Evolution of Pay: Remember Pay Cheques?
The process of paying employees has changed a lot in recent years. We sat down with Don Weinstein, ADP’s corporate vice president of Global Product and Technology, to discuss the state of pay and how technology and people’s attitudes around being paid are changing.
Q: Why is the way we pay people changing and why does it matter?
Pay is something that is near and dear to everyone’s heart, and it’s undergoing fundamental changes. Since we’ve been digitizing pay and going to online pay statements and direct deposit, the act of paying people has moved into the background where we don’t see it anymore. I think we’ve sort of forgotten the tangible, visceral elements of pay, and the opportunity to connect with employees on payday. I remember at my very first job, there was a lady who pushed around the cart every Friday with a lot of white envelopes. She would go from desk to desk and hand each person their envelope. That was my favourite part of the week, getting that tangible reward and feeling like my work mattered to the company.
As we have moved into this digital era of pay, we have lost some of that personal connection.
The other thing that’s happening is that technology has changed our expectations about how things work. We can, pay bills and transfer money instantaneously from our phones now. When we are no longer locked into a specific pay cycle, it becomes possible to pay people at any time. Right now, we are focused on making pay both more convenient with technology but also making pay more personal to meet employees’ different needs.
Q: What are some of the significant developments that have changed how we get paid?
One of the biggest developments in paying employees was direct deposit, which came from changes to both banking laws and tech that allowed money transfers directly from one financial institution to another. Before that, all transfers went by cheque through a central clearing house and it usually took a couple days. Direct deposit allowed employers to deposit employee pay directly into employee bank accounts within minutes and saved the expense of printing, signing and delivering cheques.
In the late 1990s, new internet services and gift cards made it possible for anyone to transfer money to anybody else without writing a cheque or wiring funds through a bank.
Each of these changes to how we handle money also opened up new possibilities for how organizations pay their employees faster and more conveniently for everyone.
Q: Besides technological advances, how have people’s attitudes toward getting paid changed?
ADP Research Institute® (ADPRI) surveyed both employers and employees globally in 2018 about their changing attitudes toward pay. As we dug into the research, what we found is that people’s financial needs don’t always match how they get paid. And it makes sense. In most organizations today, we’ve got a very fixed pay schedule, where everybody in the company is paid at the exact the same time, regardless of the personal circumstances, regardless of their needs, regardless of their role. As we see the balance of power shifting a little bit right now, more towards employee customization and personalization, the ability to offer a worker a more personalized pay schedule is something that’s valuable.
There are a lot of people who don’t have significant savings, and who have challenges meeting short-term unexpected financial needs. We also found that employees care most about their money being secure and having access to their pay quickly. People also want to be able to see the details and easily access information about their pay.
Most employees are open to non-traditional payment methods. About half said they would consider using a pay method that bypassed a traditional bank account. There was also a significant interest in having access to earned pay any time instead of just payday – half of Australian employees would pay a small fee at least once per year for early access to earned money, especially if an unexpected expense arose such as a needed car or house repair. But at least for now, direct deposit is still the preferred method of paying employees for both employers and employees.
So we are seeing both employers and employees looking at payroll and money management in new and interesting ways and also being open to new ideas and tools that could make pay both more efficient and more personal to meet individual needs.
To learn more about people and pay, download the ADPRI report: The Future of Pay
Original post by ADP Spark.