With the explosion of unique employee benefits being added to packages, it is important to reconsider some of the more traditional ones, so they do not get lost in the search for something new but not necessarily better. Many employers are cutting back on offerings to help save their bottom line, but some, like payday advances, can benefit both your company and your workers. It is important to balance the costs of these benefits with the savings you gain through employee retention, workers invested in your business and in safety, and a positive company culture.
Surveys have found that the average citizen is one emergency, of five hundred dollars or more, away from financial ruin. Struggling employees will often turn to other forms of consumer banking or financing such as predatory payday lenders, credit cards or personal loans to cover these unexpected expenses such as new tires, medical bills or student loan payments when a small payday advance from you would benefit them more. Most employers ask for little or no interest on these advances and deduct a set amount from subsequent paychecks to spread repayment out longer, making it easier for employees to get caught up. Many payday lenders, for example, will expect the full amount to be repaid with the next check instead of spreading repayment out over the next couple of months, and trap borrowers into a cycle of debt which is difficult to get out of. Lower interest and longer-term lending options are more difficult to qualify for and take longer for the approval and release of funding, making them less appealing for emergency cash.
Offering employees payday advances can provide a bonding experience because your staff will look to you first for help with problems. When your employees feel like they are supported and cared for by you, they are more invested in the success of the company and more productive on the job. Since you will be helping reduce or eliminate a source of stress, employees will be better able to focus on the job and may work harder to prove themselves worthy of the company’s trust. Employee investment often looks like seasonal contests, discounts on company products and productive annual review processes, but it can also look like tooling your benefits packages to better meet the unique needs of your workers instead of an industry standard.
Worker confidence in the success of the company is one of the major drivers of that success and the impetus behind creating a positive company culture. If employees feel like the business is struggling or uninterested in the wellbeing of workers, their investment in work will decrease, they may start looking for other jobs and the lack of confidence can transfer to customers and investors who interact with them. When you offer them the option of cash advance on their paychecks, however, it gives the impression that the company has enough success to keep going strong through hard times while showing an investment in the lives of their employees. Benefits of this type also help build confidence in the job security for workers, giving them six months to pay back the advance, for instance, shows them that layoffs are less likely to happen during that period. That confidence can be reflected in how they interact with customers, how they encourage friends and families to apply for your open positions, and even how your business is reflected in their social media habits.
The more focused your workers are on the task at hand, the more safely and effectively it can be completed. Financial struggles are one of the leading causes of stress and can cause significant mental roadblocks for focus at work. Not everyone can leave problems at the door to work or to home and this can lead to accidents due to inattention, a loss of productivity and even injuries. When your employees know that you are willing and able to help them reduce stress, it can do more than just build confidence and increase investment, it can help focus attention on work matters by lifting a weight off their shoulders. This can reduce workplace accidents, missed deadlines and work stoppages. In many cases, offering an advance to help reduce the financial struggles for employees can positively impact the bottom line by keeping the workplace safe, workers on the job and insurance costs low.
With most employers looking to reduce the amount of employee benefits offered, having a robust benefits package can help boost your recruitment and retention. Losing a valued part of benefits can often cause the most dedicated workers to seek new employment, and if your company offers that missing piece, you can bring in that talent. Payday advances are not the only benefit being reconsidered by businesses, and items such as childcare offerings, remote work options and even robust health insurance packages are being dialed back. When trying to offer the most benefits to employees for the lowest costs, your best bet is to keep them in the loop. Inform your workforce that you are evaluating the current benefits package and ask for feedback on which items are most important for each employee as well as which new ones would work better. Chances are that the option for a payday advance will rank high among your workers while some niche offerings such as pet insurance will rank much lower.
There are some potential risks to payday advances for both the company and the employee, so it is a good idea to address these before considering offering the option. Employees can take too much from future checks to pay for an immediate need and end up relying on credit cards or predatory lenders in the future, or use the option for a frivolous purchase just to need another one in an emergency before the first is paid back. Some companies have issued too many advances at once and depleted working capital or advanced funding to workers who quit before the end of the repayment period. One of the best ways to avoid these risks is to work with lawyers and financial experts to create a contract that will cover repayment if the employee quits as well as an educational package or financial counseling to keep employees from getting too far behind to catch up. You can even make sitting down with a financial advisor part of the application process to ensure that your workers know how to best use the advance to their advantage and to the health of your business.
As an employer, you are not obligated to offer your employees payday advances, but there are many benefits to doing so such as better employee retention and investment, boosting confidence in your company and recruiting talent. The best time to consider this option is before approached by an employee, however, so you can take steps to reduce your risk and the risks to employee financial health. You can work with experts to develop policies, procedures and contracts designed to better protect yourself and your workforce while helping struggling employees get back on their feet.
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