At 54 McDonald’s locations in Tampa Bay, employees can get paid by the day instead of waiting up to two weeks until payday. The result: Worker morale is up and turnover is down. To find out how and why the new paid service is a success, the Orlando Sentinel editorial board reached out to Kim Scott, head of human resources for Casper Companywhich oversees the 54 locations.
Q: About 12 million American consumers take out payday loans each year, which quickly accrue interest and fees, according to research by Pew Charitable Trusts. How do your early paydays work and how do they differ from a payday loan?
A: Our goal is to provide our employees with financial flexibility, and Instant payment gives them the option of deducting 50% of their salary from the shift they worked the day before. Once registered, employees receive an Instant Visa debit card to withdraw cash from a large network of ATMs across the country, or link the card directly to a bank account. There is no charge for employees, and it is up to them to decide if they want to collect their pay before payday. If they need the money, he’s there. It’s not a loan; there are no fees; it is their money. This gives them the flexibility to pay unexpected bills and buy gas or groceries before payday without having to use an expensive option like a payday loan. If employees work six hours a day on a given day, they will have access to half of that income the next day.
If they need the money, he’s there. It’s not a loan; there are no fees; it is their money.
— Kim Scott, Human Resources Supervisor, Caspers Companyh
Q: How has this change in access to compensation changed the environment for you, the employer and your employees?
A: We have seen firsthand the significant cost of ongoing recruiting, hiring and training costs due to high employee turnover in the restaurant industry. Financial well-being and employee retention are directly linked. Employees facing financial difficulties cannot reach their full potential. Our industry has traditionally suffered from high turnover, but through this innovative new compensation option and allowing employees access to half their salary after a shift, we have seen a substantial improvement in retention of existing workers while attracting new hires. It was also a good opportunity to further position ourselves as industry leaders.
Q: What changes have you seen and how quickly have you seen them?
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A: We began a three-month pilot phase, starting with a McDonald’s with approximately 85 crew members, to introduce the new system to our locations, and we saw the impact right away. The results were so positive that before the pilot ended, we had seen enough value to grow to company scale. It is now offered as a paid option in all 54 restaurants with approximately 3,200 employees.
Q: What was the most noticeable immediate benefit you saw?
A: Running a McDonald’s franchise can present scheduling challenges, both with last-minute absences and covering those shifts. Providing employees with the ability to access a portion of their earned wages daily has not only reduced absenteeism, but managers report that it has been much easier to cover open shifts. The incentive to have daily access to their salary, free of charge, was the main reason for this. After setting up the Instant Pay Program we saw improved customer service scores and improved employee morale in our pilot stores. A benefit that helps create a happier, more engaged workforce is a win-win situation for our business. If our employees are satisfied, our customers will notice the difference.
Q: How does the use of payday apps reflect millennial influence in the workplace?
A: Instant payment perfectly matches the expectations and needs of millennials. Our goal was to be at the forefront and be a leader in employee satisfaction. Millennials live in a world where almost everything is in real time, including their spending. Offering millennials a free payment method, giving them daily access to their salary and centered on mobile applications meets this expectation. The reality is that the employees have already earned the salary, so it’s their money.
Q: What is the extent of use of the Payday app by your employees?
A: Of all our employees who have opted for Instant Financial, only about a quarter of our employees access their payroll daily. With Instant, we gave employees control over access to their payroll. We’re excited about the app and plans for more financial planning tools and features coming soon, and we believe there will be even greater adoption.