On-demand Pay – A Well-beloved Perk For Employee, Yet Challenging For Businesses
On-demand pay is seen as a new benefit for employees' financial wellness. But how do businesses apply this new strategy, and further implement other “on-demand” benefits?
On-demand pay is more attractive than extra days off
After the pandemic, the priorities of employees have changed as the common compensation package is no longer attractive. For that reason, besides new regulations regarding pay rises and extra days of annual leave, many businesses are offering on-demand pay – a popular and highly regarded solution by workers and businesses.
Mr. Jack Nguyễn, Deputy CEO of Talentnet shared: “On-demand pay program is the inevitable trend for businesses when employees are showing more interest in their financial wellness. Only those businesses that are agile and thoughtful enough to implement this model will be rewarded to attract and retain talents. However, on-demand pay will generate tremendous stress on businesses given that businesses are not provided with enough preparation.”
Applicable for large businesses but a great challenge for SMEs
According to Mr. Jack: “Paying on demand will put a heavy burden on the cash flow of SMEs since salary is a key component of business finance. To apply this new model, leaders need to carefully prepare and set up a slowly but surely process."
According to Mr. Jack’s sharing, businesses can refer to these 3 steps as follows to implement this new model:
Step 1: Identify your needs
It is necessary to determine the financial status of businesses to decide to apply the on-demand pay model. In some cases, employees and businesses can negotiate for a subsidy or full pay. However, for SMEs who couldn’t adopt this model, you can offer employees payment as advances provided for reasonable purposes.
Step 2: Apply technology
The constantly updated salary and compensation according to employee demands might burden the HR department. To make the on-demand pay model to be widely applied, businesses can consider applying technology and building a quick and transparent payroll system.
Currently, many payroll service providers are ready for on-demand pay from businesses with accurate algorithms as a way to lessen the workload for the internal HR and Financial departments.
Step 3: Seeking personnel from payroll outsourcing services
The HR department has to deal with a lot of pressure while changing the existing complicated payroll process of the businesses. Therefore, seeking personnel from payroll outsourcing services can relieve internal HR from administrative work and errors in the payroll system as well as save time and resources.
The payroll outsourcing team will systematize the employee's salary advance or the used money, etc. so that HR can easily extract data. In addition, while systematizing the system, the payroll outsourcing team can also advise businesses on how to apply and manage the cash flow appropriately. The HR department can focus on strategic work to ensure employee benefits when the workload is reduced. Furthermore, the experienced consulting team can quickly update new regulations and advise businesses on the implementation of the new payroll processes.
“The core value of the on-demand pay model is to maintain employee’s financial wellness. Facing the prolonged employee shortage, SMEs need to proactively develop innovative, flexible, and sustainable strategies to meet employee demands, and increase cohesion to attract and retain talents.” – Mr. Jack Nguyễn concluded.
Source: Báo Đầu Tư