Unlocking the Power of Flexible Pay: A Comprehensive Guide

Understanding the Concept of Flexible Pay 

Firstly, it’s helpful to figure out a working definition of flexible pay. In short, flexible pay breaks away from the traditional pay cycle, allowing employees to access their earned wages at a time that suits them, occasionally for a small processing fee. 

There’s been something of a historical evolution of flexible pay in the workplace. Previously, you might have heard terms like ‘wage advances’ or ‘early pay’ but these terms don’t really cover the scope of modern flexible pay. They’re more focused on emergency situations, and typically leads to people feeling less in control over their finances in the long term. 

Flexible pay is one part of a broad financial toolkit, which is designed with sustainable financial wellbeing in mind. It gives employees the flexibility to choose when they get paid, in a manner that suits their unique circumstances. 

Technology has a huge part to play in the accessibility of flexible pay. Real-time technology makes it a lot easier to offer this service to employees without adding more work to your payroll team, for example. 
 

The Impact of Flexible Pay on Employee Satisfaction and Retention 

Different people have different needs for their finances, and so flexible pay is vital to add an extra layer.

Financial wellbeing is closely tied to general wellbeing, with over with over 54% of the UK saying they felt more stress when the cost of living went up. If you offer additional tools to support employees, and show them how you’re willing to support them, you’ll see huge boosts to your productivity.  

The most obvious usage of flexible pay is in crisis situations, where a sudden unexpected bill hits hard. For example, having to pay to fix a car you need to get into work can be something many people’s budgets can’t account for. Flexible pay has had employees reporting they’re 73% less likely to use payday loans, and 72% less likely to use credit cards. 

However, flexible pay shouldn’t be seen as solely for emergency situations. For example, an employee might have many expected, fixed costs spread throughout the month, so getting their wage a bit early can help them reliably cover these costs. 

Making Flexible Pay Work for Your Business 

There are loads of benefits of implementing flexible pay for employers. With less financial stress, employees feel more positively about your organisation, and less likely to look for a new role. Employers who offer flexible pay report a 16% lower churn rate, and fill positions 27% faster than employers without this benefit. 

There are some challenges to implementing flexible pay, most of which are based around infrastructure requirements. Without real-time data and an investment in improved cybersecurity, you’ll struggle to make it stick. 

Luckily, there are solutions in place to make the whole process as simple as possible. Financial Wellbeing from MHR is powered by Wagestream, and seamlessly integrates into our HR, payroll and finance platforms. That makes it easy for your employees to access flexible pay (in addition to a range of other services), without overburdening your pay team with more admin. 

To learn more about how we can support your organisation in implementing this game changing tool, download our complete guide below.