providers, this is a clear win:win for employees and organisations. For me, however, the wider impact of income streaming is even more exciting than these immediate benefits.
Social and organisational impact
Giving people more control of their finances can have a profound impact on the lives of individuals, families, and communities.
This has been recognised by one of the UK’s leading income streaming providers, Wagestream, who, in partnership with a range of social charities, have set themselves the objective of ending overdraft fees, eradicating payday loans, and ensuring that every household in the UK has at least £300 in savings.
To achieve this, Wagestream enables employees to track their wages, to access advances on pay they have already earned, to create a savings plan which automatically sets aside a small amount of monthly pay, and to access financial education programmes and money management tools.
Wagestream have shown that giving employees greater choice and autonomy over their pay leads to individuals working, on average, 22% more hours per month. And they’ve shown that employees are working these additional hours in order to get an immediate return on that extra work. What’s notable from an organisational perspective is that these additional hours are often taken during the less popular shifts that have traditionally been difficult to fill.
Everyone’s a winner
As we head towards the edge of the ‘workforce cliff’, the availability of talent will become an ever-greater challenge for every organisation.
In response, every organisation will need to demonstrate that they care about their people and are embracing innovations which enhance the employment experience, clearly differentiating themselves in the marketplace.
Income streaming is a simple and effective way for employers to achieve this through ethical providers. That’s why I’m proud and excited to have recently been appointed as a Global Strategic Advisor to Wagestream.