In This Post
- 1. How bad is turnover in industries based around hourly workers, and what is the impact on finances and operations?
- 2. What is On-Demand Pay?
- 3. How does On-Demand Pay boost retention and help attract new talent?
- 4. How does On-Demand Pay access improve operational performance?
- 5. How does Fuego integrate with HotSchedules and a company’s payroll?
A recent Gallup poll found only 22 percent of employees feel engaged in their work, a concerning sign especially within the hospitality and service industries already experiencing high turnover rates. Businesses looking to reverse this trend can offer employees valuable benefits aimed at filling open positions and incentivizing longevity.
One of these options, On-Demand Pay, allows employees early access to their earned wages, resulting in greater financial flexibility. We talked with Piers Lambert, Fourth’s Workforce Management expert, about the business impact of this benefit.
- How bad is turnover in industries based around hourly workers, and what is the impact on finances and operations?
Annual turnover across the hospitality sector came in at 86% in 2021, the highest across all industries. For retail, it was a noteworthy, 65%. To put both into context, turnover rates averaged 47% for the year across all U.S. industries.
Employee turnover at any level results in lost productivity and increased rehiring costs, including the hours operators must dedicate to candidate interviews and onboarding. These costs average 33% of a worker’s annual wages.
On the operations side, having too few employees cuts into available throughput (68% of restaurants had to reduce hours of operation due to employee shortages), and more responsibilities get piled onto those who remain. This increases burnout, further exacerbating turnover.
- What is On-Demand Pay?
On-Demand Pay is a growing trend in the hospitality industry that is quickly becoming a key differentiator among employers as they try to attract and retain staff.
Fuego is Fourth’s an On-Demand Pay app tailored to hospitality and service workers, granting early access to the money they’ve already earned. Fuego comes at no cost to the employer and is easy to integrate using the existing HotSchedules setup.
Employees can receive earned wages before payday, avoiding predatory practices common among payday loans. Drawn wages are simply deducted from the employee’s net pay, same as any other benefit.
Fuego funds the early wage access draws, and the employer reimburses Fuego as part of payroll processing. The employer does not have to fund these.
- How does On-Demand Pay boost retention and help attract new talent?
On-Demand Pay is a great way for businesses to attract and retain talent, reduce turnover and lower absenteeism. With more than 3 in 5 workers concerned about getting into or out of a debt cycle, early access to wages helps combat financial stress levels and makes for happier employees. Research shows that 79% of employees would switch to another employer that offers On-Demand Pay access.
Fuego clients are experiencing 30-70% employee adoption of On-Demand Pay due to the seamless integration within HotSchedules.
- How does On-Demand Pay access improve operational performance?
Here are a few key operational benefits:
- Better guest experiences, as employees carry less outside stress into the workplace and there are more employees to split responsibilities
- Improved cash flows, as employees can access tips with Fuego along with their earned wages before payday. Operators don’t need cash on-hand for tip payouts.
- Incentivized shift pick-ups, as employees are motivated to pick up shifts and maximize earnings potential with scheduling and On-Demand Pay all in one place.
- How does Fuego integrate with HotSchedules and a company’s payroll?
Only Fuego seamlessly integrates with HotSchedules to provide employees a view of their schedule, open shifts, earnings potential, and access to earned wages on their timeline.
Since Fuego is fully integrated with HotSchedules, it can be turned on with no additional technical lift, and a couple of hours of your payroll team’s time.
- Fuego is flexible in that it interacts with your payroll system the way your team prefers.
- Earned wage draws get deducted from the employee’s net pay just like any other paid benefit, post-tax calculations.
- Fuego provides draw deduction amounts per a business’s payday schedule.
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