Time to Rethink Your Pay Strategy? Here Are 3 Aspects to Consider
Digital and mobile technology is changing every aspect of our daily lives, including the way how we pay for things. In Asia Pacific where smartphone penetration is high, the trend of going cashless is even more prominent. According to Venture Insights, nearly one third use smartphones at least once a week to pay for a product or service in Australia.
Despite the fact that we have more payment options as consumers now, the way how we get paid as employees has mostly remained the same.
A recent study on the Future of Pay by the ADP® Research Institute (ADPRI) highlights a number of changes expected in how payments will be conducted within the next 10 years, and companies can leverage this new wave of payment options to deliver better employee experiences.
Modernize your payment methods
Direct deposit still dominates the pay methods used by employers and employees in Asia Pacific and globally according to the ADPRI study, but nearly all employees have expectations that changes in pay are on the way. More than 50% of APAC employees already prefer non-traditional methods (such as paycards, mobile and digital payments, and cryptocurrency) over direct deposit.
Demographic and generational trends could be a key driver of the change. Millennials, who grow up in the digital age and are accustomed to the immediacy technology provides, will make up 75% of the global workforce by 2025. Parts of the Asia Pacific region will be focal points for this change, as the average age of the population in markets like Philippines and India is just above 30 years old.
Also with the rising of the gig economy and an increase in unconventional employment arrangements, which further drives the desire for more flexible payment options, it is a good time now to rethink your pay strategy if you want to attract and retain those workers.
Offer off-cycle pay options
Pay frequency is another important aspect to consider. Nine out of ten Asia Pacific workers say they would pay for early access to earned money at least once per year, and over half would do so at least once per month, mostly for emergencies and unexpected expenses. Millennials are even more likely to pay for early access than their older counterparts.
Just as employers’ payment methods lag behind consumer technology, so do pay cycles. Most of Australian employees are paid biweekly, and in other countries across Asia Pacific, monthly pay is common. Offering off-cycle pay options to your contingent workers and full time employees with emergency needs can be as attractive as other popular perks such as telecommuting.
Introduce financial wellness programs
If the future of pay is focused on speed and flexibility, there’s one additional dimension to be explored that is less obvious, but potentially far more impactful.
Recent trends such as rising cost of healthcare, housing and education, along with income stagnation are increasing workers’ financial stress, which could have a direct impact on organizations in terms of productivity and engagement.
The good news is that employers are well positioned to offer support in this area as employees make many of their most important financial decisions while at work. Nearly 80% of APAC employees say they want to work for an employer who cares about their financial wellness and 62% are comfortable to share their personal information with employers to receive financial wellness recommendations.
Introducing budgeting and money-tracking tools to help your employees better manage and spend their pay could be an interesting first step to consider in this aspect.
The world of work is changing. For employers seeking to embrace change and elevate their workforce, considering how employees are paid is just as important a consideration as how much they’re paid.
Want to learn more about future of pay and how you can leverage it for your own pay design? Join us in a webinar on July 18th when we have our special guest from ADPRI to walk your through the key findings of the study and answer your questions. Register here to book your seat.