Making Payroll More Flexible for the New Workforce

    Technology has changed a lot of things in the hospitality industry, from bookings to electronic room keys to guests paying with their phone. It’s also beginning to change how hospitality workers are paid, offering them more flexibility about when and how they collect their earnings.

    One of the most recent developments is a payroll version of the money transfer apps that are increasingly popular for sending money between individuals. Instead of having to wait for the next regular pay period, employees can opt to get some or all of their earnings sooner, sometimes within a day or two.

    - Advertisement -

    Hilton is one of the hospitality brands that has been introducing this technology to its managed properties and continues to roll it out more broadly.

    “We started looking into this a couple of years ago in response to feedback from team members who wanted to be paid more frequently than weekly or bi-weekly,” said J.D. Barnes, Vice President, Global Workforce Innovation & Optimization for Hilton. “We’re constantly looking at what we offer team members and how to make adjustments to meet their needs.”

    The request for more flexible and rapid pay often comes from the younger employees who are being recruited into an industry that’s been experiencing a labor shortage. Those employees have grown up with technology as well as the idea of things happening immediately—including things financial.

    While the company could have simply adjusted pay periods to be more frequent—albeit at a cost—that wouldn’t have addressed the other expectation of those employees for flexibility. That led Hilton to look for an outside vendor that could handle that sort
    of need.

    “What if one person wants to be paid more often and one doesn’t?,” Barnes said. “So while we knew we could do things faster, we also thought that it wasn’t something we’d do by ourselves, but rather find an expert.”

    Hilton issued an RFP and after some robust competition chose a company called DailyPay, one of the many “fintech” companies that has sprung up in the last decade. The company, which has been in business since 2015, specializes in what’s known as “on-demand pay” or “earned wage access.” Hilton liked DailyPay for a number of reasons, including “super easy, very straightforward” implementation, as well as scalability and security.

    For employees at a managed Hilton property that uses the service, they now have several options for being paid. There’s instantaneous access, where people can draw on their pay as soon as they earn it, transferring it to their bank account after paying a service fee to DailyPay, similar to how many consumer money transfer services work. If the employee waits 24 hours, they can choose to send their earnings to any account they choose without the fee. Finally, they can choose to have their pay loaded onto a debit card from DailyPay, which also carries no fee and is especially useful for those who don’t have traditional bank accounts, Barnes said.

    Offering this kind of pay flexibility can be a compelling benefit for attracting and keeping talent. In today’s tight labor market, “visibility and transparency of pay is a big motivator,” Barnes said. With DailyPay, hourly employees can use an app to see their earnings in real time—one of the most widely used features of the technology—and make choices about how to be paid.

    “Team members enrolled in DailyPay have attritted four times less than others, and in terms of job postings, we get 2.5 times more applicants to positions where DailyPay is offered,” Barnes said, although he noted it’s not possible to know if there are other factors at work as well. The technology also helps keep Hilton competitive for some positions in the midst of the gig economy, where people are accustomed to being paid right away.

    Hilton brought the technology on in phases, starting with a single-region pilot and gathering feedback before rolling out to another 50 properties, then 100 more over the course of six or seven months. Right now, DailyPay is available at all Hilton’s managed hotels in the U.S., making it an option for about 34,000 workers.

    The next step will be encouraging franchisees to look into offering the service, and then a potential global rollout, Barnes said.

    “This is the continuous innovation that we ideate on, and in the current workforce it’s all about flexibility,” he said. “We see that in other parts of the team member experience, where people value greater choice, control and autonomy.”

    - Advertisement -