It has been more than two years since the global pandemic began, and the turnover story isn’t getting any better for employers with tipped workers. And, as every restaurant owner knows, high turnover means exponentially more work for payroll and HR teams, which impacts the bottom line.
Adapting to today’s high turnover employment cycle requires a holistic approach that aligns payout processes with the needs of today’s workers. To change the tide, many businesses are implementing new ways to pay their employees as a way to stand out in the hiring crowd.
Below we explore how Netspend’s integrated approach to payroll — including digital tipping, earned wage access and payroll cards, alongside other financial wellness tools — can streamline and minimize the pain points of high turnover, while supporting workers’ financial health.
Overcoming High Turnover: Addressing Employee Financial Wellness
Outside of hiring, turnover and absenteeism remain two of the biggest workforce management challenges businesses face. These issues have always existed, but they have been significantly amplified by the Covid-19 pandemic.
One issue impacting the hourly workforce is high levels of financial insecurity. Netspend’s research on this subject revealed a strong correlation between financial stress, and increased absenteeism and turnover.[1]
More than half (57%) of hourly workers reported feeling financially insecure[2], and this segment of the workforce is 2.2 times more likely to seek employment elsewhere, while nearly a third (31%) of the financially insecure reported they’ve quit a job due to a lack of financial wellness.[3]
On the contrary, employees that are financially stable are much more likely to remain with their current employer for the next year compared to those who are financially unstable (87% vs 58%).[4]
Retention problems are costly for any businesses. In the restaurant industry, even before the pandemic, the cost of turnover in the restaurant industry was estimated at $5,864 per employee lost.[5]
How to Retain Hourly Workers: Overcoming Financial Barriers with Digital Payments
One factor of financial stress comes down to not just how much an employee is paid, but how easy it is for them to access their accrued wages. For instance, workers being paid by cash or check, report being more likely to have their financial situation disrupt their work.[6]
Netspend Tip Solutions and Earned Wage Access solves for this problem by giving HR professionals more tools to help address hiring and retention issues. By giving employees more control of how and when they get paid, employers can gain an edge in this competitive hiring market.
Workers want to work today, because having to wait on the traditional pay cycle and methods are costly in many ways. For example, returning to work to collect wages or tips long after a shift is over, spending time and incurring the expense associated with cashing checks or waiting weeks for direct deposit to access their wages and tips can be time consuming and costly. This recurring scenario can be very inconvenient and detrimental to workers’ cash flow and financial stability. Employees are interested in early wage access, and some are even willing to switch jobs, or stay at a job, for these benefits.[7]
Businesses looking to retain their workforce must take steps to respond to workers’ needs for faster, digital access to earned wages and tips. In doing so they will enable solutions that bolster financial health, so employees have the resources and support they need to stay on the job.
Winning over workers today as businesses nationwide focus on rebuilding in a post-pandemic environment, is about enabling financial health and participation in the digital economy. Payment solutions that deliver digital wage and tip payments help businesses close the digital access gap while bringing much-needed stability to the business and its workers.
About the Author: Andrew Garner is Senior Vice President and General Manager of Business Partnerships at Netspend, and is responsible for the company’s innovative suite of payment solutions for employers including earned wage access, paycard, digital tips, disbursement and incentive product sets including all sales and business development efforts, implementation, account management, operations and strategy. Garner is a graduate of the University of Kentucky with a Bachelor of Business Administration in Finance.
[1] Netspend, “The Restaurant Recovery: Three Pandemic Trends-Turned-Opportunities,” April 2021, Page 4 https://www2.e4.netspend.com/l/533722/2021-04-09/h4ygm8
[2] Netspend, “Power of the Pivot: Embracing Three Major Pandemic-Driven Trends”, April 2021 Page 2 https://www2.e4.netspend.com/l/533722/2021-04-09/h4ygm4?li_fat_id=1aac4863-dc55-4bf9-901d-e9241510e7f8
[3] Netspend, “The Restaurant Recovery: Three Pandemic Trends-Turned-Opportunities,” April 2021, page 4 https://www2.e4.netspend.com/l/533722/2021-04-09/h4ygm8
[4] Netspend, “The Restaurant Recovery: Three Pandemic Trends-Turned-Opportunities,” April 2021, Page 4 https://www2.e4.netspend.com/l/533722/2021-04-09/h4ygm8
[5] Netspend, “The Restaurant Recovery: Three Pandemic Trends-Turned-Opportunities,” April 2021, page 5 https://www2.e4.netspend.com/l/533722/2021-04-09/h4ygm8
[6] Netspend, “The Restaurant Recovery: Three Pandemic Trends-Turned-Opportunities,” April 2021, page 3 https://www2.e4.netspend.com/l/533722/2021-04-09/h4ygm8
[7] Netspend, “The Restaurant Recovery: Three Pandemic Trends-Turned-Opportunities,” April 2021, page 4 https://www2.e4.netspend.com/l/533722/2021-04-09/h4ygm8
