Case study: How the Financial Benefit of Earned Wage Access from DailyPay Helps Hilton Support Its Award-Winning Employee Experience

Transcription:

Moderator (00:07):

Hi everybody. We welcome to the stage David Schwarz, Head of Corporate communications at Daily Pay and JD Barnes who is VP of Global Workforce Innovation and Optimization at Hilton to discuss their case study on financial benefits of earned wage access. Thank you.

David Schwarz (00:25):

Alright, Thank you very much. So today we're going to examine the financial wellness benefit of earned wage access and the positive impact it could have on employees and employers. And so to set the stage, we're going to take a look at the need for earn wage access and the challenges that the American worker is facing right now. As you see here, the American worker is really still feeling the effects of high inflation. More and more employees are living paycheck to paycheck as we know, and fewer and fewer really have any meaningful savings. So it's really certainly a wake up call for all of us. On top of that, so many are resorting to financially crippling options such as payday loans to make ends meet. So we did some research with Harris Poll and learned that the current economic climate is having a disproportionately worse impact for Gen Z workers and similar demographics. They can't pay bills on time, they're stressed and it's affecting their health. And so that's where we come in at earn wage access. We did some forward thinking companies, partners that we have such as Hilton have taken notice and they're prioritizing the impactful financial benefits that EWA can have. And so we're seeing that the companies really prioritize now they're taking notice that they really have to step up for their employees and I know that certainly at Hilton, that's been one of the priorities that you guys have initiated.

JD Barnes (01:58):

Yeah, I appreciate it David, and a pleasure to be here and thanks again for the invitation. I think our journey around exploring earn wage access was about two and a half years ago and we all know sort of the dilemmas that we were facing coming out of the pandemic and certainly from a hospitality perspective, probably harder hit than a lot of other organizations in terms of the labor decisions that we had to make and bringing people back in. And so excited to share a little bit more about our journey there and some of the learnings that we had throughout the process of bringing it to life at Hilton.

David Schwarz (02:33):

Yeah, if we take a look at the next slide, it's really about those ever-changing expectations. We talk about pay flexibility, it speaks to need for these impactful benefits that can really make a difference in an employee's life because really at the end of the day, your bills simply cannot wait and it comes down to something very simple and that's timing. Timing of scheduling your pay and timing of those bills that can't wait. And so we're seeing more and more employees really needing earned wage access because it's become more of a nice, it went from a nice benefit to have to an essential one and it's right up there with health benefits and 401 k and you could speak to how important it's for your employees.

JD Barnes (03:19):

Yeah, kind of going back to the journey, I think many of you in the room are probably evaluating a slew of different benefits and listening to your team members or employees to understand how best you can serve their purposes. Our sort of response and initial investigation into the concept really came from team members that were asking for us to change our pay cycles. So across our hotels in the US we have a combination of biweekly pay cycles, we have weekly pay cycles. And listening to our team members, there were groups that said, Hey, instead of biweekly, can we go weekly? So any of you that have been involved in the payroll process, we'll know the complications of that small little change can take months if not years. And so as we were going down that path, at the back of our mind we were really evaluating saying, okay, we can move to weekly pay.

(04:04)

We can put every hotel and property on the same cycle. And then the conversation came with the speed of everything being on demand. If you think about when you order a package on Amazon and it shows up at your door the next day, why should pay look any different? And so we will go down this path of moving to a weekly pay cycle and then all of a sudden people would say, well what about I want to get paid today? And so that's sort of how we came upon the concept of earned wage access and we began with a few pilots across a number of our hotels and it really took off and back to sort of that initial point really on the embedded flexibility. I think that that's core to every benefit that we offer at Hilton really is knowing that the needs of team members are different and the flexibility that we provide to opt-in to health insurance to opt into, I was hearing a little earlier pet insurance and a slew of other different benefits. Why should pay not be any different? Let's give our team members the flexibility necessary to determine where and how they choose to get paid.

David Schwarz (05:03):

Absolutely. We love that. Just to note about how daily pay works, how earn wage access works, there's some misconceptions that it's going to be very disruptive on your payroll system. So just sort of address some of those. We integrate into employer's timekeeping and payroll system, really literally every payroll system you can imagine and it's a seamless integration happens rather quickly and there's no extra work. That's the key. There's really no extra work on the employee side to the existing payroll process. So again, it's one of the big questions that we have. I know it was a question that certainly a lot of companies are faced with when they're deciding on whether or not to implement wage access. And so sort of a leaving those fears that that's how seamless it integrates into anyone's payroll system.

JD Barnes (05:52):

Yeah, I mean we certainly did our due diligence at the beginning portion of this. I think nobody within the organization felt that, I'll say candidly what you were sharing and the ease of this was actually how it was going to be applied. But when we undertook it, I can't say anything more positive than the fact that I think we had this up and running within six weeks and a minimal lift from our internal payrolls and technology teams. I think the integration is very, very smooth. I think the mechanisms within it, it's hard to believe any process like this that integrates and has an impact on upwards of 37,000 team members for us could be done in six weeks. But I think it's a huge call out on our part about the ease of it and the minimal amount of lift that's done on our internal systems with daily pay support on all the respective integrations that were done.

David Schwarz (06:43):

Once it's implemented, and here's the best part about it, and the part that really is very meaningful for us at daily Pay is the impact that it has on people. And we hear it every day. They're no longer needing to resort to payday loans, they're no longer paying overdraft fees. They're being able to pay their bills on time and we see what they're using the money for. They're using the money to pay bills, groceries, transportation for food, again, essential needs again to make their lives just a little bit easier. It's very rewarding for us when we see the positive impact that it has on employees.

JD Barnes (07:16):

I mean the number of stories that I get from team members that are so appreciative of the benefit and it skews across the spectrum. We had a team member that basically had shared that by able to, there was an unexpected need for him to get medication for his wife and he was able to advance and access some of his wages in order to pay for that medication. We've had team members that have shared that they got in a car accident and needed to pay for a tow truck and all of these sort of unaccounted for expenses that many of us have experienced in our time and being able to use this as a resource to assist in that. We're also seeing team members across our hotels use it for other purposes that we didn't even anticipate. I think a great example there is in applying for mortgage and improving their credit score by paying off their bills a little bit faster and things like that.

(08:07)

So the net benefit, I think a lot of the discussion has always been about what due diligence do we as an enterprise or as a benefits provider need to do in terms of financial wellness and educating our worker populations around how to save, how to budget, how to finance. And so I think when we launched Daily Pay, a big focus was in ensuring that we provided the framework and education around all of that. But it really kind of boiled down to ensuring that we allowed our team members the flexibility for them to make the decisions around what the payroll cycle would best be for them. And we're seeing sort of utilization across the spectrum. We've got team members that are accessing, I think on average your team members are accessing I think seven to 10 times a month. So if you think about that, that may be twice a week. I think my mind initially went through are we be having people drawing down their wages every single day. That isn't the case. And the average amount that folks are drawing down is between a hundred and $130. So roughly about 10% of their net pay, which I think is a good indication of just the behaviors and what the folks as you were alluding to earlier on, are looking to this resource for.

David Schwarz (09:18):

And just to note that there are three ways to make a transfer daily pay and two of them are actually free. So just Venmo the next day if you like the money that you've earned next day it's free. We also have what we call a Friday card in a partnership with Visa and if you use that card, it's also free again. So there's three ways to make a daily pay transfer and two of them are free. And again, that's all really speaks to that financial wellness. And speaking of that, we also love to hear from our clients and our partners about the positive impact it has on their business. So employees, we've done the research when they have daily pay, they actually stay longer on the job for our partners. They can hire faster, employees are more engaged, less absenteeism, and again, they feel more connected to their employer and it's very gratifying to hear.

JD Barnes (10:09):

I think the call out that I'd make on this is certainly, and we'll get to it in a few slides in terms of the tremendous impact that we had on retention of those team members that enrolled in daily pay, both from a new hire perspective and those that are tenured, we have the retention of those folks was four times higher, which was a remarkable statistic when we looked at it. And there was a lot of due diligence done in scrubbing those numbers. And then even from an attraction perspective, we saw that our job postings that shared same day pay offering, we had two to three times more engagement on those particular posts. And back to our beginning portions of when we were sort of evaluating the offering, we did a pilot and we did a same day hiring event for our properties in which we advertised the benefit in one and one in which we did not.

(11:01)

And again, three times more interest. We hired same day hires at almost a 200% higher rate than we did in sort of the other non advertised perspective. But it really goes back to I think one core concept and what we're seeing just from a workforce perspective in the rise of the gig economy and the speed to which everything being on demand. So if you are a corporation that has a high hourly population, there's a multitude of different ways in which those folks can engage in activities or gigs or flexible work that provides them the autonomy and control to get paid every day.

David Schwarz (11:41):

Employees now, and we see also the research that this payable stakes, right? They are demanding that this for their next job. This is something that is a requirement that I just had on-demand pay in my last job. It's something that of course now I'm used to this flexibility. I'm used to this power of control of my pay. Why not have it in your next job?

JD Barnes (12:03):

Yeah, I always give the example, I say, you never leave a job that gave you three weeks of vacation to go to one that only gives you two, right? You'll negotiate that extra week. It's probably the same thing from a pay perspective, regardless of whether or not you use the particular benefit. I think having it there for those times when it's something unexpected happens. So team members and I think employees these days are evaluating that I was at one provider and I had the optionality of getting paid every single day and I moved to another job and I don't have that. It helps them sort of evaluate some of the priorities and the whole benefit offering that a company offers.

David Schwarz (12:36):

On our platform. There's also financial coaching. There's free financial coaching that you can reach out to folks that we have on call that can again help you guide you in your financial wellness path. And again, going back to the need for, and this is one of the areas that we've spoken about, especially in the hospitality industry in particular post covid, right? You've seen such a higher demand and I know that's an issue that as far as hiring and speed to hire was important.

JD Barnes (13:09):

Yeah, I mean I think for us, there's one other interesting kind of tidbit of what we had sort of again, focusing our energy on why we decided to pursue this. I mentioned earlier on that for us at Hilton, a big portion and I heard it from one of the other speakers is listening to our team members. And I'm sure many of you across the room, a good portion of your time is dedicated to that and understanding what the respective needs are. But the pandemic actually illustrated another thing with the postal service. So we've had some difficulty transitioning a lot of team members to direct deposit. It's particularly tenured team members. We still do probably more than a lot of other industries in terms of paper checks and things like that. And we had a lot of difficulty making sure that during the pandemic with where the postal service was, that people were getting paid on time, we were writing our checks, we were mailing them as we would, but just everything was sort of combusted. You think about other situations, whether that be a hurricane or an ice storm or everything we're doing from a natural disaster perspective that if you have team member populations that are not on a direct deposit, daily pay is a mechanism, is a great way of ensuring something like that that happens a whole stop of either their ability to go to a bank because of closures, their ability in order to receive mail through the application, they've been able to seek and advance their pay.

David Schwarz (14:33):

Yeah, we have a product called Cycle and for those payroll people in the audience off-cycle payments can be quite a challenge and quite time consuming and laborious. And so with Cycle, you could address those off cycle payments through the daily pay platform. In many states, like in California, if there is termination, you have to be paid that day. And so a lot of states have that regulation, so with our cycle function, you can pay that employee immediately. So cuts down on those paper checks. So again, I know we addressed the hospitality market is tight, and again, it's something that we're seeing in a lot of industries, right? In healthcare, hospitality, QSRs, there's still these hiring challenges and so offering daily pay certainly can give you a leg up on the competition.

JD Barnes (15:21):

Yeah, and I mean I think one of another big win for it is just in terms of the ability for us to pay a new hire on day one. So through the application when we have a new team member that's onboarded, they'll go through their onboarding process, they can enroll in Daily Pay, and we have the ability to pay them on day one and in some instances, depending on when they come in on cycle and things like that, it may take us two or three weeks in order to get direct deposit or to be able to pay them effectively. And so from a retention perspective, that's been sort of monumental. Again, I sort of leverage the gig economy and everything that we were seeing with this movement of labor from an hourly basis into more of that sort of flexible work. And we've been focusing a lot of our energy and how do we embed that within our ecosystem, but it was a real way of us attracting talent who were doing some of these sort of side hustles, whether it be an Uber or a Lyft or a DoorDash or something like that into our back into our hotels because we could replicate an experience that they can have in an autonomy that they were getting comfortable to when they pursued those gig ventures.

David Schwarz (16:29):

And I know again, the prioritization of the employee is something that is built into the DNA at Hilton and again, offering this financial wellness packages is something that is on par for a lot of other great benefits that you guys offer.

JD Barnes (16:45):

Yeah, I mean I think that this is one component of what we try to accomplish in creating a fully human experience at work. So what I mean by that at Hilton is that we're really focused on ensuring that we have a healthy, caring and flexible culture. And so I think Daily Pay speaks to the flexibility component, but sort of in the composite suite of everything that we do. A few sort of callouts here, our Thrive platform that we rolled out back in 2017, which was focused on mind, body and spirit and something that has paid us tremendous dividends through the pandemic. We were fortunate enough to sort of build the roof when the sun was shining and had a strong platform. And so when the pandemic hit, we really had a great infrastructure that ensured that we were able to, I think what moved to be from a health crisis ended up, as we know becoming a mental wellness crisis is now a caregiving crisis. And so we continue to look at the whole offering of what we provide our team members. This year we launched a partnership with a company called Wealthy to provide caregiving benefits to our team members and access for concierge with a real focus really on de-stigmatizing mental wellness. And I think that that couples what we want to do in terms of de-stigmatizing access to pay and the necessity to use other means in terms of why somebody might need their pay a little bit earlier or at a different cycle.

David Schwarz (18:18):

Again, you speak of mental health, financial stress is a huge driver issues for employees. And again, not having that financial stress is such a relief for a lot of employees and knowing that they have the confidence that Daily Pay is there just in case they need it, they can pay those bills on time.

JD Barnes (18:38):

Yeah.

David Schwarz (18:40):

I included this slide. This is to brag about our good client and friend of Hilton again, but we're very proud to be a part of that financial wellness package, the benefits package that you offer, and again, seeing what you're lauded by Fortune and other publications, it gives us a lot of pride, I can tell you that for our company. But really, really to conclude talking about can't forget about Talent Traction. I know we've addressed this issue on how well it's performed for you guys.

JD Barnes (19:13):

Yeah, I mean I think overall the engagement in the application has been very, very positive. I think two main call-outs from a benefits perspective, and at least when we're evaluating benefits of things that I look at is so much around it as the education, we can put out great programs, we need to make sure that our leaders are sharing the details of that program, that they're answering questions. And that can be half if not more of the battle and especially when something comes into financial wellness, whether that be an stock purchasing program, whether or not that be financial, a retirement account, I think most of us in the room that deal in the benefit space, sort of the complexity is of that. I think what was great about Daily Pay is really the application and the intuitiveness of it and we have probably yielded less questions around daily pay than we have with any other financial benefit perspective and outside of the flexibility that it provides its team members, one of the outcomes that we had not anticipated at all was how team members would engage in the application purely on the basis of transparency.

(20:12)

So for those of us that are salary team members, we know sort of on a biweekly basis what our paycheck is going to be for an hourly team member population. There may be a little bit of uncertainty around that, how many hours they worked, whether they worked overtime, whether they worked double time, whether they worked on a holiday and back to the focus of everything being on demand that didn't exist in a lot of payroll cycles. They get a pay slip at the end of their pay period or when they get paid with the transparency of what they earned and they can sort of go through the detail within the daily pay application. We syncing that information real time so a team member can look in the application and see that they made $300 today and they can predict if they have something later in the week and they want to pick up an additional shift in order to make more income. So we've actually seen an increase in engagement in shift participation. We've seen team members on the flip side really from a wellness perspective, step back from needing to pick up additional work so that they can focus on their wellness because they may have made the income that they needed. So I think that pay transparency was a component that we didn't realize the tremendous impact that it would have in engaging our workforce. And so I lied you all for continuing to evolve the application in order to have that feature built into it.

David Schwarz (21:37):

It's a fun fact that people use daily Pay primarily, primarily to check there, we call it the pay balance. So eight times a week our users are going to, it's almost every day or more than every day, they're going to check their pay balances. And with that, we like to say that knowledge is power. And so when you're able to understand how much you made on that shift, maybe I'm going to take another shift. Maybe I want to take the family out to dinner, so on another $180 or what it be. And also it gives them the ability to say, you know what? I can pay that bill on time. So the pay balances gives them that visibility that I used to work an hourly job. I never knew how much I made on a shift and now you know exactly how much you're making each day. And again, that can be very powerful and transformational for employees. And so again, to sum it up, really we view daily pay as a win-win for employees, employers that we've addressed today. Having that power and that choice and control over your earned pay really can make such a difference in somebody's life. They can pay bills on time, they could spend invest all on their own schedule, not an arbitrary payday.

JD Barnes (22:46):

Yeah, I mean we've spoke a little bit to the tremendous impact that it's had at Hilton, and I think to summarize it, it is a very easy implementable solution that has paid tremendous dividends on our ability to retain and to attract team members from a workforce perspective. If we even think generationally with Gen Z and the fact that I think it's by 2027 it's going to be 40% of the workforce, their intuition with technology, their ability, the necessity that they have for everything to be on demand, my opinion is that if you're not offering a solution like Daily Pay or an earned wage access process, you really are missing an opportunity to be attractive to that demographic. I think this is certainly going to be table stakes in the next year, year and a half, but it's been a win-win on both fronts. We've talked actually a lot, if I can bring this back on the hourly, but when we look at the utilization between salaried team members and hourly team members both across our regions in the US and in other parts of the world, we have both populations using it to the same engagement levels, which again was an interesting sort of finding that we had when we looked at the details was initially designed for our hourly population.

(24:06)

But if you think about entry level managers who may be moving from Syracuse to one of our properties in order to pick up and all of the associated costs that they may have and getting settled in a place, the ability for them to be able to advance some of their wages in order to put that first and last month deposit on their apartment and get settled in, I think it's just one of the use cases that we saw amongst our team members on the salary population with this.

David Schwarz (24:31):

Alright, thank you. We have time for some questions in the audience. Any questions?

JD Barnes (24:37):

Yeah, I think one in the back there. Alright.

David Schwarz (24:42):

Is a question about lunch, any lunch question over here? Yeah.

Audience Member 1 (24:52):

So it's interesting, I hadn't even thought about this as an option until listening to you all. Did you find any issues at Hilton where employees would actually, they draw down and then almost deplete, meaning this has been spun very, very positive, but there's got to be some negative to it and I guess I'm just trying to put my head around the balance.

JD Barnes (25:22):

Yeah, I mean I think what it has provided us is transparency where that behavior exists. So we didn't have visibility to that before. If a team member was taking their paycheck to a payday loan to a Western union and cashing that in and paying those fees, we didn't have any level of visibility. We do have a small, I won't be disingenuous. There are a small population of team members that are advancing it every single day and so we're watching that. That allows us, I think to better align some of the other financial benefit offerings that we have, either financial counseling, it provides us an opportunity for our managers to interject into the experience of the team member and understand why they may be doing that and see whether or not we can offer assistance. So I certainly think we can't control what our team members do.

(26:10)

We can provide all of the education, but it has provided us the transparency to understand where might we be missing the mark. And I'll use another example. Part of the details that we got within daily Pay was that when a team member makes an advance, and I say an advance because they're sort of drawing down on their earned income, so this is not income that they have not yet earned, they have the option of listing why they may have done that. So early on in the pandemic we were seeing a lot of them were advancing it for transportation and so it sort of gave us an opportunity to pause and we sort of dug down and we saw, hey, everybody is no longer taking public transportation. A good amount of our team members we're now having to come to work and use toll routes. And so we then loaded in a transportation benefit to assist in that and to offset some of the costs there.

(27:02)

We see some individuals who are advancing for medication as an example, and I gave an earlier example there. So it gave us an opportunity really to go back and educate around our health benefits and various plans and sort of help educate team member populations. So this was all data that we didn't have access to help evaluate the impact that we had of other programs. I think many of us have probably assess our benefit programs based off of the utilization, the uptick, the engagement and things like that. A lot of it probably is voiceover about the positive impact that it's had. This gave us sort of the hard facts to say, Hey, we needed to focus on transportation or we see that our team members are accessing it for food. Hey, we're one of the largest procurements of ingredients and things like that. Should we partner when we order for banquets food and provide an option for team members to get the discounts that we do on bulk purchasing of milk and eggs and flour and things like that. So it just gave us a lot of different insights that were data-driven that provided us the opportunity to really hone in and focus on where our benefits were going to evolve.

David Schwarz (28:16):

Only thing I'll add is that we see the millions of transfer that happen constantly. We see exactly, a typical transfer may be $74 and 85 cents and someone will do that every month and they line it up to pay a specific bill. So maybe that phone bill they know is due in the third week, so they're going to access their earned income to pay that bill every month at that time. So it'd be $74 and 83 cents. So we see them using it as a financial wellness tool. It's not an ATM even though again people may, again, it's one of those misconceptions, but they use it typically specifically to pay a bill.

Audience Member 2 (28:57):

You mentioned syncing in real time. I'm curious how you verify that data and validate it on a daily basis to show the employees how much they've earned.

David Schwarz (29:08):

So we integrate into your time and attendance system. So again, we are working with the employer and their system and their payroll system. So that's how we know exactly how much you earn, exactly how many hours you've worked.

JD Barnes (29:24):

Yeah, and it's a great question. We had the sort of the same thing we said whether or not with the synchronization, we certainly have managers that are not as due diligent as they should be in making adjustments to time clock entries and things like that. I won't go into the explanation of the algorithm and all of this type of stuff because it's it's way over my head, but from a technical perspective, there are sort of gates that provide the ability. I think the other key thing to sort of allude to is that through the application we set a threshold so it's not a hundred percent of their earned wages that are made available to them. There's a threshold that you can determine that provides that flexibility and is able to give you sort of the buffer needed if something like that doesn't happen. But we haven't had any instances of overdrafts or any instances of synchronization and we didn't change any of the behavior on our leaders and managers to make sure that they were doing their edits at any different frequency than they currently were expected to do.

David Schwarz (30:25):

I think we are at time look at that. So thank you so much. If you have any questions, we have a booth right outside. Love to talk to anyone about my favorite subject. So thank you so much JD.

JD Barnes (30:36):

Appreciate it.