Making Payroll Just in Time

Safwan Shah, Founder and CEO of PayActiv, was a recent guest on the TechnologyAdvice Expert Interview Series. The series, which is hosted by TechnologyAdvice’s Josh Bland, explores a variety of business and technology landscapes through conversations with industry leaders.

In this episode, we discuss everything from financial stress, employee wellness, real-time access to payroll, and more.

Below are Safwan’s four biggest insights from the conversation.

1. The reality of the workplace is that two out of three employee’s stress is due to financial stress.

We usually target the symptom. We never go to the root cause. If people are living an unhealthy life, is it because they choose to live a certain way or is there a stress driving them to an unhealthy life? Whether that’s obesity or something else, it turns out that financial stress is the single biggest culprit.

Here are some raw stats from industry analysts Voya Financial:

And just to bring this into perspective, the cost of replacing an individual due to turnover is $4,300 per employee. So stress is a huge problem.

2. PayActiv helps employees, living paycheck to paycheck, break free from their financial stress.

Mobile phones are in the hands of pretty much everyone, and they are usually smartphones. Given everybody has a mobile phone and they are working at a workplace, we developed an application for employees. They can log in and click “What I Can Access Today.” And that number is a percent of what an employee has already earned.

The app provides them the ability to pay any bill without any additional cost. So take for example someone who makes $100 a day or $12 an hour. They log in, they see that they have $60 that they could access, since we limit the amount. We would allow them to access that money. They simply click on it and transfer it to their checking account — assuming they have a bank account.

They can also choose to access cash from a store or pick it up from a ATM. We provide that. Instantly, they get the cash in hand. And in addition to that, they can use the application to pay their bills.

3. Making decisions is much easier when employees have all the data right in front of them.

I firmly believe that the frontier to cross is to understand what drives human productivity and human achievement in the workplace. The 70-90 million people who are working at low income levels, their issues and their challenges have to be understood very well in order to create engagement. What we are doing with real-time access to earned income with no additional debt, we’re just bringing efficiency to a dysfunctional system. That will play a big role.

4. The difference between grazing versus binging is similar to PayActiv’s model.

Obviously, grazing is better — eating 3,000 calories at 9:00 PM is just not the right thing to do. Eating small portions throughout the whole day is better.

When you are at a low income category, you’re making say $1,000 a week or $800 a week. So why do you have to wait one or two weeks for your income? It’s better that you have the $50 when you need it so you don’t end up paying $35 dollars in overdraft fees. Which will happen if you’re a penny over and a second late — the bank will charge you. All because of $1 that you didn’t have. These problems, once we take them away, will make a better workforce.

This podcast was created and published by TechnologyAdvice, an Inc. 5000 company looking to help buyers find the best HR software, payroll systems, and more. Interview conducted by Josh Bland.