Rewatch our CIPHR Connect partner Hastee Pay on CIPHR’s stand at the CIPD HR Software Show (filmed on 13 June 2018)
Discover why paying your employees immediately, rather than waiting for pay day, can boost workers’ financial wellbeing, increase productivity, improve employee engagement and help improve staff retention rates.
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Yes, yeah, a couple. Okay, great. So there’s gonna be some stuff that you already know, there’s gonna be some stuff that hopefully is very new. We’ve got lots of information, we’ve commissioned our own studies, and we really are here trying to revolutionize the way people are paid. I’m gonna spend a little bit of time now, over the course of this presentation, to explore how we can cultivate a happy, healthy, financially well and productive workforce, utilizing financial well-being.
Now, it’s important to challenge those outdated principles that no longer fit modern society. Consumer needs and demands have changed. So has the way that we actually consume and satisfy those demands. Disruption is obviously a key topic. You’ll hear that word a lot at the moment. Everything is disruptive, some more disruptive than others.
But there are some very, very exciting companies around the world at the moment that are causing huge disruption to traditional conventions and industries. They’re changing the way that we do things forever. You know, Uber, PayPal, Amazon, Air B&B. Who waits for a cab in the rain on the side of the road anymore? No one. You don’t wanna input your credit card details every single time you make an online transaction, stay in a budget hotel that’s got terrible reviews, or, you know, even go to the shops, when you can buy pretty much everything and receive next-day delivery. These disruptive organisations have seen and recognised the challenges and changes to those consumer behaviors, and actually, in many cases, are actually creating those needs and those changes themselves. And they’re using technology to fulfill those changes, and give those consumers a fantastic user experience, customer experience, and I think, why we’re here today, and where part of our mission is, is actually, it’s not just consumers that are experiencing those changing behaviors and those changing needs and desires and wants. Actually, it’s in the workplace, too, and we’re gonna see a great deal of change in the workplace over the years to come, and that’s something we’re very much excited to be a part of.
Today’s, and indeed, tomorrow’s workforce. Millenials currently make up 35% of the UK workforce. By 2020, Generation Z are anticipated to make up another 24%, so combined, that’s 2/3 of the workforce. This is a pool of talent that has unique challenges, and is experiencing a different way of consuming, of living, and demands on their life. It’s a studious generation. Okay, I’m gonna ask for a show of hands again, here.
By 2020, there is an estimation of what the student debt in the UK is likely to be. A show of hands, who thinks it’s under £50 billion? A show of hands, who thinks that it’s under £100,000? Okay. Well, it’s actually going to be 100…sorry, £160 billion pounds by 2020. We’ve already reached over £100 billion of student debt in the UK economy. Now, 83% of these graduates will never pay it off in the three years post-graduation. A quarter still live at home. The housing market, they’ve been totally priced out of. Fourteen million of them will never own their own homes. They’re experiencing higher costs of living while lower real wages. They’re gonna retire later and work longer than their parents did, and they’re coming to a realisation that they’re the first generation that are gonna be less well-off, they’re gonna be poorer than their parents. Interestingly enough, this isn’t…the UK’s badly affected on the global stage, too. UK millennials are the second-worst hit financially out of any of the developed world.
On top of this, they are the FOMO generation, fear of missing out. Millenials consume experiences rather than goods, and experiences do not wait for payday. They live their lives on social media, to a large extent, and they’re striving to keep up with one another, always heightening their expectations of themselves and of each other to try and be pursuing the most exciting and fulfilling lives. This fuels consumerism, as they need to buy and engage in those experiences. They are waiting for that perfect filtered Instagram image to post around and show off to their friends. Additionally, 95% of millennials admit to impulse spending. That’s partly related to exactly these factors we’ve mentioned, of the type of things that they’re consuming. Nearly one in five are actually having impulse spending every single day, and as a result, they’re becoming really increasingly reliant on the range of finance options, and accumulating debt at an unprecedented rate. Our own research has shown that 28% of the working population feel they budget and live within their means, and it’s actually a smaller percentage of that within the millennials. And in today’s on-demand world, everything is becoming instant. So why do we still have to wait until payday to receive the money we have already earned?
Interestingly enough, it’s actually not just the millennial generation that’s being affected. It happens in works across all of the generations, a broad range of generations are relying an increasing amount on borrowed funds. This is a big problem. Thirty-five percent of the working population feel in control, leaving 65% who do not feel in control with their own finances. Some 78% of workers use some form of credit on a monthly basis to get between paydays. Twenty-seven percent of the workforce are actually requesting pay advances from their staff. I don’t know if any of you guys work in…would be exposed to that, and are getting those requests, but I know from my previous work that that is painful, and administering manual pay advances is a very difficult, painful, painstaking administrative burden.
And it’s probably no surprise that Londoners, and those aged between 25 and 44, have the highest tendency to use finance. What is surprising, that it’s the highest-paid workers in senior positions are not only those that are most likely to use a range of finance options such as credit cards, etc., but actually are the most likely to habit ask for an advance, and be most comfortable asking for an advance. This actually leaves the lower-paid earners, who potentially need it more, with a fewer range of financial options available to them, be that with many turning to family and friends, or worse still, the predatory lenders.
Three million people are currently using high-cost credit in the UK, and 19 million people are going in and out of overdraft on a regular basis. Another question. Okay, what do people think that UK banks made in one year from unauthorised overdraft fees? Okay, more or less than one billion pounds? More? Yeah. UK banks, out of just unapproved overdrafts, made £1.2 billion. In the US, the figure is even greater. They made $35 billion in 2015 from overdraft fees. This is crippling the generation that are using them, and they’ve found that overdrafts can often be seven times more expensive than a payday lender, and we all know how much we hate the payday lenders.
And where does this really impact? Seventy-five percent of the UK workforce has admitted that financial stress has affected their mental health. Why does this matter to employers? Well, with spending becoming ever easier, with cards, with Apple Pay, with subscriptions, with everything there on-demand, instant almost gratification and consumption, pay is not keeping up with that. They’re increasingly reliant on debt and finance, and it’s impacting the workforce. Financial stress creates poor performance, creates absenteeism, and ultimately negatively impacts organisations’ bottom line. It hits their profits. Seventy percent of people admit to spending time thinking about and managing their finances at work. Financial stress is the single biggest contributor to poor mental health. According to the NHS, poor mental health has been cited as the single largest reason for absenteeism, taking time off work, and it’s costing the UK nearly £11 billion in sickness absence, and a further £21 billion of lost productivity every single year. Ironically, meanwhile, NHS workers, along with those the NOD and Amazon workers, are the highest users of payday loans in pretty much every study, paying percentage, paying A.P.R. of over 1300% on these facilities.
Employers must build an understanding of the challenges their workers are facing now, and are gonna continue to face and be compounded in the future. They can use this if they’re going to combat absenteeism and poor performance, to ultimately drive productivity and profit. The level of support being offered is not enough. The Thompson Employee Benefits Report recently revealed the majority of employers offer no financial support to their workforce at all. So it’s time to game-change everything, in my opinion. We’ve mentioned the way the Ubers, the Amazons, the Air B&Bs; of this world have used technology to disrupt traditional economies and improve the experience of consumers around the globe. Pay is ripe for disruption. It’s time to change the way we pay our workforces. It’s something we can do aligned with a financial well-being strategy that I’m sure we are all aware is becoming increasingly important in the environment we live in, and especially for organisations that are gonna compete in this war of talent.
The implementation of carefully formatted well-being strategies grew by 20% last year. We see this growth gonna be continuing and accelerating. So, if you aren’t doing it, your competitors are, and you’re gonna start losing staff to them. Flexible payment is an attractive option that drives a meaningful benefit to workers and is easy and inexpensive to operate. And remember, it’s not just the lower-paid workers, but this is something that we’re seeing across the board, that this is a product and a service that people value. Forty-five percent of workers would be more likely to stay with an employer that offers flexible pay, rather than a defined, fixed payday. Our research shows that 88% of workers take frequency into consideration when applying for a job, with 26% of those actually is a serious consideration. So why not turn this into a positive, and use financial well-being, and access to financial freedom, access to their pay instantly, as a tool to attract, retain, and engage the best talent out there? Ultimately, that makes them more productive, and by default, makes companies more productive and more profitable. I founded Hastee Pay to disrupt the way people are paid, to have a big social impact on the global economy, and to drive productivity within individuals, and in turn drive productivity within organisations, and in turn drive productivity across the wider market. In the UK, we suffer from poor productivity versus our neighbors in the developed world. We need to change that, and this is a method by which we can do it. Financial freedom will make a big difference.
Workers should have the opportunity to avoid debt, and easy, risk-free access to the money they have already earned, and businesses have the responsibility to help, and as I mentioned, can profit from that. This has proven very successful for our clients so far. We are still in soft-launch mode. We’re about to grow much more rapidly. One of our competitors is stood behind you, over there, but yeah, we’ve got a lot going on, we’ve got a lot of excitement being driven, and we’re getting hugely positive feedback from our clients. We’re seeing the fact that they are getting much better engagement and retention of their workers. Customer satisfaction is going through the roof. They’re finding recruitment times are reduced, and they are finding the fact that the administrative burden of advancing pay is massively reduced as well. We’re seeing a 42% registration rate within the workforces. We’re seeing over 80% regular users, people that are using this multiple times each month to smooth their income. It’s not just about one large cash-out, it’s actually, “I’ve worked a shift, I’ve worked a day, I’m gonna turn my monthly pay into weekly pay, etc., etc., etc. We are seeing average cash-outs of around £50, but regular, as I mentioned. We’re enabling staff to receive their pay as they earn it, which is a huge motivating factor, particularly within sort of the more manual, shift-based economy.
How easy is it to implement? I can imagine people are thinking here, particularly working with large organisations, I don’t know how many are large organisations, or how many small organisations. Particularly within large organisations, people always expect this to be A, hard, and B, expensive. What is the impact on company payroll? What is the repercussions on company cash flow? Well, I can put your minds at rest here. It is easy. We have built this to be globally scaleable. We sit alongside, and we integrate seamlessly with your existing payroll processes. Workers access their pay via a smartphone app, which means that they can cash out on-demand, whenever they wish. They can only ever cash out for work that they have completed. We’re not advancing money that’s not yet earned. Halfway through the month, they only have access to that half-month’s pay. At the end of a shift, they only have access to that shift’s pay, etc., etc., etc. It is perfect income smoothing. And we also limit that, as well, to a maximum of 50% of their gross earnings that they have earned. This means that there is no situation around them being…having taken more then they’re going to get around taxes…it encourages discipline around budgeting, and again, it’s income smoothing. Additionally, should companies wish to do that, they are able to reduce that amount further.
So one of the case studies that you have on your chair, if you haven’t, please grab one off one of the guys. There’s one here with a company called garner glass [SP] They have reduced it to 25%, because they want to only give lower access to it. We’ve got a…nurseries, for example, a chain of nurseries where they have a number of apprentices. They’ve got a different percentage for the full-time senior staff than they do with apprentices, just so that they can get people to learn how to use it. As with anything, there’s a big education piece to do with this, both with organisations, as well as the workers, and it’s a nice easy way in to feed that, get the feedback, get the usage, make sure people are comfortable with it, and enhance that, and we can always grow that over time.
Additionally, I mentioned the workers are cashing out. They have no impact on company cash flow, because we fund the advances. You, as an employer, pay us back for the funds that we have already given to your staff, at the point that you’ll be paying them their workforce anyway. They get the balance of their payment, we get the amount we have already given them. This give employers a free-to-offer benefit that makes a big difference to enhance their financial well-being by helping them avoid bad credit and spiraling debt. Whether it’s to pay for unexpected bills, whether it’s to help avoid going in and out of their overdraft and paying £X a day going in and out of it. Whether it’s just they find budgeting less stressful, receiving their pay on a weekly or even daily basis. This product is safe and secure, and brings piece of mind and productivity gains for both the worker and the employer. It really is faster, smarter, and ethical.
And as with any disruptive technology, it needs to integrate smoothly, and be enormously scalable. Hastee Pay is no exception. We have a suite of APIs, it really is built in the brand new tech, and all the IT professionals amongst you or that you speak to can relax that it is a simple, seamless integration setup process. I founded Hastee Pay with a vision of bringing real social change on a global scale. To do that, it needs to work for every single business, be it large, be it small, and we have enabled that to happen. It’s free for employers to offer, however, should you wish to be a gate employer, you can pay for it on behalf of your staff. It’s cash flow-neutral, as we’ve mentioned. It’s fully insured and safeguarded. We have, to the best of our knowledge, the world’s first and only credit insurance policy of its type. This means that, once your staff are on it, should something happen to a large…as we are seeing some huge, high profile, you know, bankruptcies these days, you know? If you are exposed to that, could it have an impact on the momentum and the ability of your, the consistency of your staff to use it? No, because we have the world’s first and only insurance policy that protects us against such losses.
It’s rapid to set up, through integrations, and through the technology. It really is best-in-class, bank-grade, military grade security. It’s universally available. I think this is one of the most important things, because for many workforces, they struggle to offer financial benefits to those part time, contingent, lower-paid workforces. It might be easier to give benefits to the higher-paid executives, but very often you can’t do it. Or people that are on probations, people that are not able to…this is available to everyone, because it’s based purely on the work they have already completed, and it is socially responsible. You can use this to help make a very positive change to your workforce and their organisation.
Hastee Pay provides financial freedom to an increasingly demanding financial environment. Employers profit from engagement, from attraction, from recruitment and retention, ultimately driving productivity and profit in your business. As employers, it is our responsibility to change these outdated processes, and give our workforces financial freedom. Disruption’s the name of the game, and how you get paid, and pay your staff, is about to change forever. Thank you.