Self-pay. Forward-thinking or flawed?

Date: 25 Sep 2019

Author: Chris Radley

If you’ve been reading my recent blogs, it will be no surprise to you that when we designed Jemini’s payroll engine, we focused on the business thinking behind it. As you will have gathered, we’re not big fans of just rejigging traditional processes and making them look pretty.

We took a modern approach and built a live payroll engine, which means our technology works very differently. With the live engine, there’s a systems calculator that works every minute of the day. So instead of processing pay in batches the old way, you can just finalise payrolls for groups of people. And why not? Everything is in real time, and everyone’s pay is up to the minute.

And of course, we’ve made sure it’s compliant with best-practice business processes as well as ensuring the system keeps the tax man happy. Just in case you were worried.

Best of all, it allows the future-thinking employer to think very differently about how people are paid. And this brings us on to the exciting stuff.


Why would you consider self-pay?

A live payroll engine opens up a whole new world of self-pay possibilities for businesses and employees.

What if we could allow people to choose when they are paid to suit their bill cycles, so they can control their budgets and avoid credit card or short-term loan debt? Or to enable on-demand part- or advance-draw-downs to cope with unexpected bills or travel? Even to select how often, or how much of their pay they want to draw down?

And if you could do all this, why as a business, would you even consider it?



In my opinion, self-pay is a win-win situation.

Your people win. All of a sudden they can manage their own money, as they earn it. Like the grownups they (generally) are.

And you win. In a time where the competition to attract great people to the business is a very real problem and expense, you’ll be able to differentiate your business in the marketplace. You’ll be the place where people want to work.


Self-pay in action

As a simple example, let’s start with something most of us have — a mortgage. It’s usually due on the same calendar day of the month (e.g. the 1st). But your employee is paid on a fortnightly cycle which sometimes falls before, and other times after, mortgage day. If they’re living payday to payday, that can make things tricky.

What if they could reschedule their payday either permanently, or as required? So they get paid the exact amount they’re due (or even more if they have accrued holiday or long service pay up their sleeve) the day before the mortgage is due.

I call this a win-win-win scenario.

The employee wins. Not unexpectedly, the bank wins. And as an employer, you win too. You’ve amassed some serious kudos for your flexibility and upped the stakes in providing a desirable workplace.

The only problem? Being able to schedule a payday will have a negative impact on some businesses. Especially the 1000% interest per annum payday lenders.


Financial flexibility

If you’re thinking that self-pay is just about helping Joe Average get by, think again.  

Having the flexibility to self-pay is not position and salary dependent. It directly relates to where someone is in their life. While someone may have a great job, and salary to match, at age 40, divorce or death can have a major and unexpected financial impact. They may face having to sell up and start again, find a better-paying position, or mortgage their soul to the bank. But if you truly value this employee, your workplace might help them out of a financial hole that could otherwise swallow up their career.

And when you start doing that, word gets around. Your company becomes THE place to work.


The biggest challenge

In my blog ‘Why Jemini isn’t for everyone’, I discussed the difference between companies who pay lip service to the concept of “our people are our most important asset” and those who live it. Self-pay will be another defining moment.

Frankly, it’s not going to be for everyone. While you might genuinely embrace the HR principles of modern-day engagement and empowerment, the major payroll roadblock for some will be cashflow.

However, you can temper this with selective access and rules. For example, limiting the number of times the advance pay function can be used? Or only offer self-pay to long-tenure or senior high-value employees, or as a recruitment tool? Or at a more altruistic level, only provide it to the most financially vulnerable employees?

Self-pay is a strategic commercial decision, not just a financial one.


It’s a biggie

Self-pay is probably one of the most significant fundamental changes in the world of payroll. Ever.

Our expectations of the people that work for us has changed, and vice versa. We need to think about how we can retain people and build a better connection with them. And it’s a time to remember that it’s not just all about us. Your goals as a business owner/shareholder are not necessarily the same as your employees. A lot of people just want a good job, with flexibility.

Every industry is going to have its own considerations when it comes to self-pay. Financial. Emotional. Cultural. It’s not a concept that will be embraced by everyone, but once you begin to think about it, it does start to stick. And it has across-the-board appeal – from CEO to forklift driver.


The wow factor

So far, everyone who’s seen Jemini’s self-pay capabilities has been wowed. I’m not saying that they’re ready to adopt self-pay – and it’s certainly not a pre-requisite of using Jemini - but they recognise the incredible value it can add to a business or organisation that does put people first in real life, not just on paper.

Self-pay engenders employee loyalty. And at a time where research says that the biggest issue facing companies in a competitive space is attracting and retaining talent, that’s got to count for a lot.

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