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Hourly Worker Retention: Why It’s so Difficult and 4 Ways to Improve It

February 17, 2023

Employee retention has always been an area of interest among HR departments. Even today, as recession talk is everywhere and mass layoffs have already begun, voluntary turnover is still something to avoid whenever possible. And according to research, it’s avoidable about 77% of the time.

Work Institute estimates that one in four employees left their jobs in 2018, and that more than three-fourths of that turnover could have been prevented by employers. That is – only if employers know what’s driving the turnover in the first place.

It may be tempting to fight hourly worker turnover the same as salaried employee turnover, but by doing so, employers may be missing the mark.

To help employers understand the wants and needs of their hourly workers, we’ve outlined ways to reduce voluntary turnover and increase retention for hourly workers.


What is Employee Retention and Why is it Important?

Employee retention is when employees stay with a business for an extended period of time. Doing so reduces the costs associated with recruiting and training new hires, leads to higher employee morale and loyalty, and results in greater productivity.

In short, employee turnover costs companies time, money, and morale. And with turnover hitting 55% in 2021, many companies have been rethinking their strategies around retention for hourly workers.

The goal of any successful employee retention strategy is to create an environment where both full-time and hourly employees are engaged, motivated, and contribute to the business's success.

But in order to ensure hourly employees stay at your company, you need to understand what drives them to leave.


Why Do Hourly Workers Quit Their Jobs?

According to research from Pew, the top reason full-time workers quit their jobs in 2021 was low pay. 63% of people said low pay was either a major or minor reason for quitting. 35% of people said feelings of disrespect was their main reason for quitting, followed by 33% saying lack of advancement was their major reason for quitting.

Hourly workers, however, show slightly different reasons for quitting. In response to The Great Resignation in 2021, major retailers like Amazon and Walmart began offering higher pay, sign-on bonuses, and other perks to help attract and retain hourly workers. But despite their best efforts, Amazon found their average warehouse worker still quit after only 8 months.

So, while pay was the main reason for full-time workers to quit, something else is likely driving hourly workers’ dissatisfaction.


How to Increase Retention for Hourly Workers

What do hourly and part-time workers really care about at work? The answers to this question will help increase retention for hourly workers.

1. Provide Opportunities for Career Advancement

WorkStep surveyed over 18,000 hourly workers across 150 companies and found that lack of career growth was the top reason for turnover. In truth, this finding should be unsurprising.

No one truly wants to just punch in and punch out every day. People want to feel as though they’re growing, developing, and advancing. Furthermore, the ability to develop skills is a fundamental component of employee engagement. Companies with a culture of growth tend to attract and retain high-performing employees who develop stronger relationships with the company.

This is especially true for younger employees. According to a LinkedIn study, 40% of young workers said they were willing to accept a 5% pay cut to work in a position that offered career growth opportunities. Additionally, 76% of Gen Zers want more opportunities to move up or increase responsibilities at work.

Employee development opportunities may include:

  • Career development conferences
  • Online classes or higher education
  • Taking on more responsibilities and challenges

These activities can:

  • Enhance an employee's performance in his or her current role
  • Spark curiosity or bring out a new talent
  • Present the opportunity to learn about other roles within the company's industry


2. Get Employee Feedback and Listen

One reason for the disconnect between what hourly employees want and what employers are offering is the lack of effective communication. Employers assume that if employees are quitting, money will make them stay. But this is an expensive option that doesn’t get to the root of the issue.

Instead, employers need to open the lines of communication. This can be done through regular, one-on-one meetings where employee and manager discuss the goals of the employee and ways to achieve those goals. Doing so shows the employee that they have a future at the company and will help build trust, loyalty, and engagement.

Also consider running periodic employee engagement surveys. An employee engagement survey is a tool used to measure how employees feel about their work, their job satisfaction, and their commitment to the organization.


RELATED: What is an Employee Engagement Survey? And Why Should You Care?


These surveys usually include questions about:

  • Job satisfaction
  • Engagement with work
  • Commitment to the organization
  • Motivation at work
  • Satisfaction with management

Employee engagement surveys can be administered in many ways, but most are either paper-based or online. They can be given to employees all at once (such as during a company-wide meeting), or they can be sent out periodically (such as once a year).

Additionally, some companies choose to make their employee surveys anonymous, while others allow employees to put their names on the survey. Depending on your needs, you may or may not choose to utilize anonymous surveys.

Once employers have feedback from their employees, it’s important to communicate back to your team what information you gathered from the survey and how the company will use this information. Whether you decide to address concerns directly with employees or make changes to company policy, it's crucial that you show your team that their voices are being heard.


3. Pay Well

All this isn’t to say pay doesn’t matter. In fact, it was the second reason for hourly workers cited for quitting. So, while pay may not be the main reason why hourly employees quit, it’s still a factor.

Furthermore, job switching has shown to be an effective raise solution too. In fact, one survey found that 49% of people who switched jobs during the pandemic received a 10% or more pay increase.

Additionally, it found that 62% of people are concerned that their pay won't keep pace with inflation. Meaning, leaders should take the opportunity to prevent voluntary turnover by proactively addressing pay negotiations – if an employee has done consistently great work, give them a raise and talk to them about their future. Waiting for employees to open the discussion just leaves the door open for them to take a better offer.

Speaking of inflation, it's common in today's market to see product costs increasing yet pay stays stagnant. If your company has raised its product prices but not its wages, know that your employees have noticed. Ask yourself, were your cost-of-living raises at least 6% this year? Because if not, your employees essentially took a pay cut.


4. Give Recognition Early and Often

Recognition is another powerful motivator that can retain quality employees. Companies that recognize the hard work of their team members tend to have lower turnover rates and higher engagement levels than companies that don't offer recognition programs.

In fact, a study by the American Psychological Association found that 93% of employees “who reported feeling valued said that they are motivated to do their best at work.” Another study found that when employees believe their efforts will be recognized, they’re 2.7x more likely to be highly engaged in their work.

But because turnover for hourly workers can happen quite early – a matter of months rather than years - it’s important to give recognition early. Where a salaried employee might get recognized at their one-year anniversary, an hourly worker might benefit more from a three- or six-month acknowledgement.

In a company-wide setting, offer a certificate or small gift and take a moment to highlight some of the accomplishments they’ve achieved since their first day. It will no doubt make them feel more connected to their work than no recognition.


Getting Started

Interested in learning more about how your company can benefit from a recognition program? Schedule a demo of Terryberry's new 360 Recognition platform today.