The rapid pace of change due to COVID-19 and its impact on hiring and retaining hourly employees demands a new source of insight to distinguish yourself as an employer. Historically, most employers turn to benchmarking as a first step toward enhancing their employee attraction and retention efforts. But a new source is emerging, and that new source is your own employees. Making the unique needs of your own hourly workforce a new benchmark to consider provides the information that will differentiate you from the many companies in competition for your talent.
With employees holding out for higher income, more flexibility and safer working environments, you need to get creative rather than just following the pack. The moment calls for an agile approach, one that involves trying new things so that you fail — or succeed — quickly. After all, hiring hourly workers won’t be getting easier any time soon. According to the US Bureau of Labor Statistics’ Employment Projections (September 2020), the US worker growth rate over the next 10 years is estimated at just 0.4%. Such anemic growth means reliable scheduling, guaranteed annual income, and investments in education and training are all in the conversation mix.
A number of issues explain the “disappearance” of the desperately needed frontline worker. Some workers have jumped from struggling industries to booming ones (waiter to warehouse). Many still have a significant amount of fear about the safety of frontline work. And others have decided to remain on the sidelines, reassess their employment situations and upgrade to new jobs that allow for higher, more stable income and flexibility. For many women, the continued lack of childcare and/or consistent school schedules have made it difficult to return (3.8 million women left the workforce in 2020, according to a report from the National Women’s Law Center in July 2021). Finally, migrations from expensive cities to more affordable areas have simply resulted in fewer available workers in higher-demand urban cores.
Attracting new workers is not the only challenge. Retaining the current workforce, which is experiencing many of the same stressors as workers who have left, remains a problem. We all see the headlines about frontline healthcare workers, for example. Exhausted, stressed out and oftentimes fearing for their own safety, many frontline workers are looking for the exit.
The cost to everyone in the workplace ecosystem is significant. The Society for Human Resource Management (SHRM) reported that, on average, replacing an employee costs a company six to nine months of that employee’s salary. But those costs can grow even higher. According to Nursing Solutions, Inc., the average cost to replace a registered nurse equates to approximately US$330,000 per worker!
Meanwhile, those employees who stay often remain behind in low-morale, poorly resourced environments.
In our most recent pandemic research, workers cite pay and flexibility as the most important factors. We see many employers addressing both with wage increases and more flexible working schedules for their hourly staff. For example, our research has found that 70% of companies are introducing more flexible working arrangements, but most of these programs target the professional workforce rather than hourly workers.
With so many reasons for hourly worker shortages, solutions to attracting and retaining need to be varied and targeted to the needs of this population. Research has shown that the best, most enduring solutions come from listening to the workforce and focusing on their unique needs. (To provide a glimpse into this process, Mercer will soon release findings from our Inside Employees Minds research.)
Here are a few places to start:
The pandemic has caused a value shift within employees. The result? Employers need to understand their needs inside and outside work. This, in turn, can reveal high-value workforce investments that can serve as a source of differentiation in a tight labor market. Examples are emerging every day, such as Amazon paying full four-year college tuition for its 750,000 hourly workers.
During the pandemic, companies and society came to appreciate the value of the frontline hourly workforce. It held up many businesses that otherwise would have been shuttered. It’s an often-overlooked segment that is essential to the viability of many industries. With demand for hourly workers high and availability low, this talent pool now has the option to be more selective. The rise of an empowered hourly workforce demands that we listen more closely to what these employees value and need if we want to maintain a competitive advantage with this segment.
With 42% of companies saying voluntary attrition and turnover is higher than usual among hourly, frontline workers, the competition for this talent will be won and lost with listening, empathizing and ultimately customizing your employee value proposition. In doing so, you create the definitive benchmark — one built by you for the greater good of your organization and your people.