The second installment in our Hourly Employee Series

Hourly workers have a lot on their minds while at work. As an HR professional, you know that simply paying above minimum wage is not enough. Low unemployment, increasing levels of automation, and the rapid evolution of jobs have made it more difficult to attract and retain hourly employees. While traditional incentives like financial rewards have some impact, taking a holistic approach to the well-being of your hourly employees will have a far larger effect. 

Below are real-world success stories from organizations collaborating with a trusted advisor like Mercer. Look at these three cases — maybe one, or all of them, could work for you and your hourly employees! 

Case study # 1: improve retention and engagement through work and process design 

Problem: The retention and productivity of an hourly store clerk is low due to too many work responsibilities, many of which keep the clerk away from the sales floor. 

Actions: The employer conducted a study to better understand what tasks and activities prevented the store clerk from being on the sales floor selling products and attending to customer service needs.

Findings: Stocking practices at the store locations were not compatible with inventory automation. Clerks were manually moving 45-pound products onto shelves during substantial portions of their shifts, which kept them in the back warehouse instead of out in front of potential customers. The organization had digital tools in place; however, they were not taking full advantage of the capabilities

Outcomes: To address these challenges, the organization made process changes to improve the work design for the store clerks. These changes added inventory automation processes to streamline the clerk’s ability to easily manage inventory, see what was selling the most, and to find the locations of fast-selling products more easily. These changes also resulted in more productive work because the clerk was spending less time in the back dealing with inventory management issues. The result was more engaged store clerks, lower clerk turnover, and happier customers

Case study # 2: lower voluntary turnover with with competitive pay 

Problem: A hospital system has low employee retention and satisfaction due to pay that is not competitive compared to the rest of the market.

Actions: You need to understand your local labor market and have a realistic definition of what skills are needed to perform the jobs. You also need a clear understanding of what those skills are worth. To successfully do this, a  pay benchmarking analysis was conducted. This gave management staff a way to develop a data-driven structure to administer competitive pay. They were also able to create an organization-wide pay philosophy to align pay with local living wage standards. 

Findings: Current pay levels for hourly employees were below the competitive market. Hourly employees were easily leaving for a comparable job that paid more elsewhere. Over time, the hospital system invested in resources to align its employees’ pay with compensation market competitiveness.     

Outcomes: Just like with your salaried employees, hourly employees care a lot about their pay. The outcome of this investment has been an hourly workforce that, when surveyed, reported increased engagement and an enhanced sense of financial well-being. Further, the hospital system has since seen a dramatic decrease in voluntary turnover, particularly with hourly clinical workers who are critical to hospital operations.

Case study # 3: improve engagement and retention by supporting financial well-being

Problem: Heightened employee stress due to poor financial wellness and a general inability to withstand unexpected financial crises.

Actions: A cross-functional financial health team was established, which assessed employees’ ability to withstand sudden and unexpected financial expenses. 

Findings: Employees were unable to endure unexpected financial pressures. By listening to their people and through engagement surveys, the company found that the employees were living paycheck to paycheck and not saving money to manage an emergency or higher costs of living. For example, in the event of a vehicle’s flat tire or an emergency room visit, any available money was redirected away from paying for rent increases or food shopping.

Outcomes: The employer developed programs to help employees with immediate needs, such as emergency housing and food, while also collaborating with employees to build a strong financial foundation, including savings plans and credit rebuilding. The company structured a personal savings crisis account that received employee deposits and matching employer contributions. As a result, the company has seen improvements in employees' savings rates, reduced stress, and increased employee financial wellness. The program has also resulted in a high employee satisfaction rating and improved engagement as seen in their annual surveys.

Application to your organization

These scenarios highlight multiple approaches to meet the needs of the hourly worker from the store to the manufacturing floor to the hospital system. 

Do you see any parallels to similar situations in your organization? 

Organizations need to broaden their traditional views and practices on how to retain, motivate, and reward hourly employee. Consider things like:

• Tuition assistance
• Student Loan assistance
• Career or leadership development opportunities
• Paid time off
• Referral bonuses
• Performance bonuses 

As an employer of hourly employees doing the bare minimum of what is required isn’t enough. Be flexible where you can, and create a way to listen to employees. Continue to assess and evaluate their employee value proposition frequently to ensure that both the foundation programs (i.e., pay administration, job architecture, core benefits offerings) and the more innovative programs (i.e., financial wellness offerings, student loan repayment, subsidies for meals or home office equipment) are addressing the concerns of your hourly workforce. You can also check out the first installment of our Hourly Employee Series that addresses skills readiness and closing the skills gap for hourly employees.

Do you need help assessing your total rewards offerings and employee value proposition to meet the needs of your hourly employee population? Call us at 1-855-286-5302 or send us an email. 
 

About the Authors

Andre Rooks, Partner
Andre Rooks is a Partner at Mercer, where he is responsible for developing strategies that improve the outcomes from rewards programs. Prior to his current role, Andre was head of the Career Business for the Upper Midwest.

David Kopsch, GRP, Senior Principal
David Kopsch is a Senior Principal Consultant in Mercer’s Career Business located in Atlanta, Georgia. David assists clients in retail, manufacturing, and financial services on a variety of topics, including career framework, skills and jobs design, and total rewards strategy for developing a compelling employee experience. His experience includes business restructuring and transformation for global organizations, benefits valuation assessment, and organization design.

Abby Labow, Senior Analyst
Abby Labow is a Senior Analyst in Mercer’s Rewards Practice in Chicago. Her current work includes assisting clients in developing incentive plans, total rewards strategies, job evaluation and leveling, and compensation philosophy design.