Flexible Pay Future

Speaker A: One of the most underrated levers in talent strategy. That's how we pay people.

Speaker B: You can use compensation strategy beyond just thinking of it as a two week payroll. It's a strategy for attraction, it's a strategy for experience. It's helping people on the front line with that, uh, financial stress.

Speaker A: Yesterday's story was flexible work. Today's story is flexible pay for nightly, you know, bi weekly. Like when did you figure out that was broken?

Speaker B: It's a need based service, not a want based service is how we think about it. So there's a retention play there from financial, but it's also like, don't fuck up my payroll. Please don't.

Speaker A: Welcome to what the FTE. I am losing my voice, but I am Hani MacLeod and today we're digging into one of the most underrated levers in talent strategy. That's how we pay people. Yesterday's story was flexible work. Today's story is flexible pay. My guest is the one and only Sean Paulset of Zay Zoon, a company taking a completely different approach to, to compensation strategy in a fast changing talent market and seeing surprising results with the organizations they partner with. Sean, welcome to the show, man. Good to see you.

Speaker B: Great to see you too. Thanks for having me on. Excited to be here.

Speaker A: It's exciting to have you. I've been a long time fan of what you guys are doing at Zay Zoom.

Speaker B: Yeah, we've been uh, it's, it's an exciting time for the company as, as a Canadian company that launched obviously in the US market originally many years ago and then relaunching obviously strange Canadian company and then launching the US and now relaunching back in Canada and having that impact starting July, I think it was July 2024. It's been a great run. So I'm um, excited to be part of it.

Speaker A: I remember talking to Darcy and Tate those years ago and I was like, oh, we need this. Like, sorry, not in Canada. I was like, but, but why? So this is like, I mean this, this is big. I, I mean you guys are going to take this market by storm.

Speaker B: That's the whole thing, right? Like, I, I think and this is pre, even um, pretty Sean era with, with R.C. and Tate is when was a good time to relaunch in Canada, right? Like when. And with any company, when is it a good time to, to relaunch or launch in a specific region or, or segment? And I think all things kind of pointed to, uh, the challenges that we solve for in the US are fairly similar to the challenges that we solved for in, in Canada.

Speaker A: Right.

Speaker B: Like there are a lot of similarities, there are nuances, of course. Not going to not say that, but there are a lot of financial wellness challenges across frontline work. Right. Like we think about mental health, we think about physical health, we think about benefits that adhere to that. We don't talk a lot about financial health and financial stress. Right. Like it's kind of a hidden, a hidden issue that we don't want to talk about. Right. That's why there's all these other solutions out there for that, that target those markets that I uh, should probably not say are a little more on the predatory side. But that's what we kind of see we saw in the economy. We, a lot of our great partners with Scotiabank and other payroll companies are saying this is, you can use compensation strategy beyond just thinking of it as a two week payroll. It's uh, a, it's a strategy for attraction, it's a strategy for experience. It's helping people on the front line with that financial stress, you know. So yeah, we ended up relaunching. It's been going great.

Speaker A: Talk to me about that. Like, tell me about the moment that you realize that like payday monthly, fortnightly, you know, bi weekly, like, like when did you figure out that was broken?

Speaker B: Yeah, really good question. I think, I think about all the times of when I had my first even couple jobs. You know, you're out on your own for the first time, maybe you just graduated school, maybe you're um, it's your first job and, and you have rent for the first time and, and I remember thinking, oh, I'm not getting paid for another two weeks. Like I need money right now for groceries and specific things. Right. Someone told me this, and this was probably about two years ago before I had even started with Zoon. It's across Canada. There's about, I don't know, maybe it's closer to 1400 different locations of uh, payday loans, which is actually more locations than Starbucks Canada. And everyone knows Starbucks because it's on the corner. Everyone also sees payday loans. So like I think about times when I could have used, or emergency came up where I could have used that money instead of waiting for that monthly or typical two week cycle because, oh, a lot of people just thought okay, that's just how the world works. Like why do we not pay every day? And there's of course implications to Canadian banks and banks in general and how payroll works from a software standpoint and how they make Money behind the scenes, you know, like through interest and all of that. So a lot of it's just looking back and I was like wait, why do we do two like a bi weekly pay? Like why do we do the monthly? And then if you think of it and distill it to specific industries like the hourly folk that are doing all the hard work on the front line and then representing these brands and talking to customers every day, if something came up like a car breakdown or something like that, or you're with a, you have your family, like how are you going to make ends meet? Particularly when things look, think inflation, think all these other things, macroeconomic trends that impact that. So I think there wasn't just one moment. I think I started to piece it together when I was thinking about Zay Zoon and on demand paying compensation strategy generally and thinking there must be a better way, right? There must be a better way out there to access at least a portion of it to help you. But that centers around kind of financial wellness as like a whole different category now. Like how we think about that for our employees and how profound impact we can once we address that and the challenges that come with it.

Speaker A: Well, I keep hearing stats about the number of people that are living paycheck to paycheck.

Speaker B: Yes.

Speaker A: And I haven't really thought about it until right now, but this seems like a, like a really good solution for those people to not end up with predatory interest and payday loans.

Speaker B: Totally.

Speaker A: Right.

Speaker B: Like I, we look at the US I think when we looked at it in 2025 and all our customers, the, the amount of Americans that are living paycheck to paycheck is in the 50. I think it's about 58% and, and Canada is fairly similar. Right. 56%. Now that concentration is going to be, concentration is going to be in the desk list type of hourly uh, a worker. But I also believe, because I think you and I probably know people that live paycheck to paycheck and, and have decent salaries. It's, it's almost like an education is needed in regarding just financial wellness in general, which I just don't think is out there. Right. Like unless you've gone to school for economics and like there's just not a lot of, even if you have like there's not a lot of information around financial resources of how to get out of that because all of these tools and all of these other secondary products out there are centered around them making money off you. So they're not necessarily with the best and I'm not going to shout out anything but like it's not necessarily customer centric, it's how they're going to make money off you for, on interest, on not being able to pay back things. And that's why some of these payday loans being I guess the most severe, at the opposite end of the spectrum of predatory. But there's a, tons of them in there that really aren't advantageous for that customer to utilize. And then it's really hard to get out of it. Right. Like, and uh, then that's when you see that paycheck to paycheck because you're, you're just constantly trying to get out of that hole and you get stuck in these ruts and like how do you then get out of that? Right. Like that is fundamentally the challenge that we see and we all talk about it, but we just don't really talk about innovation or talk about strategies. And like there is just so much correlation between the stress that can come from someone who's about a hundred dollars away from being completely broke and having to put food on the table with mental health and physical health and how you show up to your work and how you communicate with customers. Right. Like it's, it's just so all interconnected. It's just something that has not really been um, on the forefront for some strategies in the past.

Speaker A: Well, it's, it's wild when you think about it. You know, you could have a PhD, uh, in physics, you'd be incredibly intelligent and no one's ever taught you how to file your taxes or you know, how to effectively use debt or how to budget. You might be able to create a, you might be able to, you know, build a reactor, but you, you know, you, you can't, you're like, you don't have those skills. It's crazy. I mean like when you think about it, what we learn in school. So like what kind of real world results are you seeing from this?

Speaker B: Yeah, and I think we've taken a, A, um, unique approach to this beyond what it is from a, like an on we call it. There's different acronyms out there, right. There's the earned wage Access, which is, is heavily used in the US there's on demand pay that we've heard. There's flexible pay. You hear all. Like to your point earlier, there's a lot about just flexible work, flexible remote work, you name it. Flexibility is a big term. I think that some of the feedback that we've seen, at least from the Canadian market as we relaunched here and works with some of the larger ones is there's a fierce, um, race for talent. Um, in some of these industries we think hospitality, we think healthcare, home care, these people are on the front line, busting their ass and working long hours. And if I work for home care and I'm going house to house, it's not like from a organizational standpoint we can pay them more. I mean if it was a perfect world, we could all be paid 150k and we'd have great benefits. But unfortunately that's just not the case. We're not, it's not a perfect system. So how can we adhere to that market and that frontline workforce that directly impacts, uh, a company's bottom line. Right. Like the more people in home care that serve and I see and I, and I show up in a positive manner and show a great experience. I think even retail, anyone who's kind of interacting with customers, call centers, you name it, how are we adhering to that person to make sure that they're showing up for their best self and they're not thinking about, oh my God, if I have like something, if my car breaks down on the way to my next customer, I'm not going to be able to make ends meet on the way home. Right? So like when we think about what we've gone live, and I'll just use some examples, there's a big hospital and healthcare so system in Vancouver that we work with is that there's a fierce, fierce, uh, race for talent in these, some of these industries and they're going up against things like gig workers and the gig economy where people are getting paid right away. I could, hey, I may take a shift here and there at the hospital, but I can go in Uber Eats as a second job. And they actually came to us and said, hey, look, like, are, uh, we getting feedback from our employees saying if we had the ability to access just a portion, because we only allow a portion, we don't allow people to take out their full paycheck. We think it's counterintuitive to the message of financial wellness and that being at the uh, ethos. But if I was able as an employee at this hospital, take out money, I wouldn't need that second job because I just need it for, let's say, gas and groceries, common things. Right? And if I just had a portion of that, I would be able to not have to take a second job, therefore more spend more time with my family, spend more time at home, be less stressed because I could make ends meet because I took a portion of what I've earned. It's not like an advancing, it's like I've earned that. And this is all automated in a very easy app. And then on top of that, there's free resources for financial education and resources to your point, where there's not a lot of that out there in terms of benefits and just general knowledge where I can actually educate myself but also get a portion of that, then I don't need that second job. Right? And I don't need that second job. I'm more engaged at work and in some cases it actually means I have shift uptake where I actually take an additional shift, therefore creating a better system, um, with retention and engagement from, uh, from a turnover perspective. So that's what we see. Like, I, I, I think there's different use cases out there. I think people are now using it in job descriptions to be like, hey, you can get a portion of what you've earned and like, you attract more applicants. But I think of the more impactful is like the employee experience every day, how they show up and their stress levels and, and everything like that. So we hear a lot of great stories and feedback from different industries, but it's, it's all very positive. Right? And I think we have a different view of it from other vendors is that you want to make sure that there's a portion but also create an entire great experience with the app where there's tons of. I can now save money. If I'm, uh, in my 20s, I'm saving, uh, um, or putting money through H and R Block because we have a partnership there. So I can save money through taxes through our app where we have a partnership with H and R Block. So there's a number of kind of like adjacent services. They're just centered around helping people manage their money better, educate themselves and uh, and eventually save money, of course.

Speaker A: Sean, that is awesome. There is a lot of like, you know, financial security. But like, do you guys give people any kind of, I don't know, instant gratification? Like, you know, it would be awesome that like, you know, if I worked in a job where say I got commission or, you know, I worked overtime to like be able to get access to that. So I got that like kind of instant gratification even if I couldn't access all of it, it was like, oh, I need, I need this, I need money tomorrow. Like, I'm going to bust my butt because I know I'm going to get access to it instead of like, oh, I got to wait a month to get access to this, this money when like, you know, really I'm like busting my butt and doing double shifts so that, you know, I can get money now to pay those bills.

Speaker B: Yeah, totally. I was having a conversation with a large movie, um, theater company that we would all know and appreciate, um, being here in Canada. But what they. Look there are a lot of their workforce. They just have a couple shifts, right? Like, I may not be full time. And if I'm a young professional and I know there's the world of instant gratific, you know, of like, we need things now, we need an Uber now, we need to buy things now. We have Amazon now. There's that whole generation that's used to that type of convenience. So the on demand pay and flexible pay touches on that for sure. And if I'm an employer offering that and it allows my frontline staff to access funds right away, maybe I would take an extra shift. Maybe I would take a third shift or a fourth shift because I have that access. Because if I'm only doing one or two shifts in a two week period, I have to wait two weeks to get, um. And I'm getting an hourly minimum wage. That's going to be tough, right? Like, I might just go to a different company or someone down the street that can pay right away and, or have a different type of, or has more shifts for us, you know what I mean? Or for myself. So you nailed it. Yeah. I think for those industries that have the workforce that is maybe not all full time, but they have a huge hourly workforce where it's just, maybe it's a younger generation, but it's on shift work. Um, it definitely touches on that from an HR perspective too.

Speaker A: I'm thinking from like sales commission, you know, like, you close the deal. Like, you know, I think of, you know, on our team, if I was a sales rep and I closed the deal and I could unlock that sweet cheddar, that would be, that would be amazing, right?

Speaker B: Buy that watch, buy that car.

Speaker A: You know, isn't that what we all want salespeople to do is like live just, just above their means?

Speaker B: I mean, as a fellow salesperson, and I've come from HR to like, I would appreciate that, you know, a portion of it. Not saying that you would take, you want to take all of right away and, and go wild by any means. But like, I do think that it's, um, there's something to be said for that. Right. That's exciting. You can you can, you can. You don't have to wait a month. You can access it right away. And if I'm a salesperson and the. The whole instant gratification, I think that's. I think that's awesome.

Speaker A: So a portion of it or a Porsche of it? Because, you know. Yeah, it's that surprise Porsche payment that, you know, you. You need to make because you know that you just landed this deal and now you've, like, yeah, the contract is signed and you're waiting for your quarterly commission. Because. Because that's the other thing is, like, there's some. There's some compensation that's not paid bi weekly or monthly. Like, it could be paid quarterly. Like, you've. You've earned it.

Speaker B: Yeah.

Speaker A: Uh, but, uh, it's not there.

Speaker B: So if I can come back with an inappropriate Porsche payment and I can say that to my family, I think that's a win right there, you know, and say, hey, look, I just jumped the gun. I think we need this for the whole family. So, you know. No, but I do think that is. And there are tons of comp plans out there with commission that, to your point, are quarterly. They take a couple months to go through. And those are things. Even if a savvy saver is like, I would rather put that in an investment fund right away, then you're thinking about those couple months that it's not sitting in an employer's bank account, it's in your bank account, and you're doing what you want with it is you earned it.

Speaker A: Yeah. Well, I mean, I don't know if this is possible, but, like, can you do, like, retirement savings? Like, could you actually use that for savings? Like, if you were going to cross an, um, RSP deadline, you could use that in theory, kind of like an RSP loan.

Speaker B: It's fussy that you mentioned that. We did a present. Someone did a presentation, I think they were part of Ivy, and they were doing a presentation to, uh, for us regarding new innovative ways that would be beneficial for workforces. That came up being like, it automatically. If you take it out, there's a percentage that you put towards your RSPs or like some sort of investment or your retirement. And it's something that you just bake in as a part of a benefit suite, um, that you can click on as an employee, being like, hey, if I can take out this commission right away, a percentage of it's going to be automatically taken. Just like, you can program that through your bank accounts usually, but you can automatically do that through this app. So that has actually come up a couple of times now. That's a great idea.

Speaker A: That is very cool. That is very, very cool. I mean, how do you measure success of, of pay innovation like this?

Speaker B: Like, I mean, it's interesting because the ethos around what, what it is we're, we're doing is around improving financial wellness, decreasing financial stress. You allowing a portion, not a Porsche per se, um, of, of money taking out. But do we want people to get out of their paycheck to paycheck lifestyle? How do you do that? Well, yes, you want them to be like, have a, uh, have a more responsible lever that they can pull if an emergency comes. But on top of that, how, how do we know that they're also using the education. How do we know that they're also using the budgeting tools? How do we know that they're using all the other financial wellness pieces that we have as part of our engagement suite? Well, we have to track that. Right? And I think there's a, there's a fine line of then them moving and I think there's a different, there's guardrails that we have put up as a company that isn't necessarily widespread across the EWA community where you're only allowed a certain percentage. But there's also these educational things. And we've seen employers say, hey, when you onboard, we're, you have to do this budgeting course through zoom. It's like, oh, okay. So it's that people are baking this into. So when we look at our data on our customer success and our account management, we say, okay, well there was a certain. Some people had, um, used the EWA or the on demand pay portion. That's great. But people are also leveraging the other pieces of the app. And that from our point is we're providing more value that doesn't cost, uh, them anything beyond just having that flexible pay. So I think that's the real win. Right? And then those stories that we hear about the hospital being like, hey, this really impacted their lives immediately. And now I could afford like, we have so many different great use cases and stories from different industries and frontline workers and salaried workers too, saying, hey, this really saved me, like, even if I had to pay cash, no one has cash anymore, right? Like, I had to pay cash to this contractor and I didn't have any money because it's all in my bank accounts and investments. Like, how am I. Oh, I was just going to quickly use Zayzun and then I can take it out and so there's like beyond some of the, some of the really impactful stories are just some of these day to day stories that things come up. Right. And it's just, it's a need based service, not a want based service is how we think about it, where they look to it when they're. It's like insurance. No one wants to talk about it like auto, about a crash or an automobile crash, but you have insurance just in case. This is almost something that, that will become ubiquitous across Canada where on demand pay will be part of all payroll, will be part of all types of benefits, but it allows you to just have that portion when, when something comes, comes up.

Speaker A: And I guess how do you convince, you know, the, the cautious finance team?

Speaker B: Uh, very good question. Uh, we talk about this a lot. Um, as you can imagine. No, I, so for. I was talking to a cfo, right. We were doing a lot of customer interviews these past two weeks of like really understanding and, and understanding the why behind why they chose um, Zoom. You know, like what was the, what was the reason, what was the benefit? What have they seen? What has changed? Like very powerful conversations in any company that's growing is to really create this kind of customer centric type of philosophy. But what we learned from a cfo, at least they, they said that hey, you know, people are coming and this is the most obvious use case. Sometimes this doesn't happen. But hey, people are coming and they're asking for advances and it's costing me as a business a hundred dollars to do this and a lot of administrative work and payroll burden. Like we don't want to do that. And this was like a high volume security type company and this is costing business time, resources. I had to hire someone to do this type of stuff. Now I don't need to. And then from. If you zoom out because there's also a lot of times where people are feeling a little embarrassed to ask for an advance from their employer. Rightfully so. That's a really awkward conversation. I certainly wouldn't want to do that. You would just move on being like, I'm not doing that, like I'm not going to go to my manager. You may not even have the best relationship, let alone asking them for money. You don't know how to. They may perceive that. So totally understand that that's where you

Speaker A: go to payday loans.

Speaker B: Yeah.

Speaker A: That's why you know like you're like other options, right? Yeah. Like you have, you have money you, you earned kind of that you can't access and Then, you know, then you have to go, you know, you got to get 200 for 20 plus. Plus. Plus, you know, yeah, the interest is

Speaker B: through the roof, like 300% or something. And then you get stuck and it's like, it is just. Yeah, uh, it's horrible. But like, if I'm a, ah, cfo, I also think just make sure you don't disrupt payroll. We all know the story of the federal government with that Firefox payroll that went. People are still being inappropriately paid from that. Like, the last thing you want to do is stamp your name on something that's disrupted in payroll. People don't get paid and whatnot. So ensuring that the integration and relationship with that payroll system from a financial aspect, it has to be, has to be. That risk has to be so low that they feel like, okay, this is just a value add. Maybe it decreases advances completely. Maybe it helps with turnover and retention. So I don't have to hire as much because we're competing with talent in home care or security, you name it. So there's a retention play there from financial. But it's also like, don't fuck up my payroll. Like, very simple. Please don't and show me how you won't do that. Right.

Speaker A: So, uh, anyway, that, yeah, that would, that would suck. That would suck. Well, Sean, I got a, I got an existential question for you before we go. Like, what's the next evolution of compensation? Like, where, where is this going?

Speaker B: Yeah, you know what? Um, we think about this a lot and I do think that on demand pay will be everywhere. I think it'll be part of all to a certain degree. Right. Like we have different levels. There's some different things within on demand pay, like pay cards and direct deposits and putting that now on digital wallets. And we think Bitcoin and we think about the stable coins that are coming out. Like, how are you now moving money from a. Uh, I think there's an open banking conversation across Canada. That's a big topic in the financial world. But then from payments and compensation, how are there different forms of payment? Like, but where can I put that on a digital wallet or as opposed to just direct deposit? So I think we're going to find different innovative ways to move money faster into a. Newer wallets and new digital wallets and, and stable coins and you name it. Because I feel like that is where we're slowly heading. I will say emphasis, slowly heading. And I think that on demand pay, just the convenience of it will just be ubiquitous. Part of all payroll um, the only reason it isn't now is because of, um, like, payroll interest and banks and all of that. But I think those barriers are getting. Are getting broken down, so we'll see. But I just think there'll be a whole different world of wallets and moving money.

Speaker A: Just money money, straight to that stable coin or that Bitcoin.

Speaker B: I didn't print all my money on this Stablecoin. Do I know where it is or how it works? No, of course not. But that's okay. Like, I can just tell people that I have it and it's pretty cool.

Speaker A: But the Internet said it was going to be great.

Speaker B: Exactly.

Speaker A: Well, Sean, thank you for coming to our listeners. If this episode made you rethink how you pay your people, go do one thing this week. Ask your HR or payroll team, could we move the payment timing needle? And if you found value here, share this episode with a peer in people or talent who still treats payday like history. Thanks for joining us, Sean and T listeners. We'll catch you next time on what the FDA telephone.