It is forecasted that by 2025, 32.6 million Americans, or 22% of the US workforce, will be working remotely. That represents a 715% increase from the 4 million Americans who worked remotely in 2015. A direct outcome of the enthusiastic adoption of remote work has been the increase in digital nomadism and global hiring. Trends towards a globalized and highly-collaborative workforce have given rise to a growing demand for solutions built to accommodate borderless onboarding, collaboration, and payroll.
In the wake of a new era of technology designed to bring ease to global hiring, hybrid fiat and crypto payroll solutions have stood out as critical tools for not only unlocking access to international talent, but as meaningful incentives for attracting and retaining employees.
Understanding Hybrid Payroll
Hybrid fiat and crypto payroll is a compensation method that combines traditional fiat currencies with options for payment in crypto and stablecoins. It provides a myriad of benefits that include access to expanded labor pools, instant and cheap borderless payments, and competitive compensation for attracting top talent.
Depending on the solution that a company chooses to employ, hybrid payroll can involve a variety of currency offerings and payroll structures. A comprehensive solution will enable automated routing between fiat and crypto which is highly advantageous for both traditional companies and web3-native organizations alike. This allows for a company to fund payroll in either fiat or crypto, from a traditional bank account or a digital wallet, and for a contractor to receive their payout in their preferred currency, across a range of fiat and crypto options.
A common example of the necessity for automated routing can be seen with employee payments for DeFi protocols and DAOs, who often hold part of their treasury in USDC. They can fund payroll in USDC, which, through a hybrid payroll solution, is automatically sent to contractors in USD in order to simplify matters of compliance. Once received, contributors then have the options to withdraw their payout in the currency of their choice. This cash out can be in fiat, crypto, stablecoins, or a combination; a contributor may take 80% of their paycheck in fiat and the other 20% in crypto in order to seamlessly participate in DeFi, buy other crypto, and beyond.
While the addition of crypto into the payroll mix is an obvious factor that distinguishes hybrid payroll from traditional payroll, perhaps the most notable difference between these two systems of compensation is the freedom that is inherent to hybrid payroll. Through allowing companies and contractors not only the freedom to choose the currency in which they want to get paid but the ecosystem in which they interact with payments, hybrid payroll breaks the mold of traditional banking and fiat compensation.
Hybrid Payroll for Employee Attraction
Shifting hiring trends and workforce demographics have ushered in demands for updated payroll systems. With web3 representing a prominent force of innovation, engagement with its products enables companies to demonstrate their adaptability and agility. And with the web3 market growing at an annual rate of 43.7%, getting in while it's still relatively new provides a competitive edge to companies looking to attract tech-forward talent.
Beyond its important contribution to a company’s reputation, web3 technologies and hybrid payroll promise a new level of convenience. By onboarding payroll with a solution that supports a wide range of fiat and cryptocurrencies, a company can conveniently and effortlessly offer contractors and employees the ability to get paid how they want to get paid. This provides employees with greater control over their financial portfolios, and those looking to invest in crypto have direct access to the DeFi ecosystem. When it comes to attracting potential hires, this perk can be highlighted on job postings and career pages, serving as a competitive employee benefit.
For crypto-native companies, hybrid payroll is a powerful incentive for attracting talent in web3. While many projects offer payment in crypto- oftentimes their native token- the option to receive a fiat paycheck is a highly attractive benefit. In this scenario, the hybrid nature of the solution not only speaks to worker’s financial freedom but allows for payroll to align with a project’s mission; the ability to fund payroll directly from a digital wallet means that it can function fully on-chain without involving traditional financial systems.
When addressed through the lens of international hiring, this takes on elevated importance since the issuance of fiat payments to international bank accounts can present numerous obstacles. Additionally for international recruits coming from countries with restrictive financial systems, lack of access to traditional banking, or unstable local currencies, the option to cash out in crypto and stablecoins is a major draw.
Hybrid payroll represents a commitment to remote, global contractors by ensuring that payments are made in the currency of their choice- whether that is local currency such as USD, EUR, or GBP, or crypto such as ETH, USDC and USDt- and paychecks arrive in a timely manner.
Here are some ways that hybrid payroll strategy can make a company more appealing to prospective employees:
- Cutting-Edge Reputation: Companies that offer crypto options signal that they're forward-thinking and in tune with the latest technological trends. For tech-savvy individuals or those keen on innovation, this can make such companies more appealing.
- Financial Flexibility: Offering a crypto option provides employees with greater control over their financial portfolio. For those looking to invest in cryptocurrencies, this removes an extra step and can be seen as a unique financial benefit.
- Global Talent Appeal: For international recruits, especially from countries with restrictive financial systems or unstable local currencies, the option to receive part of their salary in crypto can be a major draw. It can facilitate faster, cheaper, and more reliable cross-border payments.
- Alignment with Company Mission: For companies in the blockchain or tech sectors, offering crypto as part of compensation aligns with their brand and mission. This coherence can attract like-minded individuals passionate about the industry.
- Competitive Differentiator: In competitive job markets, unique perks and benefits can set a company apart. The option for crypto payment can be that differentiating factor that sways a candidate to choose one company over another.
- Access to Exclusive Benefits: As the crypto ecosystem grows, there are exclusive services, platforms, and benefits accessible only with crypto. For instance, exclusive NFT drops, early access to certain platforms, or membership clubs. Having access to cryptocurrency can be seen as a gateway to these exclusives.
- Education and Skill Development: For those unfamiliar but curious about the crypto space, joining a company that integrates crypto can provide an opportunity to learn and upskill. It's not just about the payment but also about being part of a company that can educate them on this emerging field.
- Environmental and Ethical Considerations: Some prospective employees might appreciate the option to be paid in eco-friendly or proof-of-stake cryptocurrencies. Offering these options can appeal to environmentally conscious candidates.
- Tax Benefits: Depending on local regulations, there might be potential tax benefits to receiving crypto as compensation, making the proposition attractive for some.
- Intrinsic Motivation: For some, the sheer novelty and excitement of being part of the crypto movement can be an attraction. It's a chance to be part of a financial revolution.
The Role of Hybrid Payroll in Employee Retention
The innovation, flexibility and interaction with web3 that are hallmark features of hybrid payroll and key components for attracting top talent, are equally vital for employee retention.
Similar to how companies who refused to switch over from mailed checks to direct deposit received significant backlash from employees, as crypto and stablecoin payments rise in popularity, the lack of options for their receipt signals to workers a company’s stagnation and failure to adapt.
On the contrary, a company’s eagerness to evolve and embrace new technologies allows employees to feel a continued sense of growth within their workplace. As worker’s needs and demands change with the times, a company’s willingness to meet them is crucial for employee retention. This can lead to an increased sense of pride in one’s place of work and a feeling of being at the forefront of groundbreaking technology.
As interest in yield farming has grown and protocols such as Aave provide easy onramps for earning interest on stablecoins and crypto, the ability to seamlessly transform a paycheck into an additional source of passive income possesses substantial appeal. The potential to earn 5% APY or more on a paycheck is a draw for tech-savvy workers, and with the hybrid payroll setup, a portion of the month’s wages can still be withdrawn in fiat.
Employees are further drawn to reinvest commitment into their places of work when they are stakeholders in the company. With hybrid payroll, since payments can be cashed out in a project’s native token, an employee is able to have a direct stake in a company’s success, leading to increased loyalty and motivation. In the event of a project’s growth, the appreciation of the native token means significant financial benefits for employees who have chosen to invest in it. With respect to projects such as DAOs whose native token often corresponds to voting privileges, an additional commitment to a project is possible when earning in tokens; on top of the potential financial upsides, more tokens can equate to greater voting rights.
For employees based in economies with depreciating local currencies and less reliable centralized financial systems, the ability to bypass these and save in crypto is a major perk. It can represent the ability to save in a stable currency such as stablecoins or to broaden their financial portfolios with investments in crypto.
Here is how flexible fiat and crypto payments can boost engagement and retention across your global workforce:
Access to Decentralized Finance (DeFi)
- Earning Interest Instantly: Traditional savings accounts currently offer minimal interest. With DeFi platforms like Aave, Compound, and Yearn Finance, employees can immediately deposit their cryptocurrency and start earning competitive yields. For someone who's financially savvy, the ability to earn, for instance, 5% APY or more on their paycheck can be a significant incentive.
- Liquidity Mining: Some DeFi platforms offer liquidity mining or yield farming where users can earn additional tokens by supplying liquidity. Employees can put their crypto to work and earn potential rewards beyond just holding.
- Loans & Collateral: Employees can use their cryptocurrency as collateral to take out loans on DeFi platforms without having to liquidate their assets. This offers them flexibility in managing their finances.
Getting Paid in the Company's Native Token
- Alignment of Interests: When employees receive a portion of their salary in the company's native token, they become stakeholders. This direct stake in the company's success can lead to increased loyalty and motivation.
- Token Appreciation: If the company does well, and its token appreciates, employees stand to benefit financially. This potential for additional financial upside can be a strong retention tool.
- Voting Rights & Governance: Many tokens give holders some form of governance rights. This could mean that employees can have a say in certain company decisions or the direction of its product/services.
Financial Autonomy and Inclusivity
- Banking the Unbanked: For international contractors or employees in regions with limited banking infrastructure, receiving crypto can provide access to financial services they might not otherwise have.
- Cross-border Efficiency: Crypto transactions can be more efficient than traditional banking for international transactions. Employees might appreciate the reduced fees and faster transaction times.
- Hedging Against Currency Volatility: For employees in countries experiencing significant currency devaluation or hyperinflation, receiving a stable portion of their salary in cryptocurrency can be a hedge, preserving the value of their earnings.
- Education and Upskilling: By introducing employees to crypto, you’re also introducing them to a broader ecosystem. They might take the initiative to learn more about blockchain, enhancing their skill sets, which can be valuable both for them and the company.
Personal Investment and Diversification
- Diverse Portfolio: By receiving a part of their salary in crypto, employees can diversify their investments without actively buying into the crypto market.
- Long-term Investment Strategy: Those who believe in the long-term value proposition of cryptocurrencies can see this as an automated dollar-cost averaging strategy, where they accumulate crypto over time.
- Tax Implications: In some jurisdictions, the manner in which cryptocurrency is acquired can affect its taxation. Earning it as salary might offer different (potentially more favorable) tax implications than purchasing it directly.
- Employee Pride & Community: Being a part of a company that's at the forefront of financial innovation can be a point of pride. Employees may feel they're part of a bigger movement, fostering a sense of community and belonging.
Real World Examples of Hybrid Payroll in Action
Whether a company holds its treasury in crypto and wants to allow for contractors to receive compensation in fiat, or vise versa, a hybrid payroll solution provides a scalable method for facilitating this.
T3rn, a protocol built to enable frictionless, trust-free and reversibile cross-chain smart contract execution, serves as an interesting example of hybrid payroll’s diverse utility. As a fully remote company with its team members spread across the globe, it is a non-negotiable that payroll can be issued across a wide range of currencies.
While T3rn holds its treasury in crypto, many of its contractors want the option to receive full or partial salaries in their local fiat currency. By onboarding with Rise, an all-in-one crypto and fiat payroll and compliance solution, T3n is able to fund payroll is USDC from a digital wallet while their global employees can choose to receive payouts across a range of 90 fiat currencies and 100 cryptos.
Another example of hybrid payroll in action can be seen with ZenAcademy, a content media company with a focus on web3 education and community building. As a web3-native company, ZenAcademy holds its treasury in ETH, but wanted to leverage hybrid payroll as a means of catering to employees' diverse payroll needs and interests.
While in some cases the need for fiat payments stemmed from compliance considerations, in others, they were driven by contractor preference. Regardless of the situation, hybrid payroll with Rise allowed for ZenAcademy to easily fund payroll in USDC from a digital wallet while contractors had total freedom to receive remuneration in their preferred currency.
Implementing Hybrid Payroll in Your Organization
While restructuring payroll can initially appear to be a daunting task, with today’s available technology it has been made relatively simple. When beginning to consider the implementation of a hybrid payroll system, the first question to ask is whether your company has the capacity to issue crypto and fiat payroll and compliance independently or whether a payroll provider is needed. In the majority of cases, due to the ever-changing regulatory and compliance landscape of crypto, going through a hybrid payroll provider that serves as the expert in these matters is advisable.
The next step involves choosing a solution that best meets the needs of your company. When looking at hybrid payroll through the lens of agility, opting for a solution that provides the flexibility to fund payroll in both fiat and crypto, from a traditional bank account and a digital wallet, offers a forward-thinking approach to ensure that your treasury and payroll can swiftly adapt to the evolving demands of the workforce.
A follow up consideration should be the currency offerings provided by a solution. Depending on the countries in which contractors are based, the respective fiat currencies must be available for payouts. For this reason, choosing a solution that has a wide range of fiat and crypto payment options is critical.
Once a best-fit solution has been selected, the process of onboarding and educating employees and contractors begins. For those who are resistant to change, there may be additional work necessary in providing encouragement and education. These moments can provide an important opportunity to elucidate workers as to the many benefits provided by hybrid payroll and access to DeFi.
The Future of Payroll
With more companies worldwide adopting a hybrid payroll model, an increasing segment of the global workforce now expects its inclusion as a standard component of their compensation packages. To appeal to these new demands, from both a present day and future-facing approach, the integration of a hybrid payroll solution is a necessary step in attracting top global talent and retaining employees.