For all the human and business impacts caused by the global coronavirus pandemic, the crisis has also been instructive, particularly in illustrating the shortcomings in systems that worked just fine — until they didn’t.
The massive and simultaneous global shift to digital has put a spotlight on traditional supply chains, antiquated paper-based processes and an aging payments infrastructure. It’s also given innovators a renewed impetus to improve them.
On that list of well understood shortcomings is employee payroll, Ceridian Chairman and CEO David Ossip told Karen Webster in a recent conversation, and the speed and accuracy at which the money people earn is made available for them to spend.
“What the health crisis has really shown us is that within the broader workforce, regardless of whether people are salaried or hourly, the majority don't have enough savings in the bank to last them for a week or two-week period,” Ossip said.
For Ossip, this is more than an opportunity to innovate; it is a call to action to rethink how to get money quickly into the hands of workers to meet their personal financial requirements.
A long-established global leader in human capital management (HCM), Ceridian launched its latest payroll innovation, Dayforce Wallet, this week. Dayforce Wallet leverages the Dayforce platform’s continuous calculation capabilities to deliver an accurate, on-demand payment, instead of an approximation of earnings. Individuals can then use those funds as they wish — to pay bills and deal with unexpected expenses, withdraw their earned wages through a network of ATM partners, or make purchases either in store or online. There are no direct fees to employees or employers.
The value for the workforce is compelling and clear — but so too is the value to the employer who makes it available, Ossip said. Innovating the payroll process for their workforce doesn’t require any change in how they process payroll. In fact, he said, it can actually save them money.
Your money, on demand. With #DayforceWallet, you can control your cash flow to fit your life and your needs with easy access to your money. Learn more: https://t.co/sHH9XYVoPQ pic.twitter.com/qqYJnbXqR1
— Ceridian (@Ceridian) May 11, 2020
Breaking Out Of Payroll’s Past
The payroll status quo has always been paying workers in arrears — often, two weeks after the employee has earned it. The reason is more technical than anything else. Paying a worker relies on data captured in a time and attendance system — one that is totally separate from that which processes the data and then pays the worker.
The two-week cycle, Ossip said, is a remnant of an era when that was roughly how much time it took to true up those two systems or get all the necessary managerial approvals to send the files to be paid, and then transmit the funds — either via check or ACH-based direct deposit — to consumer bank accounts.
Those technological limits may no longer exist, yet the two-week process remains. Perhaps the two-week cycle persists due to force of habit, or perhaps it’s the need to design a payroll system that keeps track of workers’ hours in real time while also calculating necessary adjustments for taxes, Social Security, benefits, etc.
Industry observers are quick to note: Disrupt or be disrupted. By leveraging the Dayforce platform’s continuous calculation capabilities, the Dayforce Wallet takes payroll to the next level by giving workers the chance to be paid on demand as wages are earned. The funds are then deposited in real time into the Dayforce Wallet app, allowing individuals to access their funds without waiting for bi-weekly payout.
The unfortunate reality for many Americans is that payday loans and high-interest credit cards are last-ditch solutions that lead to a spiral of increasing debt. Ceridian’s new solution is one step forward to easing an employee’s financial burden, an alternative to borrowing from lenders with high-interest rates.
The Dayforce Wallet “gives the employee access to wages that belong to them,” Ossip explained, adding that it’s no different procedurally and technically than doing an off-cycle payroll.
Building The Bigger Services Portfolio
One criticism of payroll options that provide on-demand/same-day pay for workers is the perceived risk that these options overspend or lose track of their ongoing financial obligations, given the ease with which wages can be tapped. Dayforce allows employers to put controls into place on how much or how often workers can request their earned wages in the form of caps or daily limits.
What consumers like, and what Ceridian is working to add, are tools that are flexible and customizable to their needs, for example, bill pay capabilities.
Webster asked Ossip if this was a toe in the water to developing a more extensive worker-centric financial services ecosystem. After all, she said, the battle for the consumer often revolves around the battle to bank their paycheck. Ossip didn’t rule out the possibility, but it’s very early days.
More importantly, he said, the solution is meant to give workers the option to be paid on the basis of their needs and not that of their employers’ payroll process.
That’s a commitment, he said, that the global pandemic has accelerated remarkably for all workers — not just hourly and part-time workers. As it pertains to Dayforce Wallet, Ossip noted that the largest user demographic is among full-time salaried workers.
Ultimately, Ossip said, the existing pay ecosystem is not working for employees anywhere at any level — yet, there is technology to fix it for the entire workforce ecosystem. He said it won’t be long before workers not only want it but demand it.
“It’s very hard to argue that people should be paid in arrears,” he said. “If you move to effectively same-day pay or continuous pay, it is the right thing to do by your employees. And once employees have seen that this is an option, it’s going to be a big part of where they choose to work.”