Hourly workers may be the backbone of an organization, particularly in retail or hospitality, but they’re often the most neglected staffers on the payroll.

Perhaps because of the high turnover rates, or possibly because they’re distanced from higher management, hourly employees are often overlooked when it comes to development. Every member of the team is valuable, and each does their part to enhance the company — but not every company may offer learning and development programs to hourly workers.

It’s important to engage those workers who are at the front line of the customer experience, even if they earn the least within the company. One way to do so is with performance evaluations.  

The high cost of low retention

Hourly workers typically represent the highest turnover in any company, and turnover is costly. A survey from the Hay Group found retail store turnover reached 65% in 2016, up from 57% the year before. The Center for American Progress puts the cost of replacing an employee who earns less than $30,000.00 per year at 16% of their annual salary, meaning replacing a $10.00 per hour worker lost will cost you over $3,000.00.

Add to their findings that the voluntary quit rate for hourly workers in retail, food service and leisure/hospitality is high (with food service at 37%) and the costs of turnover can be significant.

The Work Institute’s 2017 Retention Report cites that 75% of the causes of employee turnover can be prevented. As the busy holiday season looms for the retail industry, the cost of turnover can put a serious dent in margins and performance.

Workplace policies that address hourly employee issues and concerns can help reduce turnover. Some states have mandated predictive scheduling laws for these staffers, while other states (and some companies) are increasing their minimum wage. In addition to financial concerns, these employees want to be valued in the workplace — to know their employer is aware of the contributions they make in maintaining market share and customer satisfaction.

Annual “well done”

For these staff members, with less financial incentives, performance evaluations can be key to retention and engagement.

“Employees want to know how they are doing and reviewing performance is a way to keep an open line of communications with one’s team,” Lorraine Gusé, Senior VP, Human Resources Director at Community Bank of Oak Park River Forest, said.

Reviews don't just clarify goals and reinforce positive behaviors — they also help adjust behaviors that aren’t so positive.

“They help build the employee-manager relationship. They also serve as the foundation for the career development of an employee,” Gusé added. That recognition can turn into engagement and retention.

As for skipping evaluations for hourly staff? Gusé doesn’t recommend it: “Skipping a performance review, or being late with one, can send a negative message when that may have not been the manager’s intention. The time the manager spends with the employee is meaningful to the employee and could make the difference between an employee staying and thriving with an organization or becoming dissatisfied and perhaps even walking away from a company.”

According to Gallup, companies that implement regular employee feedback have turnover rates up to 15% lower than for employees who receive none. Feedback feeds into employee engagement, as well. A 2004 study from CEB Inc., now Gartner, found employees who are most committed perform 20% better and are 87% less likely to leave the organization.

Instant gratification

Abby Baumann, Senior Marketing Coordinator at EPAY Systems knows performance evaluations are tied directly to motivation.

“Productive employees who do good work want their work to be evaluated, so that they can be recognized,” she said. “This can be true with hourly workers, especially in the blue and grey collar jobs, who can feel like their work is not held in high regard.”

In the high turnover world of hourly employees, it can be easy to accidentally send the signal that no one will care if an employee puts in extra effort. Baumann notes that some hourly workers have limited time per week for formal evaluations. She suggests offering informal feedback more frequently to keep employee morale high.

Shiftgig.com pairs hourly workers to available shifts, adding a temporary workforce to a company on an hourly basis. CEO Wade Burgess said that he is aware this can create a distance between the shift workers and employees. Rather than rely on inconsistent manual feedback from the client, they’ve created a two-way feedback mechanism for both their workers and clients through a mobile app.  After a shift is complete, clients can provide immediate feedback, both positive and/or negative, on each worker.

Hitting the ground running

The hourly workforce is also an excellent talent resource. In a study done by Wharton School assistant professor Matthew Bidwell, companies saved more than just the cost of recruitment for new hires when they promoted from within. Bidwell found external candidates typically cost a company more to hire and, in the first two years, receive lower marks on performance evaluations than internals. Additionally they were 61% more likely to be fired than internal promotions.

The prospect of retaining a higher level job within the company can be a strong motivating factor for many workers. And for companies and teams, internal candidates already know and demonstrate company culture and values. Internal employee development has been increasingly turned to as a way to source talent and ease skill gaps.

In addition to raising engagement and customer satisfaction, what begins with simple recognition can develop into savings and positive outcomes for the employee and the company in the short- and long-term.