“I want it all, and I want it now!” belted the late, great Freddie Mercury on a criminally underrated song by the rock band Queen. Was he channeling typical first world consumers and employees from some four decades into the future? He might as well have been. People these days, not all of them want it all, truly, but most seem to want whatever it is they do want, now. They expect every accommodation. Leeway and speed are what they want. They want what they buy to arrive as soon as possible. They want to pay in the easiest way available, in a way most accommodating to their needs and wants. And they want the pay they’ve earned so far, right now — not in two weeks, at the end of a pay period.
The gall, the nerve of these people, to expect convenience, immediacy and flexibility — it’s almost as if they see the caliber of technology out there and ask rhetorically, and logically, “Why should I have to wait?”
I’m with them. So is the future of getting paid and paying.
An Equestrian Revolution
The horse is already out of the barn, as southerners in the United States might say. The meaning of their saying approximates the idea that it’s too late to go back to the way things used to be. When it comes to paying and getting paid today, this is absolutely true, and entire industries must take note and heed. Providers of technology to pay people for labor expended will never return to the days when the processing of payroll followed an unwavering weekly, biweekly or monthly pay period, period. Gone are the days when the payments industry could expect a captive audience forced to wait patiently for credit approval to make purchases in installments. Say sayonara to a time when consumers enjoyed flexibility in paying outside these limitations only at the most gargantuan retailers. Oh, and wave goodbye to the relevance of your enterprise infrastructure built around these and other, sudden anachronisms. Fast forward ten years at most, and your best bet will be to cut your losses with those sunk costs.
The evidence is aplenty that a great recalibration is underway. To get our heads right, let’s have fun for a moment….
“I Just Got Paid Today…
…got me a pay card loaded with currency.” It doesn’t exactly roll off the tongue or ooze soul like the original lyrics in the old blues song, which instead states in the second half of that stanza, “got me a pocket full of change.” Lost in the translation, that earthy, gritty mystique of the everyman off to have fun with his pay isn’t exactly there anymore.
When it comes to communicating the novel in the mundane of modern everyday life, the Zoomers have their work cut out for them. It’s not like the younger generations have the kind of world at their disposal that conjures a memorable, visceral soundtrack or lore to describe sights and smells as indelible expressions of modern-day routines or their overall lot in life. It’s not like money in its digital form inspires fondness for lasting imagery or feelings of physicality….
Convenience, Flexibility, Immediacy
What Zoomers and any of the other generations alive today do have going for them, however, is convenience, flexibility and immediacy. Described in the old song is something that would be completely out of place today. A guy had to wait a spate to get paid, and we may infer that it wasn’t exactly easy for him. The long-awaited payday arrived, and he finally had some fun. He even had a pocket full of change. When was the last time you had a pocket full of change? For me, it’s been at least 15 years. I was happy about it, but it wasn’t exactly easy or comfortable to walk around that way.
Imagine that the guy in the song had a pay card or even Google Pay or Apple Pay on a so-equipped smartphone (bulky, but easier to cart around than change). Many today pay in one of these ways. If you’re Gen X, you may still pay in the now-ancient way: via debit-credit cards tied to your bank account, which receives pay nine point nine times out of ten via direct deposit; live, printed checks have long become the exception. And, if you have a job today there’s a decent chance that your employer’s payroll system offers or integrates with some version of functionality for on-demand pay, also known as earned wage access (EWA). There’s practically no wait. You can get your money whenever you need or want it—for fun or whatever else.
The 21st Century: When Layaway Gave Way to Right Away
Back when this Gen Xer was a little tyke, there was this popular option in department store retail called layaway. By putting something on layaway, you ensured that nobody else could buy it while you made a set number of scheduled payments. At the conclusion of this payment schedule, the purchase was complete. You took delivery of the item.
That was good enough for the 1970s. From what I understand — I wasn’t even in first grade yet — layaway was a direct agreement between the customer and the retailer, and credit wasn’t really involved. Break the payment schedule, and you lost claim to the item, which went back into stock for someone else’s taking.
Today, things are different…. and the same. Today, also without a credit check, you can set a payment schedule for an item you want to buy, but without the layaway. You gain access to the item (or ownership of it) right away. Craig Himmelberger, my colleague at 3Sixty Insights, blogged in early August on Square‘s announcement to acquire the Australian-based Afterpay, a global provider in buy now, pay later (BNPL) capabilities — with one fell swoop, making BNPL available to consumers at small businesses far and wide. Almost as if feeling the heat, Affirm, another provider of BNPL functionality, announced in September that it had forged a partnership to make BNPL available to consumers on Amazon Prime. And, in the proverbial canary-in-the-coalmine move, Mastercard itself this month announced plans around BNPL, as reported in Barron‘s.
The thing with the now-archaic practice of old-school layaway is that it was really something only the largest retailers of the time were equipped to do. Think Sears et al. You needed financial heft to cover the spread on the inevitable attrition, or “defaults,” on layover agreements. Solutions such as Afterpay make it possible for small businesses to offer, right away, the modern twist on layaway. That’s democratization in immediacy, flexibility, and convenience. Welcome to the 21st century.
Concrete and Abstract Business Models
Readers of this blog and 3Sixty Insights’ research will be familiar with the concept of concrete and abstract. Concrete is conventional and, in some contexts, easily quantifiable financially, whereas abstract is unconventional, innovative and not necessarily translatable to the accounting spreadsheet — but essential to the business nevertheless. A concrete perspective looks at what’s there and can be automated, solves for this, labels the newfound efficiencies as productivity gains, and calls it a day. An abstract perspective, by contrast, ponders whether the ends of that potentially automated process ought to be the goal in the first place.
In human capital management, payroll is a great example and pertinent to the topic here. Those with a concrete view of employee pay consider the goal of paying staff each pay period and go about solving for this. They ask themselves how they might make this process as efficient as possible. In contrast, those with an abstract view look at the very idea of paying employees each pay period, ask whether this makes sense anymore given the state of the art in enterprise software and more, and decide whether it might be wiser to do away with pay periods altogether and transform pay itself.
Profound Energy in Support of Employee Sentiment
Many vendors of technology for HCM offer on-demand pay. Ceridian’s Dayforce Wallet is a good example of a large, full-suite player offering its own, native functionality for it. UKG and others elect to make it available through partnerships and integrations with providers of point solutions.
DailyPay is another interesting case in point. The vendor is clear in its objectives: the end goal is not merely to provide accessible functionality for on-demand pay — even though this is the vendor’s product (and developments there reveal momentum). According to the vendor’s chief innovation and marketing officer, Jeanniey Walden — who was our guest on #HRTechChat in April 2021 — DailyPay aims to transform attitudes around employee pay itself, and the vendor’s continually evolving concept of a pay experience platform gives employees an opportunity to relate to their pay on a daily basis. This plays into the idea of immediacy, flexibility and convenience far beyond the on-demand aspect of EWA.
Another excellent example here is CloudPay, whose chief strategy officer, Josep Elias, was our guest on a recent episode of #HRTechChat. Listen to the passion behind Josep’s explanation of how the vendor has brought on-demand pay to more than 130 countries as a function available in CloudPay’s system for processing global payroll.
The energy behind trends in on-demand pay (and paying, for that matter) is strong. This goes far beyond the quest to make things faster. C-level executives at companies at the bleeding edge of innovation in on-demand pay recognize the profound, positive implications to influence employee sentiment in fundamental ways. Of all the activities in HCM, employee pay expresses itself at once in possibly the most concrete and abstract ways, after all — an unequivocal currency amount recorded in the general ledger, and a fundamental rationale behind any person’s decision to contribute to your organization.
Myriad, Deep Implications
Because trends in immediacy, convenience and flexibility in getting paid and paying are gathering steam, the time is now for leaders to take stock of the inescapable repercussions, which are legion — and get out ahead of these. The spoils of this war comprise not just winning, but survival itself.
Gig Workers: It’s tough to overstate the gig economy’s role in influencing the evolution of this economy of convenience, immediacy and flexibility. Companies need to embrace the mixture of employees, contractors, and gig workers that will become the in-all-meaningful-respects-unified workforce of the future. This changes payroll and payments. On-demand pay becomes a necessity, not just a wise add-on. The demand for payroll services will see a renaissance, and capital-intensive options for paying the demographically shrinking segment of traditional employees will diminish.
Confluence in Ways to Buy: Commerce will blur between sales, leases, and subscriptions. This changes manufacturing, distribution, billing, and more. Capital-intensive components built around, for example, traditional manufacturing, will evolve to reward design over production. Think Apple.
Financial Settlement: Here’s an area that may finally escape antiquated concepts rooted in millennia-old habits tied to tangible currency exchange — and evolve to incorporate on-demand, electronic alternatives. Digital currencies themselves are just one aspect of this. Free from the burden of ridiculously regressive lending agreements, BNPL is another. Subscriptions for anything and everything you can imagine are yet another. Most notably, installment credit is now a dead-end proposition, just like deferred wages are. People want what they want, when they want it, from the value they’ve already produced.
Commercial Infrastructure: The trend here is ever moving toward flexibility. This changes everything from real estate to leasing to fixtures and furnishings on the tangible side, and computing infrastructure and all that goes with it on the other. Capital-intensive approaches such as owning and managing your own building, as well as owning computers and licensing software, will co-exist with flexible leases and on-demand space, and subscriptions for all aspects of computing and communications infrastructure (well beyond today’s software-as-a-subscription fees). There’s a subscription model emerging even for fast food.
For this last implication, let’s take a deep breath. OK. There’s a real chance that owning stuff, period, may no longer make sense for almost everything we use. That may sound like hyperbole. And it may well be a bridge too far. After all, just last night my 18-month-old daughter screamed what sounded like “mine” — one of her very first words — to her three-year-old sister, who had swiped something away. On the other hand, look no further than subscription management and recurring revenue solutions provider Zuora, a vendor that in early September announced “unified monetization capabilities enabling companies to monetize anything as a service.”
No More Excuses
Call it the subscription economy. Call it the convenience economy. Call it any number of things. It will be the plain old economy everywhere sooner than later. It has a concrete part, a disruption to infrastructure. And, it has an abstract part, a disruption to all we have known.
Aided by advances in technology and attendant changes and openings in the regulatory environment, an ethos that has always dwelled inside us has shaken free of the technical limitations that hitherto kept it from blossoming. This ethos has always maintained that the acts of getting paid for work and paying for goods and services should be democratized, free from the authority of the arbitrarily narrow thinking of those with the means to pay people or sell. The new landscape of convenience, flexibility, and immediacy provides no rationale for anyone to fall back on old excuses such as “it just can’t be done any other way,” and employers and sellers that continue to insist on doing things the old way have no excuse but to argue that it’s always been this way — and, in the end, fight progress.
These same advances, changes and openings have left obsolete everything we’ve built around the old ways — maybe not right away, but eventually. Why? The new business models that embrace convenience, flexibility and immediacy are ultimately and fundamentally incompatible with legacy application designs, cloud-delivered or otherwise. It’s a real dilemma for many businesses, who each have spent thousands, hundreds of thousands, even millions over many years in technological infrastructure that automates workflow and processes for activities that are outgrowths of ways of thinking that are fast becoming quaint relics of the past. Let those sunk costs sink in.
Just as capital-intensive and inflexible legacy businesses such as Hertz and WeWork are going to fold in the face of competition from better alternatives, automation designed around inflexible legacy business processes is going to become irrelevant. The victors in this new paradigm will be those wise enough to think to align themselves with these emerging business models embraced by the winners in the market, and capable enough to do so successfully. Put differently, the companies — including software vendors — that end up among these winners will recognize today that the future is indeed already out of the barn.