Until recently, companies viewed their compensation and rewards strategies as fairly static, in need of occasional modifications. Today, employers must think beyond offering traditional benefits and think outside the box in order to attract and retain employees. To meet the needs of the workers, businesses are re-evaluating their benefits offering.
They are shifting away from being organization-centric and becoming more people-centric. Gone are the days when workers were easily swayed by attractive pay packages. Now, they’re looking for opportunities where employers actively invest in their professional development and help them pursue physical, mental, and financial well-being.
As a result, more leaders are thinking differently about their benefits program to make way for a more nimble, real-time approach to compensation and rewards. In fact, 90% of companies have considered flexible compensation programs to build and maintain an agile workforce.
In this blog, we’ll consider some aspects of the changing face of payroll.
Modern workers demand more transparency around pay—how their pay is determined, how their contributions are rewarded, how their job impacts the company’s success, and how their skills and experience are valued.
In addition, workers expect companies to simplify their pay structures, increase visibility into the compensation and benefits function, and make their pay stub easier to understand.
Companies that are transparent about compensation will build trust, enhance their reputation, and reap the benefits of a more engaged and dedicated team.
Performance-based pay is a form of employee compensation that gives monetary rewards to workers who perform exceptionally well and go the extra mile. Performance-based pay rewards are granted over and above employees’ baseline salary.
This compensation structure is designed so that workers who contribute more to the organization are paid more, encouraging greater productivity. And because it sets clear expectations, it puts compensation largely within employees’ control and gives them an opportunity to increase their own pay.However, the trade-off is that employees are more likely to overwork themselves and suffer from burnout. A study of this compensation model published in IZA World of Labor cautioned that “the adverse effects on work intensification and employees’ physical strain and psychological stress should not be overlooked”.
Allowing employees to access pay as it’s earned, a concept known as earned wage access (EWA), offers employers a pathway to meet the critical needs of their workers, especially those who struggle to make ends meet between paychecks. Research by Payactiv underscores the extent to which EWA provides a financial lifeline, helping workers cover basic living expenses: Food (71%), transportation (64%), and utilities (58%) are the most common expenses respondents use their EWA funds on. In fact, 2 in 5 employees turn to EWA four or more times a month to cover these necessities.
The importance of bolstering employees’ financial wellness and preparing them for the unexpected shouldn’t be underestimated. Employers need to be part of the solution and help their employees build their financial literacy, manage debt, and better prepare for emergencies.
Comprehensive financial wellness solutions that integrate with HR platforms make it easy for companies to augment their employee benefits with money management tools.
Users can set aside a percentage of their regular paychecks into an emergency or savings account. The best providers also include free access to financial counselors and budget management assistance, which can help workers build financial resilience and accelerate their journey to financial wellness.
What people need and want from their employers is changing. Now is the time for organizations to reimagine compensation and benefits, and redefine their role in empowering greater financial resilience among their workers.
Help your employees fully engage in work and life with Payactiv’s holistic financial wellness solution which provides EWA and a suite of complementary financial wellness resources. Learn more about our services.
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