In today’s job market, HR leaders are expected to cultivate a supportive workplace for employees through relevant employee benefits, flexible scheduling, etc. However, HR teams are usually strapped for both time and resources. They’re often having to balance the goals of improving the employee experience with the mandatory work for payroll, a critical yet often consuming component for organizations. But is there a better way to manage and improve the employee experience without changes to payroll?
Apps like Venmo, PayPal, and Zelle have provided consumers with greater financial optionality and now people are looking for more payroll flexibility in the workplace. Financial wellness benefits have gone from a nice-to-have to a must-have for your workforce, especially against the backdrop of inflation and economic uncertainty. The problem is most payroll companies and employers can’t adapt fast enough to meet the changing demands and needs of the market. This is largely because of the technical investment required and the lengthy onboarding process to roll out a new program to employees.
Innovative financial wellness benefits – like Earned Wage Access (EWA), student loan repayment programs, and financial education – offer the flexibility today’s workforce needs while reducing the administrative burden on HR teams. Embedding these tools into the existing HR apps employees are already using is key.
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With embedded EWA, workers have real-time access to their wages to fulfill financial needs like paying bills or buying groceries – a valuable option with 78% of Americans living paycheck to paycheck. Embedded tools help employees leverage the full power of financial wellness benefits without the complications of multiple apps. When workers can easily access these critical resources within their current HR platform, HR can deliver a meaningful solution without high implementation costs for employers.
Modernize the Payroll Experience
Most organizations have grown accustomed to using older, standalone payroll systems. For other work experiences, however, there is an app for everything, making it less than ideal when you have to navigate between them all to complete a task. More than a quarter (26%) of employees say that one of their biggest challenges is switching from app to app across multiple platforms, with half reporting they would prefer one solution that could handle all of their different tasks.
More than 6 in 10 (62%) employees are not completely confident they know about all the benefits or workplace perks offered to them. With employees focused on managing their day-to-day job responsibilities, HR must reduce digital chaos. When employees have to navigate several human capital management (HCM) platforms, they can get overwhelmed, negating HR teams’ efforts to improve employee wellbeing. By providing a one-stop shop to access all HR tools, teams reduce the need for extensive training or employee education, and they can easily gather data and receive actionable insights on how the team is leveraging resources – improving the ROI of HR initiatives.
Drive Adoption with an Embedded Finance Partner
With Gen Z overtaking baby boomers in the full-time workforce and 62% of Millennials in management roles, the workplace must accommodate the preferences of these digital-driven workers. These younger generations are accustomed to sleek, multifunctional applications in their daily lives, including for finance.
Small and medium-sized businesses (SMBs) typically do not have large HR departments like big enterprises. Instead, it can often be a single or few individuals tasked with managing a large suite of functions to support employees. Left to juggle recruitment, onboarding, internal culture, and more, HR teams do not have room on their overloaded plates to manage complex payroll models. SMB tech teams do not typically have the bandwidth to custom-build new features either.
By working with a partner to integrate into existing platforms, financial wellness benefits can be hosted with minimal effort from internal product teams. Similar to paying for your ride in a rideshare app or insurance when booking a trip, the embedded option complements the experience. These kinds of embedded partnerships also lead to the highest adoption rate due to the ease of access and trust built with the end user.
Keep an Eye on Compliance
Since financial tools face more stringent regulations than other HR benefits, compliance must be considered at the starting line to ensure the success of embedded financial solutions. Without a deep understanding of the ever-evolving regulatory landscape, changing laws could disrupt services, eroding employee trust in the platform. In the EWA industry, for example, the Consumer Finance Protection Bureau (CFPB) has proposed a rule to classify wage advances as a loan. This would mean platforms that offer EWA would have to follow the Truth in Lending Act adding months and months of additional compliance work that could leave consumers using these solutions impacted, without a clear alternative. It is complicated to build a legally compliant offering, which makes investing in an HCM platform with a strong compliance background worthwhile.
Reap Rewards Across the Business
Forward-thinking HR professionals who adopt embedded finance into their payroll solutions can minimize employee frustrations and improve the overall business. Financial wellness benefits make employees feel supported, empowered, and secure – driving job satisfaction and engagement rates. Employees who are not stressed about finances feel more energized at work (68%) and are proud to work for their company (77%). Personal financial stability contributes to the overall employee experience and organizational culture, which is a priority for 75% of Chief Human Resources Officers (CHROs) this year.
A more engaged and less stressed workforce means less costly employee turnover. By retaining experienced workers with deep institutional knowledge, organizations can remain stable and position themselves for growth.
HR plays a crucial role in shaping company culture and promoting employee well-being. By implementing innovative compensation models and embedded financial wellness benefits, HR can alleviate stress within their teams while also enhancing the employee experience for all.
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