In almost every walk of life, people are accessing more services on-demand every day, whether it’s shopping for goods, dealing with public services, or managing their bank accounts. Increasingly, this level of instant access is becoming a basic expectation, and employee payroll is no exception to this: employees want unencumbered access to their earnings, without the constraint of bi-weekly or monthly payroll cycles.
Earned Wage Access (EWA) is the means of delivering that flexibility, allowing employees to use a web-based solution or mobile app to view and withdraw accrued wages, whenever they want and without the need to deal with a payroll team. At a time when (according to Everest Group research) as many as three-quarters of the global workforce is considering changing their job, the flexibility EWA provides can be a vital employee benefit to boost satisfaction, retention, and attraction.
To underline the importance of EWA, Everest Group’s recently-released Global Earned Wage Access report examines it in detail. The report explores the key factors driving EWA, how it can be beneficial, and the most important things to bear in mind when implementing an EWA solution. In this blog, we’ll summarize the most important findings from Everest Group’s report.
The factors driving EWA solutions
While EWA’s growth mirrors the increased flexibility of services in modern life, there are many reasons why it has gained such momentum in recent years:
- A shifting workforce: as millennials and Generation Z increasingly become the majority of the workforce, their demands for more flexibility, security and purpose in their work will only become louder
- Modern pay experiences: connected to the previous point, younger employees are digital natives and expect digitally-driven experiences that are paperless, fast and that deliver instant results
- New ways of working: hybrid working and the gig economy have increased the diversity within workforce models, meaning new ways of running payroll are required that easily cater for different types of employment
- The need for financial agility: employees who are living from paycheck to paycheck need the flexibility of EWA to deal with unexpected expenses (e.g. car repairs) without getting into debt and dealing with unnecessary financial stress
- A demand for fairness: employees increasingly feel that they deserve instant access to the wages that they’ve earned through on-demand pay, rather than having to wait through a payroll cycle. EWA enables this without compromising on payroll accuracy and efficiency
The significance and benefits of a global EWA program
With the right EWA deployment in place, the benefits for employers and employees alike are many.
Employers can use EWA as a promotional tool that aids talent retention and attraction, through the creation of consistent employee payroll experiences across all departments and countries. This can deliver real benefits to employees for relatively little cost. From a process point of view, EWA improves the accuracy of time and attendance records as employees have to fill in timesheets, also making off-cycle payments quicker and easier to execute.
There’s also the ability to integrate with current payroll, time and attendance software, and use global-level analytics to explore withdrawal patterns by geographical and departmental demographics. Both of these possibilities aid better payroll decision-making by management.
Employees, meanwhile, can improve their productivity and reduce stress levels by no longer having to ‘wait’ for payday or find money for unexpected bills. This can help them reduce their debt burden by no longer needing to rely on loans or credit cards in times of financial difficulty. Additionally, EWA opens up opportunities to boost employees’ financial education and literacy, through coaching and learning programs.
Key considerations for rolling out an EWA program
There are many different EWA solutions in the marketplace; which one is best suited to a particular organization depends on its specific needs, and how well a solution can deal with those needs. Core product capabilities that should be considered in the evaluation process include:
- Geographical coverage (especially for international organizations)
- Payment speed
- Types of payment, as some EWA vendors only allow payments through affiliated wallets and cards
- Funding models, including the working capital of the EWA provider
Best practice for a best-in-class EWA implementation
As this blog demonstrates, the rewards on offer for getting an EWA implementation right are substantial, but this equally means that there can be real disadvantages to getting it wrong. All good rollouts will incorporate these four components:
- A methodical approach: an EWA solution should be available to every employee within an organisation; a good vendor should be able to advise on the most practical order for implementation
- Technology integration: information should be able to flow easily between an EWA solution, and related payroll/time and attendance solutions, in both directions
- Good change management: organizations should consider how to make employees aware of the existence and benefits of the EWA solution in order to maximize adoption rates
- Data security: detailed checks that the EWA vendor chosen can demonstrate that all necessary security, privacy and compliance arrangements are in place
It’s clear that there is much to consider when exploring the possibilities of EWA, but that it can also be extremely beneficial to do so. Dive into all of the findings from this blog in more detail by reading the full Everest Group report, then find out how CloudPay’s global EWA solution can help you make the most of the opportunity that EWA represents.