• Raeesa Gabriels

Raising HR to a new LEVEL

Updated: Jul 29, 2020

The world and the workplace are changing rapidly. The 4th Industrial Revolution (4IR) and the outbreak of Covid-19 are radically transforming jobs, companies and industries. As the corona-virus pandemic continues to ravage the population and the economy, many employees have had to take salary cuts while some are supporting extended family members who have lost their jobs.

Sadly, even before these life-changing events, 76% of hard-working South Africans have been living paycheque to paycheque. A staggering 55% of black South Africans are broke just three days after payday. This irregular spending spree during the first week of the month is known as the "payday millionaire" effect. A survey done by investment management company Portafina found that the 30-day pay cycle is a direct cause of the “payday millionaire” effect. These “payday millionaires” tend to rush off to the shops on or soon after payday for their monthly shopping, but they end up splurging on things they don’t need and can’t afford. This splurge in the earlier part of the month exposes them to cash flow issues, which increases the likelihood of them dipping into savings or accessing expensive credit and living paycheque to paycheque.

As a result of the crippling socio-economic conditions in SA, studies suggest that several generations of families will continue to live paycheque to paycheque. When faced with financial hardships, desperate employees - especially those in the lower and mid LSM (Living Standards Measure) - are prone to turn to unscrupulous payday lenders and illegal loan sharks, often at great risk of financial ruin. Studies show that unsecured lending has quadrupled to R225 billion between 2009 and 2019.

Employees matter

As a Human Resources practitioner in your company, you can help stop the vicious cycle cash-strapped employees find themselves in while waiting for the monthly pay cycle. The monthly pay cycle may be HR's preferred method because it's cost-effective, time-saving and easiest for employers to manage, but it's bad for employee budgeting.

Employees are suffering financially while billions in earned but unpaid income are withheld from them every week. This money is stuck in the payroll system for weeks, waiting to get disbursed at the end of the 30-day pay cycle.

Meanwhile, millions of workers are juggling expenses, paying penalties such as late overdraft fees and high interest rates while waiting for payday. Employees who struggle to manage their cash flow are always financially stressed and constant stress impairs their ability to make sound decisions.

According to the DebtSafe June 2019 Financial Reality Survey, debt-related stress has severe negative effects on people's physical, emotional and mental health. Debt-related stress creates disgruntled employees whose poor performance leads to a decrease in productivity and an increase in turnover, fraud and theft.

A loss in productivity costs employers between 11 and 14% of annual payroll.

This makes it difficult for HR to achieve their mandate of a productive, healthy workforce especially in the 4IR corporate world that advocates flexible business and people-centered partnerships. In this new technologically savvy business world, agility, accountability and open-mindedness are encouraged. At the same time the well-being and growth of employees are paramount for companies to thrive.

Now, more than ever before, it's up to HR professionals to lead from the front and drive the implementation of new technologies and innovative services and products that will boost employee morale, stimulate productivity, encourage collective participation and result in staff retention in the 4IR.

All is not lost

LEVEL is a socially responsible daily money management platform that builds dignity and wealth for employees through savings, budgeting tools and giving them access to money they’ve already earned when they need it. This innovative money management solution is a beacon of hope for struggling employees and employers who care about their workers' financial well-being. Geared at disrupting the conventional 30-day pay cycle and kicking exploitative payday lenders to the curb, the platform can be implemented as a voluntary employee benefit.

Studies show that companies with employee benefit programs have more efficient and productive employees. Only employers are allowed to register their business on the platform. The service is free for employers, there's no financial risk and no disruption to cash flow.

Once an employer is registered on LEVEL, employees can track their hours worked and daily salary earned in real time. The platform empowers them to either save a portion of their earned salary or access their pay when they need it – before payday arrives. Employees pay a flat monthly fee (to keep the app operational) when they access the service.

The earned wage access platform provides HR with the perfect solution to embarrassing salary advance requests that often creates administrative headaches and causes cash flow burdens. Without a financial lifeline like LEVEL, employees often have no other option but to apply for loans from payday lenders who charge exorbitant interest rates that propel the employee further in debt. Having access to money your employees have already worked for, means they have peace of mind and can focus their attention on work. It's been proven that happy employees are more productive. Offer your employees a financial lifeline and get them to LevelUp!

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