Maximizing the potential of your hourly workforce 

Chances are they represent more than half of your workforce as well. That’s a significant chunk of your workforce and one that companies of all kinds are finding harder and harder to recruit and retain. Without them, many industries would grind to a halt.

To address this challenge, it’s critical to understand the unique needs of this important workforce segment. That’s exactly what we set out to do in our 2023-2024 Inside Employees’ Minds Survey. The results revealed a comprehensive look into the factors that motivate hourly workers, and the policies and practices needed to support and retain them.

Our research reveals that the three key areas of concern for hourly workers are: financial matters, benefits, and flexibility. 

Financial matters

Financial concerns weigh heavily on the US hourly workforce. Out of a list of potential stressors, covering monthly expenses is the top concern, with the ability to retire and personal debt jumping to the top two and three positions. Accompanying these financial concerns, employee challenges around workload/work life balance and mental emotional health take the 4 and 5 spots respectively.

This paints a picture of an hourly workforce that may have real concerns about how they will be able to sustain both their financial wellbeing and their overall energy and emotional wellbeing during the course of their employment. 

Questions like: “How am I going to get it all done?” and “How am I going to pay for the things myself and my family need?” may be weighing heavily on this sector of the workforce. The stress that can accompany financial worries and conflicting life/caregiving and schedule expectations can become very challenging for employees over time, impacting health outcomes for the employee and overall performance outcomes for the employer.

Benefits

Financial concerns naturally relate to and drive benefit concerns. In many hourly positions, the pay is low and there are minimal or no benefits to rely on. With hourly older workers more concerned about retirement, younger workers more concerned about mental and emotional health, and both groups concerned about personal debt, there are clear opportunities for employers to deliver benefits that can help with these concerns.

But workers are experiencing significant gaps between what they need and what their employers are providing.

• 34% of hourly employees can’t afford the healthcare they and their families need without financial hardship
  
• This number increases to 43% of all hourly employees that earn under $60,000 a year.

Lacking these benefits, employees don’t just seek other employment opportunities; their productivity in their current jobs is also at risk. 

Flexibility

Hourly workers often have more flexibility concerns than their salaried colleagues. That tends to come with the nature of the hourly work and historically limited flexibility options. And, in fact, according to our research, among hourly workers:

• 50% can’t choose the shifts they work to match their personal needs.
• 44% can’t adjust their start or stop times, even if they’re meeting their required hours.
• 63% can’t work a compressed week, even if they’re meeting their required hours.
• 34% can’t work on a gig or contract basis. 

These limitations don’t just impact work life—they have a marked effect on employees’ personal and financial lives as well. For instance, decisions between getting kids to school and arriving for their shifts on time, or challenges attending special events, meeting caregiving responsibilities or scheduling medical appointments. 

Hourly employees impacted by financial, benefit, or flexibility concerns—and often all three!—can be under a significant amount of stress which can impact their engagement and productivity. The stress that can accompany financial-, benefit- or flexibility-related concerns can also have a notable impact on an employee's desire to commit to their role for the long term.

For non-salaried, hourly employees, existing financial stress can be exacerbated should they need to take time off for unexpected health or family events. These absences are often not paid for by employers, placing employees in challenging positions when they depend on each paycheck for necessities.

Regardless of which way the pendulum swings in the job market--whether employees or employers seem to have the upper hand--engagement and retention are always key concerns for employers. As our research indicates, when employees (in this case, hourly employees) are supported in their roles, they are more engaged and less likely to seek opportunities elsewhere.

Meeting employees’ financial, benefit, and flexibility needs can drive engagement, loyalty and retention. 

Mercer’s research clearly shows that investing in the well being and satisfaction of hourly employees can lead to significant returns in terms of reduced turnover, increased productivity and, ultimately, a healthy bottom line.

So what steps can you take to address the concerns of your hourly workers and increase their engagement and longevity?

At a time when organizations are struggling to attract and retain top talent armed with requisite skills, and workers are failing to meet their needs, there is no better time to implement tangible solutions. It’s important for employers to: 

• Benchmark market pay and compensation practices to ensure that you’re offering a competitive package for your employees.
• Conduct employee listening surveys that seek to understand the specific needs of your workforce so that you can effectively address them.
• Implement job and skills models that seek to optimize your workforce and provide employees with career paths that make them feel needed and motivated.

In addition, there are best practice steps employers can take to impact each of the top hourly employee concerns.

Addressing financial concerns

Addressing hourly workers’ financial concerns can be done through means other than simply increasing their pay. Employers are using a variety of means to help alleviate financial stress for employees including:

• Employee discount programs—60%.
• Basic money management tools—55%.
• Personalized financial counseling or planning—44%.
• Personalized credit-/debt counseling—38%.
• Emergency fund/hardship assistance—38%.

When employees believe they are paid fairly and that their financial needs are being addressed by their employers, their commitment is boosted by 65%. That represents a significant return on investment for employers. 

Addressing benefit concerns

Recognizing hourly employee concerns, employers are taking steps to strengthen their benefit offerings. More than half told us that they will not shift any additional health plan costs to employees; according to Mercer Health & Benefit Strategies for 2024 Survey Report, nearly 40% will offer a medical plan with little to no deductible. These efforts have been shown to increase employee retention by 38%.

Similar employer benefits have been associated with retirement plan improvements. For instance, a 30% boost in hourly employee commitment when employees feel they can do penalty free emergency expense withdrawals.  

Addressing flexibility concerns

Our Inside Employees’ Minds survey revealed that more time off is the top action employees suggest for supporting mental health and easing burnout. Increased PTO for exigent circumstances and flexible scheduling options such as autonomy in selecting shifts and flexible start and stop times, for instance, can substantially increase workers’ ability to find work-life-balance. While only 50% can choose the shifts they work to match their personal needs, providing this to employees would have been shown to increase commitment by +27%.

Work and process design can have a major impact on attracting and retaining a strong hourly workforce. 

A common theme in Mercer's findings is a lack of predictability for hourly employees regarding confidence that their job will provide for their needs without interruption, that they will be supported if the unexpected happens, and that they will not be asked to extend themselves beyond what they can sustainably provide. A lack of predictability in these areas can be a real source of stress for employees, making it harder for them to commit to their roles for the long term. Citing concerns around predictability, our research has shown that providing employees with the ability to start/stop work to accommodate their needs (as long as the required number of hours are met) increases commitment by 24%. Similarly, the ability to easily swap shifts with co-workers boosts commitment by 21%.

We know that every organization’s needs are nuanced—as are the concerns and needs of their hourly workforce. By implementing these steps, organizations can create a flourishing work environment that supports hourly employees’ engagement and drives their career longevity.