Hourly Employee Retention Strategies

When millions of U.S. workers voluntarily left their jobs because of higher pay elsewhere, job dissatisfaction, or a need for a break—a phenomenon that has been called the Great Resignation—many expected the trend to reverse when the economy began to soften. But, even as companies prepared for a possible recession, the overall quit rate continued to register 25% higher than it was in 2019.

With nearly 11 million jobs open in November 2022, especially in industries such as food services, healthcare, transportation, and warehousing, employers are facing fierce competition in attracting and retaining employees in today’s tight labor market.

But there appears to be a disconnect between what incentives employers believe they need to offer to prevent workers from job-hopping and what their employees really want. According to recent research by business consulting firm McKinsey, bosses attributed their workforce turnover to dissatisfaction with pay, work-life balance, or poor physical and emotional health. But employees surveyed reported different reasons for why they quit: They did not feel valued by their companies (54%) or their managers (52%) or because they did not feel a sense of belonging at work (51%).

Those findings were echoed by a Pew Research Center survey of 6,627 adults who had quit their jobs in 2021. Low pay was cited by 63% of workers who left their jobs, with an equal percentage blaming a lack of opportunities for advancement, while 57% said they quit because they felt disrespected at work. At least a third of respondents said those were the major reasons they ran for the exit. Low-wage workers, at 24%, were the most likely to quit, compared with 18% of those with middle incomes and 11% of high earners.

So what can employers do to retain their workers, particularly frontline and hourly employees, in today’s job market? A bigger paycheck is certainly one element, but so are other measures to show companies value their employees.

Pay a Fair Hourly Wage

While many employers have increased hourly wages, high inflation has eroded how far paychecks stretch to cover the cost of living. A recent Harris poll finds that 75% of hourly workers struggled to pay expenses in 2022, and 35% said they received no pay increases over the past year.

The Massachusetts Institute of Technology has an online living wage calculator to help firms estimate the cost of living by county and state. Making workplace benefits, such as healthcare insurance, more affordable also provides workers with greater take-home pay.

Emphasize Employee Wellness and Good Mental Health

Research by Mercer found that 25% of U.S. workers are highly or extremely stressed. Concerns about mental health are top of mind for employees under 35, women, low-wage workers, and minorities, the survey found.

Offering access to mental health resources, including virtual mental healthcare, sends the strong message that employees’ health is a priority. In the workplace, employers can mitigate stressors, such as establishing work boundaries, discouraging constant connectivity, and offering stress management programs.

According to a new survey by global consulting company WTW, 87% of U.S. employers plan to offer more robust mental health benefits, and 64% said they would take steps to make healthcare more affordable for their employees.

Give Reasonable Employee Flexibility

In survey after survey, employees say they prize flexible work schedules. Flexible working arrangements can be more challenging for frontline workers who interact with customers. But these are the same employees who often attend school, have a second job, or have family demands that make job flexibility critical.

According to the Pew Research Center study, half of employees who quit in 2021 found new jobs that offered greater flexibility over their work hours. One strategy for flex scheduling is to allow employees to work a set number of hours within a wide window of time so they can meet their personal commitments, such as dropping their kids off at school.

The Pew survey found that 48% of workers with a child under age 18 quit in 2021 because the demands of taking care of their children were not compatible with their jobs. The U.S. Chamber of Commerce offers a road map of ways employers can support working parents, such as with child care vouchers, flexible scheduling, and temporary backup child care for unforeseen changes.

Businesses should be cognizant that employees may also be caring for elderly family members; elder-care services such as Bright Horizons can help employees manage the challenge.

Help Employees Advance

In addition to their concerns about health, employees want an opportunity to grow in their jobs, but they may not know how to go about it. Managers can assume the role of coach or mentor, reinforcing employees’ strengths and helping them identify where they might advance so they see a future with the company.

Hourly workers may also want to further their education to achieve career goals. Consider providing tuition assistance at local community colleges or online learning platforms to help employees develop new job skills or pursue academic interests.

Recognize Employee Growth and Achievements

Employees who feel recognized for their work are more likely to remain in their jobs, and they tend to work harder and are more productive. Showing appreciation to outstanding employees publicly—such as an on-site celebration, emails to executives, and a story in the company newsletter can make an employee feel valuable.

Some companies are offering more innovative benefits, such as contributing to savings accounts funded by employees so they have emergency savings, or coaching on how to manage student debt. Others are offering perks like pet insurance.

Listen to Employee Concerns and Ideas

Employees also feel valued and appreciated when their managers simply take time to talk to them and ask them about their concerns, according to Gallup’s research.

More conversations mean that managers can spot problems or discontent early and try to remedy the issues before workers quit. Managers may also be able to propose ways that employees can better organize or approach their workload so they don’t become unnecessarily overwhelmed or anxious. Employees feel supported when their bosses express an interest in them and foster a sense of employee engagement.

The challenges of the last few years have caused nearly everyone to rethink their priorities in work and in their personal lives. Employers now have an opportunity to help their workforce feel more supported, valued, and engaged. In turn, workers will be more productive and happy to stay with their companies.