New report reveals 'underutilised' benefit that can retain employees without raising wages
Pay flexibility is emerging as a new "retention lever" that's sitting right under employers' noses, according to a new report, which found that organisations are behind in modernising their payroll systems.
Findings from Rain's latest survey revealed that 56.6% of employees consider faster access to earned wages as a benefit that would make them stay longer with an employer.
Employers agree at least in principle, with 71.6% of them believing pay flexibility could reduce turnover.
The problem, however, is urgency.
"Employees describe a behaviour change (staying longer) that results from pay flexibility, while employers frame pay flexibility as a future lever rather than a present one," the report read.
In fact, the report found that just 56.4% of employers say leadership views pay flexibility as a strategic priority.
"Pay flexibility is a retention level that doesn't require raising wages - yet it remains underutilised because employers don't see the urgency," the report read.
Modernising payroll systems
The urgency problem when it comes to payroll is highlighted by the low share of employers planning to modernise their systems.
Just 52.7% of employers said they plan to modernise payroll in 2026, according to the report.
This is despite 92.2% of employers agreeing that faster pay improves employee engagement, and 89.5% of employers agreeing that financial stress negatively impacts employees' productivity.
"Organisations overwhelmingly understand and agree on the conceptual case for pay flexibility, they just don't see it as a need right now," the report read.
Financial challenges for employees
This lack of urgency in modernising payroll systems is leaving employees in more difficult positions, according to the findings.
More than a third of employees (39.2%) reported paying overdraft, payday loan, or late fees, while another 29.3% said they spend $50 or more per month just to bridge payroll gaps.
These financial challenges are hurting the organisation in the long run, with nearly a quarter of employees (23.3%) saying financial stress has caused them to miss work or arrive late.
Another 37.3% of employees also said they have taken a second job simply to access pay faster.
Catching up on pay flexibility demand
Alex Bradford, co-founder and CEO of Rain, said their findings indicate that pay timing is no longer a benefits discussions, but a workforce infrastructure issue.
"When employees take second jobs or miss shifts just to manage cash flow, that's not a personal finance problem. It's a systems problem," Bradford said.
"The companies that make improvements to their pay processes now won't just offer faster access to pay, they'll close the gap between what leaders believe and what their payroll systems can actually deliver."
Employers that will modernise their pay systems will also win more employees over, according to the report.
Around two in three employees (66.2%) said pay flexibility influences their job choice, with nearly half also saying they will judge employers based on how modern their pay systems are.
In fact, 51.6% of employees agreed that on-demand pay will be expected by 2026.
"Payroll is a key component of the future of work," Bradford said.
"The organisations that modernise pay timing and give employees real-time access to their earned wages will be the ones employees choose to stay with instead of moving to a company with these benefits."
