Mention the ‘‘income streaming’ revolution to financial directors and there’s a good chance they won’t know what you’re talking about.
But what they will undoubtedly be aware of is the proportion of their own staff struggling with debt every month. An astounding seven in ten of the UK’s working population are ‘chronically broke’, according to think tank, the RSA (Royal Society for the Encouragement of Arts, Manufactures and Commerce).
And with the CIPD (Chartered Institute of Personnel and Development) reporting that money worries are the biggest source of stress to UK employees, and that their financial woes have doubled in the last decade, it’s no surprise more and more of them are reaching for a credit card or payday loan just to see them through the month. In-work poverty among staff is a growing reality for companies of every size.
Worryingly, consumer borrowing has started to rise again over the past two years with over 5.4 million payday loans taken in the year to June 2018, according to the Financial Conduct Authority (FCA). Wonga may have bitten the dust, but the payday loans industry, make no mistake, is alive and kicking.
A recent survey for The Times newspaper by YouGov even found that one in three middle-class adults — those classified as ABC1 workers — said they would need to borrow money to pay a surprise £500 bill. For manual (C2DE) workers), the number rises to almost half (46%). It’s both a shocking, and sobering, statistic.
Employers part of the solution
The age old adage of prevention is better than cure holds well with consumer debt and a growing number of UK companies, large and small, have started to rethink the way they structure pay in order to support their staff — and not just for the corporate social responsibility benefits.
Now the thought of switching to an income streaming pay system for dozens, hundreds or even thousands of workers at your company will seem like a logistical nightmare but it really can make a massive difference to employee well-being and satisfaction, which in turn equals greater productivity and staff loyalty. The introduction of Wagestream will not have any impact on existing systems or processes, including payroll.
In our experience, income streaming — enabling your employees to access their earned pay in real time — has immediate and tangible commercial benefits. Across the companies we are working with, which employ well over 120,000 staff, it has already boosted retention rates by 10%, productivity by 20% and job applications by 100%.
Some of our clients from both the private and public sectors, including Rentokil Initial, Hackney Council and Roadchef, have identified a number of tangible CSR and HR advantages to the service. For example, staff have greater financial security, which breeds loyalty, and employers trying to fill overtime shifts, particularly during unsociable hours, have noticed it becomes easier to do this.
This is because employers can elect to give workers access to that pay as soon as their shift is over — thereby re-establishing the link between work and reward. Reflecting this, additional research we’ve carried out shows that shift workers choose to work 22% more hours on average once enrolled in an income streaming service.
Wellbeing strategies no longer optional
Having an eye on the financial wellbeing of your staff makes good business sense and more and more skilled employees are demanding better accountability and conditions from companies. Reflecting this, a recent survey by Deloitte found that millennials see ‘improving society’ as a far more important business purpose than ‘generating profit’ – 63% more in fact.
And yet nearly half of UK businesses do not have a financial wellbeing strategy for their staff and, more worryingly still do not seem to understand the impact of having one, according to recent research by Close Brothers.
Jackie Noakes, the Chair of the recent Financial Wellbeing in the Workplace report, a collaboration between the Financial Conduct Authority and the Financial Advice Working Group for HM Treasury, is adamant that UK businesses need to support financial wellbeing: In her report she stated: “As Managing Director of a UK business myself, I am very aware that supporting the financial wellbeing of my colleagues is good for them, good for society, but also good for my business”.
Back in the days of yore, this was a no brainer to industrial pioneers like George Cadbury and William Lever. They realised that social responsibility made good business sense. They may have been driven by Christian ideals which led to them revolutionising work and conditions and introducing philanthropic social responsibility programmes but they soon realised that productivity rapidly improved along with employees’ conditions: a win-win situation.
We’ve moved on from the days of Cadbury and Lever, but the feedback we are getting from private companies and public sector customers alike is that staff are happier, more productive and have greater financial security once they start using an income streaming service. Best of all, for FDs, the benefits on their company’s bottom line can be significant and immediate.
Social responsibility comes full circle
Wagestream came about because we passionately believe that companies need to rethink their duty to their employees and see staff financial health as integral to their wellbeing, happiness and productivity at work. Nowhere can this be done more easily than putting someone in charge of their manner and mode of pay.
The companies we are working with not only say that income streaming is popular and improves staff morale but also that it has improved employee productivity, assists with talent acquisition and helps to fulfil strategic business objectives.
Changing the method of pay is certainly a culture change but it is one in keeping with our times when work should not just be about profit but also about social responsibility.
I like to believe the likes of Messrs Cadbury, Lever and Rowntree would be proud of our income streaming revolution. Social responsibility has come full circle for a new generation.