Page 121 - Appreciating Organization's Biggest Assets

Analysis and Findings the employee the same day. It’s a
When businesses required time non-loan method for employees to
to accumulate cash, write checks, obtain unexpected cash.
and manually calculate taxes, the There are a few things to keep in
idea of a “payday” made sense. mind if your company is thinking
However, the time between paydays about implementing on-demand
has been putting unnecessary stress compensation. There are payout
on cash-strapped workers—61% restrictions, to start. Every pay
of whom can’t afford a surprise period, employees usually have
$1,000 expense—in the era of access to a maximum percentage or
direct deposit, when money can be dollar amount on demand, with the
distributed at the touch of a button. remaining funds being distributed

Workers are requesting assistance as usual on payday. Vendors also
from their bosses because the only usually charge a fee—a few dollars,
other option for emergency funds is like an ATM fee—for every
frequently predatory payday loans transaction. You’ll need to decide if
or cash advances with high interest you want to take on that additional
rates. According to 74% of the cost yourself or pass it on to your
compensation leaders we surveyed, employees. To be fair, a food service
their employees have voiced at least management company that adopted
some interest in getting paid more on-demand pay discovered that staff
frequently than what is permitted members didn’t mind paying the
by the organization’s current pay fees in exchange for greater financial
cycle. freedom.

On-demand pay is a function that In 2020, employee pay experienced
has been added by a few standalone a roller-coaster of changes due to
apps (like Instant Pay) and payroll the coronavirus pandemic. The
software programs (like Gusto) year started with a tight labor
in response to this need. Instead market and rising wages, which
of having to wait for a set payday, were abruptly followed by orders
employees can access their pay as to remain at home and significant
they make it with on-demand pay. job losses that completely changed
For instance, if a worker is paid the labor market. Companies
$150 for a job, they have the choice had to make quick adjustments.
to request that $150 through a Business leaders are currently
web browser or mobile app, and having difficulty determining pay
those funds are then distributed to levels for 2021 because it is unclear

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