Paycards Versus Paychecks

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There’s been a lot of controversy lately over the use of payroll cards instead of paychecks for delivering employee compensation. The practice of using paycards was implemented by employers as a convenient way to pay employees who don’t maintain a traditional bank account. With many employers now processing payroll by direct deposit via electronic funds transfer (EFT), paycards offer a convenient alternative for paying employees who can’t receive their pay via EFT.

More recently, some organizations have expanded their use of payroll cards. For example, MacDonald's has allowed individual franchise owners to decide how to pay employees. This has resulted in a much wider use of payroll cards in some areas, sometimes without even offering the option of a printed paycheck. Paycards are increasing in popularity for reasons other than the absence of traditional bank accounts. They allow an employer to use a single method of payment for everyone, simplifying payroll administration. The fees and overhead costs associated with paycards are generally lower than the cost of processing printed checks, so paycards may also reduce payroll costs for the employer. No doubt, one reason payroll cards are less costly to employers is that most card issuers also charge fees at the other end. And there’s the rub. According to Ben Jackson of Mercator Advisory Group (as cited by Forbes),

“The payroll laws vary from state to state, but the underlying principle of the laws boils down to this: Employers cannot compel workers to take their pay in a way that costs them money.”

Although fees vary from issuer to issuer, they range from $1.75 for an ATM withdrawal to a $7 fee when a card is declared inactive. In other words, with paycards employees may even face “non-user” fees. These fees have caused some employees to rebel against paycards when no other payment option was offered. The debate over payroll cards will likely persist as their use expands to a projected $62.6 billion dollars in face value by 2016[1]. Both employers and card providers will have to navigate a complex legislative environment in the face of their growing popularity.

Whether or not paycards survive as a preferred method of payment, employers will continue to look for ways to streamline payroll processes and reduce administrative costs and the payments industry will continue to offer creative solutions. Perhaps the paycheque of the future will be a direct deposit into a virtual account or mobile wallet that gives employees fee-free access to funds through smartphones, debit cards and point of sale terminals. Of course, then we'll have to ask "What happens to the employee with limited internet access, or no smart phone?"

Or maybe the solution for payroll in a non-traditional world will be something completely different. Taking a new spin on an old approach, perhaps companies will set up payroll trust accounts and issue every worker a debit card (or subcutaneous ID chip!) that provides fee-free access to their balance. With the protection of labor legislation and appropriate regulatory oversight, the shortcomings of the historical “company store” could be avoided. Such a system might offer a cost effective alternative to businesses and provide equal access to all employees. And, if this hypothetical payroll trust was fully integrated with a company’s business information systems, it might even allow employees direct access to accrued vacation pay or provide limited overdraft protection via payroll advance.

Who knows what may emerge as payroll becomes more global and more complex. What we do know is this: the payments industry will continue to evolve and big business will continue to look for ways to reduce payroll overhead. Inevitably, where these two trends intersect, innovation and experimentation will continue to happen. Interesting times indeed!

 

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Who Wants to Be a Leader?

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Who wants to be a leader? Apparently, not as many of your employees as you might think. CareerBuilder just released a survey of 3,625 American workers’ leadership ambitions and only 34% of respondents expressed interest in achieving a leadership or management position. When asked whether they aspire to C-level management, that number fell to 7%.  The most frequently cited reasons for lack of interest in leadership or management roles included: I am content with the role I have (52%) (This is interesting given recent research that found fewer than half of US employees are satisfied with their jobs!) I would have to …

Workplace Diversity: Resource Roundup

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Workplace diversity and gender balance have been so much on our minds these past few months that we’ve been up to our eyeballs in fascinating facts and resources. As I archived a bunch of them recently, it occurred to me to put together a quick Workplace Diversity Resource Roundup before filing them away. So here you go, some of our favorite resources on workplace diversity and gender balance: Workplace Diversity> Diversity in the Workplace: Take One. This one minute video by ACTRA succinctly captures the idea of looking at the workplace through a diversity lens. The Business …

7 Tips for Hiring Top Design Talent

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This posted orginally appeared on the LightCMS blog on Wed, September 10, 2014 Hiring is possibly the biggest growth opportunity for any web design company. The smaller the firm, the more each new person can contribute in terms of skill, contacts, professional image and team motivation. Of course, hiring a new person represents both potential income, possible risk and certain cost. If you want to make more money, you need to have more manpower to handle a greater amount of work. The catch, of course, is that hiring people also takes extra time, so small, busy firms tend to put …

The New Recruiter

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In our efforts to continually improve our hiring processes, we’re envisioning a new kind of recruiter: the Recruiting Marketer (RM). This isn't  someone who recruits marketers or markets to recruiters, but rather a person who recruits new talent using the tools and strategies typically considered the stuff of marketers. Recruiting, Wikimedia Commons Creating an Employer Brand As one of the earliest advocates of Social HR, we’ve always seen recruiting as marketing and recognized social networks as powerful recruiting tools. Employer branding has also been integral to our recruiting activities and success. As we move …

Did That Job Posting Say Salesman?

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We’ve recently shared a number of articles on achieving workplace diversity, our efforts to improve gender balance and some thoughts on pay equity, regardless of gender. The other day I came across a job posting that clearly demonstrates just how far short of ideal the current environment is. Here is a screen shot of the job posting in question. I’m ashamed to say that the company who posted it is in our own backyard. Right there, in the first paragraph, two sentences hit me in the face: “Have you never met a better salesman than …

How to Prepare for One-on-One Meetings with Your Manager

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One of the most commonly cited reasons for staying with (or leaving!) an organization is the relationship employees have with manager or direct supervisors. If you’re fortunate enough to work with a company that mandates or encourages regular one-on-one meetings between employees and their managers, make sure you become an active participant in those meetings. Photo by malouette,Flickr If the company is doing it right, you’ll be given time in each meeting to talk about what’s on your mind. Take some time to prepare for these meetings. Share your ideas, aspirations and concerns …

Twenty-one Questions for Great One-on-One Meetings.

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If you believe, as we do, that one-on-one meetings are still the best way to build strong working relationships with everyone on your team, you’ll want to make them a priority. Of course, when you’re distracted or struggling to shift focus from other responsibilities, it can be a challenge to get the conversation started. Photo by Sonny Abesamis, Flickr Socates said "“My way toward the truth is to ask the right questions.” Confuscious clearly believed in the power of good questions too, having written: “The man who asks a question is a fool …

One-on-Ones: Making them Work

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We’re a technology company. We create software. And the heart of our software is people: the people who develop it, sell it, support it and use it. Our objective is not to replace people with technology or to build technology barriers between people—the opposite in fact. Our goal is to enhance workplace relationships by making work easier, more connected and more enjoyable for everyone. Developing and maintaining those workplace relationships is one of our top priorities. Photo by ashraful kadir, To make sure it happens, we’ve developed the following best practices for one-on-one meetings. …

Bridging the Gap between HR and Finance

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PayStream Advisors has just released a report called “Driving Critical HR Business Processes: A CFO’s Guide to Human Resource Management Solutions.”[1] Wait a second, does that say CFO? Photo by Alan Cleaver, Flikr The report starts with the following statement: “For some time now, PayStream Advisors has witnessed the growing trend towards increasing the CFO’s role as it relates to human resource management (HRM) and payroll. Human resources (HR) plays a critical role in organizational growth, performance, and profitability, and CFOs are becoming advocates for making HR a field driven as much by …

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The Latest from Workplace Tribes
Paycards Versus Paychecks September 29, 2014
Who Wants to Be a Leader? September 26, 2014
Workplace Diversity: Resource Roundup September 24, 2014
7 Tips for Hiring Top Design Talent September 22, 2014
The New Recruiter September 19, 2014
 
Did That Job Posting Say Salesman? September 17, 2014
How to Prepare for One-on-One Meetings with Your Manager September 15, 2014
Twenty-one Questions for Great One-on-One Meetings. September 12, 2014
One-on-Ones: Making them Work September 10, 2014
Bridging the Gap between HR and Finance September 08, 2014