The practices we need to reset businesses to be fairer and more resilient already exist in many places—they’re just not always easy to find when you’re in the throes of managing your career or your team. My goal has been to scour for them and highlight what I find. 

Today I’m writing in some detail about an important effort at PayPal to take responsibility for and boost its employees’ financial wellness. I’ve been following this over the past year as PayPal rolled it out and recently spent time with company executives to better understand the details. Their pioneering approach offers a model for others to study and implement.

What PayPal is doing:

The financial technology company in Oct. 2019 announced a four-part program that does the following:

1 – Lowers the cost of health-care benefits. PayPal reduced the cost of employee health-insurance premiums by about 60% for entry level and hourly workers who represent roughly one-third of its workforce. Health-care premiums can be one of the bigger expenses for families, and are regressive in nature—they’re generally the same regardless of income, so represent a bigger percentage of pay for low-wage workers.

2 – Makes every worker a PayPal shareholder. Every employee regardless of their level received stock grants and now has the option to receive stock as part of their compensation. This is important because stock ownership is heavily skewed toward high-income Americans, making it a major contributor to wealth inequality. PayPal’s shares have more than doubled over the past year, which means those grants are even more meaningful.

3 – Raises wages for lower-paid PayPal employees around the world. The company says it was always paying at or above market rates. But as part of its new focus on financial health, PayPal saw that there were places where it needed to provide additional raises.

4 – Provides financial wellness education and coaching for all employees. In addition to personal finance coaching, PayPal provided staff with an app from Even Responsible Finance that helps budget expenses and savings, and allows them to access their earnings even before the next paycheck if needed.

PayPal created a new metric that it uses to guide its financial wellness efforts and track its progress. It’s called net disposable income (NDI). This is the income that employees have left after paying taxes and essential expenses like food, housing, and transportation. PayPal tracks NDI as a percent of the employee’s compensation.

PayPal set a goal that its lowest-paid workers would achieve an NDI of at least 20%, from a little as 4% in some places when it started. By the end of 2020, it expected to hit a 16% NDI for roughly the lowest-paid one-third of its workforce. PayPal picked the 20% target because its analysis suggested that level would allow people to “save and manage their financial health in ways that would give them more stability and security,” says Franz Paasche, senior vice president for corporate affairs.

How PayPal got there:

PayPal is one of the Silicon Valley financial technology giants, with a stock market capitalization of $284 billion. But many of its roughly 23,000 employees are hourly workers in call centers and other areas of its operations. 

The company in 2017 set up an emergency relief fund that it put $5 million into for employees to tap for grants when they experienced some unexpected financial crisis. “One sign of trouble came from a trend that we saw in applications to this fund,” PayPal CEO Dan Schulman has written. “We found urgent requests for help were increasingly the result of everyday events, like an unexpectedly steep medical bill, a student-loan payment, or a car breaking down.” 

In 2018, PayPal surveyed lower-wage and entry-level employees and found that almost two-thirds reported sometimes running out of money between paychecks. “This was disappointing and surprising, but provides a valuable lesson to other leaders,” Schulman explained in an article coauthored with Paul Tudor Jones of Just Capital. “Although PayPal’s internal analysis showed that it paid at or above market value for each of its employees, the wages were not always sufficient for many families.”

Schulman’s team had focused on wellness as one of its values after PayPal was spun out of eBay as an independent company in 2015. And while other financial companies focused on financial inclusion—making sure that people had access to bank accounts, for example—PayPal’s leadership thought financial wellness was a better ambition for its customers and staff. They also wanted social responsibility to be part of the company’s core activities rather than parked out in a corporate foundation.

The results so far:

  • Fewer employees are running into financial emergencies.
  • More employees are buying into expanded health-care insurance options that go beyond the basic plans.
  • More employees are putting money into their 401k retirement accounts and participating in employee stock-purchase programs.
  • PayPal internal surveys show greater employee intention to stay at the company since the initiatives were put in place. Employee retention rates increased.

Looking ahead, PayPal is focused on hitting its 20% NDI target. It plans to keep improving its financial wellness program as it better understands what makes a difference, and has been adjusting some of the way it’s been supporting employee wellness amid the strains of the pandemic.

What about the cost of the initiatives? And could companies who aren’t super-profitable Silicon Valley titans afford similar programs? 

“We made a significant investment in these programs,” says Paasche. “But we feel strongly as a leadership team that investing in our employees is the smartest thing that we can do to build value for all of our stakeholders. Employees who feel financially secure, who feel connected to the company and its mission are going to invest in the future of the company, feel a stake in the company. They’re now all shareholders. And that is going to have benefits for our customers. That’s going to have benefits for our investors.”

For more information, you can download a worker financial wellness assessment guide from Just Capital and PayPal. There’s a TED conversation with Schulman from last year, and an August 2020 Harvard Business School case study on PayPal, with Michael E. Porter as the lead author.

I’m interested in hearing about other pioneering specific ways for resetting business practices—you can send them to me at I recently wrote about the related question of what people are paid—you can read that here.

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