We’re still only a couple of months into the new year, yet 2023 has seen a number of significant changes in the way businesses operate - especially when it comes to employee and contractor payouts. This article lists the top seven trends that we've taken note of and encourages you to watch moving forward.
COVID-19 changed the world in a lot of ways - some good, some bad.
For better or worse, the pandemic gave many businesses a chance to adapt and implement hybrid work and despite some retraction as things have reopened, it's clear that things won’t soon go back to the way things were.
Workplace standards have changed while other outside factors like The Great Resignation and an ongoing talent shortage have created a workplace renaissance and, with it, the need to revisit the way we pay our workforce.
Distributed teams have given us a wider and more far-reaching talent pool and new challenges in how to hire, manage and pay them under these new circumstances.
Gig economy is yet another emerging marketplace that caught fire in the past few years. 2023’s exponential rise in former employees striking out on their own marked a culture shift in the way workers approach their career paths.
Rather than investing long-term in a single company, people are now turning to flexible work arrangements driven by the gig economy, which offers job seekers the ability to work on their own terms and maximize their earning potential. Companies, in turn, benefit from being able to access the skills and expertise of gig workers on an as-needed basis.
But that's not to say they're ready; leveraging this value requires attention and organizational structures beyond project-based pay.
Employers will need to develop benefits structures tailored to the unique needs of gig workers, offering more flexible pay structures and benefits to attract and retain talent.
This is a great opportunity for businesses to benefit from skilled and experienced workers on a short-term basis, while simultaneously exploring different methods of compensation and work/life balance that can enhance other areas of their organization.
Organizational payout processes are quickly evolving in the changing world of work. Technology is changing, and as it continues to do so, companies are afforded more ways to design, deploy and manage their systems.
For example, the introduction of Artificial Intelligence (AI) allows companies to automate their payout processes, reducing human labor and time needed.
Software tools can handle everything from payroll administration, taxes and compliance to vendor and contractor payouts which is helping companies reduce costs and maximize revenue.
The market has seen the emergence of “Paytech” technology, which is defined as the software and infrastructure needed to power financial transactions.
This technology provides companies with the necessary tools to securely and accurately manage their payments, allowing them to stay competitive in the digital landscape.
As other factors like remote work and AI develop, we can expect to see more innovative payout solutions that make payments easy and secure. Just like how things have grown so rapidly over the past 20 years, the next 20 could have infinite possibilities.
We’ve seen the rapid rise in digital payments and wallets like Apple Pay and Venmo in the past couple of years. This shift has been driven by consumer demand for more convenience and control over their money.
Digital payment technology is designed to provide users with a faster, safer and more reliable way to pay others. While it was once limited to industry pioneers and early adopters, this technology is now being used by businesses of all sizes to pay their employees and contractors.
The advantages are clear - digital wallets can be used for quick payments, making it easier to pay remote or hybrid workers in different countries and currencies.
They also provide businesses with greater control over their funds, with features like tracking payments, setting spending limits and additional layers of security.
For employees, digital wallets are a convenient way to receive their pay, no matter where they’re based.
This is especially important for remote and gig economy workers in emerging markets, who have different payout needs and restrictions than North American workers do. Currencies can be converted in real time, and fees are often much lower than those charged by traditional banks.
Decentralized Finance (DeFi) leveraging blockchain transacting is making big waves around the globe.
While the technology was once more of a novelty than anything else, ongoing developments are making it a tangible payment option that is capable of quickly, sometimes instantly moving digital currency from wallet to wallet, anywhere in the world, with negligible fees.
On top of that, recent turbulence in the global economy has seen many people turn to blockchain technology as a more stable way to conduct payments. Crypto is largely seen as a hedge against inflation and market fluctuations, not to mention much more transparent than conventional ways of moving money.
The transparency and security of blockchain payments make them a natural fit for employee and contractor scenarios. Decentralized finance offers streamlined payment options that guarantee both the sender and receiver get what they agreed on without having to worry about third-party interference.
This can be incredibly helpful for businesses working with remote teams or ad-hoc contractors who need to be paid quickly and securely.
Going forward, expect to see an increased focus on blockchain-based payments for both employees and contractors. As the technology matures, more people are likely to take advantage of it in their day-to-day lives and further its integration into the mainstream.
Blockchain finance's recent growth is a sign of increasing demand for more transparency in today's workplace - especially when it comes to pay. Even before it became law in certain states, businesses were already taking steps to disclose their payout processes, procedures and structures.
Sharing information about how decisions are made creates trust between employers and employees, as well as a perception of fairness. It can be done in a number of different ways, from an open discussion around salaries to a more technical approach with data-driven reports.
This type of disclosure also helps increase the accuracy of payroll, minimize the risk of manipulation and ensure that employees understand their total compensation. In a hybrid or remote setting, it can be especially important for employers to be transparent about their policies and expectations.
Ultimately, the success of pay transparency depends on system support. Businesses need to invest in technology that can help them keep track of employee information, such as hours worked, bonuses and taxes, as well as how they operate and what types of structures they follow.
If the systems in place can't handle this new reality, they'll quickly be replaced.
An increased emphasis on flexible compensation has created a need for more agile and adaptive payment solutions. Self-service portals provide the perfect answer to these new challenges. Employees and contractors are able to take control of their own information and payment preferences, choosing the timeframes that best suit them.
These portals increase process efficiency, reducing errors and minimizing unnecessary manual labor. Automated tools such as pre-filled expense forms, cross-border payment support and localized tax calculation make it easier for businesses to stay on top of their payrolls, while greater data visibility makes it easier to spot errors or inefficiencies.
Self-service portals also offer a boost to worker experience, as employees no longer need to wait for their payroll tasks to be handled or have them lost in an overburdened queue.
They can take care of these tasks themselves, reducing their stress and making them feel more in control of their own finances. In an increasingly remote setting, this autonomy can be a powerful source of convenience and satisfaction.
We continue to see an increased demand for streamlined payroll solutions as businesses seek to remain competitive with their offerings. Top talent will expect to be rewarded with the highest standards of service and fairness, so companies must ensure they can provide the best solutions possible. Self-service portals are and will be a key part of this equation in the coming years.
Are there more key trends taking place around employee payouts than are on this list? Absolutely. This list provides insights into a moment in time, the beginning of 2023, and what we’re seeing radically reshape the landscape.
Continue to check in as we stay on top of ongoing changes and report what we feel you need to know to stay agile with employees, partners and payees alike.