Managing Employees by the Hour

What’s the best strategy for finding—and keeping— hourly wage earners in a tight labor market?

By Tamara Lytle Apr 1, 2016
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April 2016 HR Magazine cover 4Lytle.jpgWhen a friendly clerk at one of Ed Doherty’s fast-food restaurants flashed him a smile, he couldn’t help but notice her missing front teeth. Doherty loaned her money to get them fixed. “She paid me back every nickel,” he says, recounting how shocked the worker was that he would be so generous to an employee.

Although Doherty doesn’t make a habit of offering personal loans to his hourly workers, he does champion a workplace where employees are treated with kindness, dignity and respect.

His decades in the restaurant business (and working for Marriott before that) have taught Doherty key lessons about managing an hourly workforce—and leveraging it to gain a competitive advantage.

His company, Doherty Enterprises Inc., which owned the Roy Rogers restaurant where the employee who had missing teeth worked, was nearly bankrupted in the 1990s after the fast-food chain ran into financial trouble. But Doherty rebooted with the aim being to “wow” guests, and he made his overwhelmingly hourly workforce a key ingredient of the strategy.

Now his Allendale, N.J.-based company owns 164 restaurant franchises across eight brands, including Applebee’s, Chevys Fresh Mex, IHOP, Panera Bread, and Noodles & Company. About 9,000 of its 10,000 employees are hourly associates.

Although recruiting and retaining hourly workers can present challenges that are beyond HR’s control, other issues that affect on-the-clock positions are well within its purview to address. For example, hiring and motivating effective managers who will communicate clearly with their nonexempt employees is key. Focusing on recognition, benefits and incentives is also integral to an effective HR strategy.

“When you run an organization a certain way, people feel proud to work there. It’s an environment you create that builds on itself,” says Doherty, whose company created the Wow a Friend Foundation to help associates facing a crisis. Last year, he personally matched the nearly $250,000 that employees donated.

Finders Keepers

Finding high-quality hourly employees is harder than it used to be. As unemployment has fallen, there are fewer workers actively seeking new opportunities. And the ability to both motivate and retain existing employees has become tougher as competitors seek to lure them away with higher wages and better promotional opportunities.

Given the tight labor market, it’s important for recruiters to show prospective candidates why their companies are great places to work, says Mel Kleiman, president of Humetrics in Sugar Land, Texas, which specializes in training, systems and tools to help companies manage hourly workers.

“Quit looking for people looking for work,” he advises, “and look for people looking for better jobs.”

That’s the approach Hilton Worldwide took, says Jennifer Rinck, the company’s vice president of talent acquisition. The global hotel operation has shifted its strategy to reflect new workforce realities, she says. With unemployment near 5 percent, Rinck highlights competitive pay and benefits to draw people away from other employers. She also emphasizes Hilton’s new policy offering hourly and salaried staff paid paternity leave.

Leaders at Flynn Restaurant Group leveraged their own workforce as a source of valuable leads. After an internal analysis revealed that hourly hires recommended by employees typically perform better than others, the company began providing bonuses to workers for referring people who land jobs, says Betsy Mercado, the company’s vice president of human resources.

One way for HR to define a company’s unique value proposition is to create a list of the top 10 reasons to work there, according to Kleiman. This exercise helps leaders to fine-tune the company’s brand and motivates top management to live up to its own promises.

Additionally, companies that want to retain their best hourly workers need to match how they treat these employees to the employees’ value in the workforce, Kleiman advises.

The easiest employees to lose are often the best ones, so focus on finding ways to give top performers growth opportunities—listen to them, assign them interesting work, and make them feel valued with competitive pay and benefits, he says. Too many companies wait until their top-performing workers are leaving to ask, “What do we have to do to keep you?”

The Boss

Managers play a big part in retaining the best hourly workers.

That point was driven home to Kleiman when he stopped for lunch recently at a casual dining restaurant and noticed that many employees were wearing T-shirts that said “I love my job,” even though they had a variety of shirts to choose from.

“You’ve got to be a manager whose employees want to wear that T-shirt,” he says. “Employees don’t leave good managers easily, even for more money.”

The key to developing bosses that engender that kind of loyalty is selecting the right people for supervisory jobs and then training them well, Kleiman says.

During a blizzard in January, a customer had ventured out into the storm to one of Doherty’s Panera Bread restaurants. The customer called later and said he had left his food there by mistake. The store was about to close as the snow piled up, so the manager decided to deliver the order to the customer’s house.

That sort of attitude sets a good example for hourly staff.

The Face of the Hourly the Workforce

  • The U.S. had 77.2 million hourly workers in 2014; that represents more than 56.7 percent of the workforce.
  • 70 percent of hourly workers are employed full time.
  • 45 percent have four-year college degrees, and another 18 percent have advanced degrees.
  • They are most likely to work in retail, professional services/banking/financial, construction/manufacturing and education.
  • 40 percent of hourly workers have been with the same company for more than five years.
  • Restaurant employees are the least loyal—29 percent have been with the same company for six months or less.
  • 83 percent of hourly employees have one job.

Sources: Profile of the Hourly Worker by Edison Research on behalf of Red e App, released November 2015; and Characteristics of Minimum Wage Workers, 2014 by the U.S. Bureau of Labor Statistics.

Effective managers are those who also get to know their employees as people, says Paul Rockelmann, vice president of human resources at The Rose Group in Newtown, Pa., which owns Applebee’s and Corner Bakery Cafe restaurant franchises and employs 4,500 hourly workers.

“Managers have the best idea on an individual level of what our associates need,” Rockelmann says. “What works for one person might not work for another.”

Predictable Schedules

Taking an individual approach is effective with scheduling as well, since unpredictable hours are a common pain point for hourly workers.

Hilton strives to keep great employees by offering flexible schedules, Rinck says. And last year the company rolled out a policy of scheduling hourly workers 10 days in advance.

“People are really looking for the ability to plan their lives out and make commitments,” Rinck says. In an industry where schedules sometimes come out just days in advance, being able to offer more advanced notice is a recruiting bonanza.

Technology helps make that possible at Hilton, which recently switched to software that looks at historical occupancy rates and labor needs to forecast how much staffing is required for any given shift.

Rockelmann’s company uses a similar tool, which projects staffing needs based on historical sales data and matches that with employees’ scheduling requests. “Technology really has helped the associate and the employer in that area,” he says.

EJ Ajax Metalforming Solutions in Minneapolis, which has 50 hourly workers in its 60-person workforce, also strives to offer flexible scheduling, says its head of HR, Curt Jasper. For example, the company has altered the usual shift schedule to allow one worker to start later in order to take care of siblings and another to leave early for a class.

The flexible schedules give employees more control over their time than they might have elsewhere, Jasper says, and “they don’t want to lose that.”

A lack of flexibility and not being assigned enough work hours are big drivers of turnover, Mercado says. Flynn Restaurant Group is the largest restaurant franchisee in the U.S., with 750 eateries across three brands, including Taco Bell. The company focuses on giving its 34,000 hourly workers the schedule that was promised to them during the hiring process.

In February, the nation’s largest employer, Wal-Mart, announced plans to use fixed shifts, which guarantee the same weekly hours for as long as a year, and flex shifts, which allow employees to build their own schedules from the hours available in roughly two-and-a-half-week increments. These scheduling features will be available to workers by the end of this year.

Doherty says he tells his managers that they are obliged to try to accommodate employees’ scheduling requests. He also makes sure not to require that hourly workers be on call for last-minute shifts—a scheduling practice that landed some employers in legal hot water last year.

Let Them Hear You

Keeping in touch with hourly employees can be a continual challenge. In industries such as hospitality, workers often aren’t all under one roof or on the same schedule, and companies may not have e-mail addresses for their hourly workers.

Here’s what some HR leaders are doing to bridge the communication gap:

  • Newsletters and magazines. Doherty’s company sends an internal newsletter six times a year that includes photos from charitable events that workers participated in and employee announcements such as births and weddings.
  • Webpages. The Rose Group uses an employee webpage to highlight benefits such as employee discount programs and to answer questions from staff. Hilton posts electronic thank-you notes on its employee webpage to recognize special efforts noted by guests, managers and peers.
  • Employee surveys. Hilton conducts an annual survey that produces a ton of feedback, Rinck says. The comments help shape company policy changes. Flynn Restaurant Group fields an annual employee satisfaction survey but also canvasses every departing hourly worker. Half of workers who reported being dissatisfied with their jobs said their company never surveyed them, according to Profile of the Hourly Worker, a report released in November 2015 for Red e App by Edison Research.
  • Apps. Some organizations are adopting tools that offer mobile device applications that create an easy way to stay in touch with employees whenever and wherever they work. Among hourly staff who access the Internet, 72 percent do so via smartphone, according to the Red e App report.
  • E-mails. Some companies collect employees’ e-mail addresses to send out benefits surveys and compensation information.
  • Focus groups. To gather feedback from its employees, The Rose Group convenes an associate roundtable about five times a year with 20 hourly workers. “You have to get out and talk to your associates,” Rockelmann says. “They are the ones who talk to your guests.”

Recognition And Rewards

Competitive pay is critical to attracting and retaining top hourly employees, and offering incentives can also help companies achieve these outcomes.

At Doherty Enterprises, managers receive a pool of money to spend on programs that reward employees who sell the greatest amount of a certain type of beverage or who earn high scores on mystery shopper surveys.

EJ Ajax pays its hourly workers additional money for learning to operate new machines. Employees get credit on their evaluations for attaining up to four levels of proficiency on machines they operate. Pay raises are not based on seniority or inflation, so workers have an incentive to keep learning and improving if they want higher pay.

About 90 percent of new hires at EJ Ajax start with no experience, so training is key. Workers also are encouraged to take outside classes in areas that grow their on-the-job skills.

Along with doling out bonuses to reward employees for good behavior, many employers are taking steps to celebrate positive actions.

Ten years ago, fewer people were interested in recognition pins or other symbolic gifts, but that is changing as more Millennials join the workforce. Members of that generation tend to want the proverbial pat on the back. That’s why Rockelmann of The Rose Group is stepping up his recognition programs with pins and gift cards to mark tenure milestones.

Twice a year, Hilton dedicates a week to recognition with thousands of events held around the globe.

Many organizations are also customizing their rewards offerings. San Francisco-based Flynn Restaurant Group is trying out a new program to let employees choose from among several award options to personalize recognition. “You come up with one [prize] for 50 people, and there are going to be 25 who don’t appreciate it,” Mercado says.

EJ Ajax offers its employees rewards such as $50 gift cards for spotless safety or attendance records. A monthly drawing is held with the names of those who submit constructive ideas to the company suggestion box; rewards include four extra hours of vacation.

Doherty Enterprises employees can receive gift cards and invitations to offsite dinners for them and a guest to recognize tenure.

At The Rose Group, if an employee submits a suggestion to the “Great Idea Hotline” and the suggestion is implemented, the employee gets $100 and a letter from the company president.

Hilton focuses on families by offering employees discounted stays at its hotels and extending that benefit to employees’ family members.

The hotel chain also supports employee development among hourly workers by providing an array of in-house and university-produced online classes and by giving workers who earn a high-school equivalency diploma opportunities to move up within the business.

Culture Club

Along with tangible tactics for managing hourly workers, developing a strong culture is an important retention component, especially in a competitive labor market. Many organizations build teamwork and pride by supporting charity and community projects, which is viewed as a big plus by Millennials. “They feel good about working for a company that is committed to giving back,” says Doherty, whose company participated in 850 charity events and community projects outside its restaurants in 2015.

Regardless of what generation employees are from—or what level they are at in a company—all people want to feel valued and heard.

“It doesn’t matter if you have a hundred employees or thousands,” Rinck says. “You need to be out there asking and finding out what’s important to them.”

Tamara Lytle is a freelance writer in the Washington, D.C., area.


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