- Evaluate comp at a local level. It is more important than ever for companies to consider how their traditional and non-traditional competitors are pricing their frontline worker jobs.
- Shortened hiring process. Organizations with accelerated recruiting timelines found acceptance rates were higher when candidates were contacted sooner after applying.
- Sign-on bonuses. Key tactics employers are using to attract frontline workers are sign-on bonuses for candidates and other short-term incentives.
- Go beyond compensation. While compensation is certainly a foundational component of retaining critical talent, companies should not rely exclusively on compensation.
Organizations across the country are facing significant talent shortages as we emerge from the COVID-19 pandemic. The onset of the pandemic brought with it waves of uncertainty, instability and mass layoffs in some industries.
While the majority of professional and white-collar jobs shifted to remote work and some workers in non-essential industries were furloughed or terminated, frontline workers continued working in-person to keep essential services running. In many instances, frontline workers were forced to look for work outside of their previous industries, sometimes seeking out less strenuous work or jobs where they could work remotely.
Overnight, the pandemic changed how, when and where we work, transforming the workforce and workplace in ways that were thought impossible prior to 2020. As we continue to recover from the pandemic, employees are changing jobs in unprecedented numbers, a phenomenon known as the Great Resignation. As life returns to normal and in-person business begins to approach pre-pandemic levels, nowhere is this shortage of talent more apparent than with frontline workers.
Frontline jobs are typically classified as non-exempt jobs that require minimal (if any) prior experience. Some roles may require a high-school diploma or equivalent (GED), but this is usually the maximum education requirement.
Workers in these roles typically can be trained to perform all parts of the job in three months or less, making them highly flexible and able to pivot between roles quickly. This agility became highly apparent during the pandemic, with many frontline workers transitioning out of their original industry to other, non-traditional competitors. Competition for frontline employees now extends cross-industry with retail, food service, hospitality, ride share, janitorial services, and others all competing for the same limited talent population.
This competition is exacerbated by many companies opening new locations, storefronts and offices as the world returns to in-person business post-pandemic. This competition for frontline talent is particularly apparent on a local, neighborhood level, with companies aggressively recruiting through increased signage, in-person events and word-of-mouth referrals.
In a recent survey of 110 leading U.S.-based organizations by Deloitte Consulting and Empsight, the “Pulse Survey of Frontline Worker Practices,” almost half of compensation professionals surveyed said that they are already looking at compensation data for multiple industries and roles when analyzing competitive wages for frontline jobs.
The decision by many major employers to increase their entry-level wages is amplifying the hyper-local market conditions.
- According to NPR, Target will be increasing their minimum wage to $24 per hour this year.
- According to MoneyTalksNews, five notable companies are raising minimum pay to $20 an hour in 2022.
- Bank of America raised their minimum wage to $22 per hour in June 2022.
- Verizon will increase their minimum wage for all new workers to $20 per hour.
- Charter Communications will raise their minimum wage to $20 per hour.
This aligns to new and additional legislation at the state and local municipality level mandating a higher minimum wage than the federal level. Additionally, in the healthcare and non-profit sectors, there is a trend toward more organizations adopting a “socially just” wage rate. This is for a variety of reasons such as to enhance their reputation in the community, not wanting any of their employees to be paid below what they believe to be a living wage, or to ensure that their workers are paid well above the poverty line.
To remain competitive in the hyper-local labor markets, organizations should leverage design thinking to understand how job seekers are looking at the market. In many instances, $0.50 or $1 per hour makes a significant difference for frontline workers, and failure to recognize this can result in companies putting themselves at a competitive disadvantage to other local establishments.
It is more important than ever for companies to consider how their traditional and non-traditional competitors are pricing their frontline worker jobs. A fast-food restaurant within half a mile of the local coffee shop, the DIY home improvement store and the local hospital should be comparing the wage rates of all three businesses against their own.
Deployed Strategies and Tactics
While pay and compensation will often be key drivers in attracting and retaining employees, it becomes less meaningful when competitors across industries are raising wages. Companies are therefore turning to non-traditional strategies to attract and retain frontline workers.
The “Pulse Survey of Frontline Worker Practices” showed that one key strategy organizations are using to attract talent is shortening the recruiting process, giving less time for competitors to poach available talent, as 75% of survey respondents said that they have shortened their interview cycle.
Meanwhile, 49% of organizations stated that they are extending offers for employment within one week of interview with 23% of these doing so immediately following the interview or even application in some circumstances. Organizations with these accelerated recruiting timelines found acceptance rates were higher when candidates were contacted sooner after applying.
Additionally, another key tactic employers are using to attract frontline workers is sign-on bonuses for candidates and other short-term incentives. 48% of survey respondents stated that they are now using sign-on bonuses to attract frontline workers.
Once candidates are in a role, 66% of companies offer premium pay (most commonly shift differentials) and short-term incentives to their frontline workers. Specifically, short-term incentive eligibility is up approximately 18% over a two-year period, when only 51% of frontline workers were eligible in 2019, and 61% of frontline workers are eligible now.
Retaining Talent in a Hyper-Competitive Labor Market
The role of compensation in the competition for talent goes beyond getting candidates to accept offers. Once they have made an offer and onboarded employees, companies are struggling to retain them. Even though merit budgets have only slightly increased compared to pre-pandemic levels, 75% of respondents indicated that they had conducted off-cycle increases in the past 24 months to ensure critical talent was not walking out the door.
While compensation is certainly a foundational component of retaining critical talent, companies should not rely exclusively on compensation.
Survey respondents indicated that paid time off, retirement plans and even understanding advancement opportunities and programs helped create “staying power” within employee populations. These ancillary offerings cannot be understated or neglected as companies work to retain their critical workers.
Despite these not being traditional retention tools for frontline workers, many are beginning to expect and ask for them from their employers. Acknowledging and accommodating these expectations around total rewards offerings while also building a greater understanding of their significance can help create stability among the dynamic, hyper-local workforce.
Total Rewards Strategy Is Key
Attracting, retaining and engaging workers during the Great Resignation has proven to be challenging for all employers, but especially for those with frontline workers.
Frontline workers are increasingly focusing on more narrow geographical areas for employment and hopping between industries. With that in mind, there are effective strategies companies can leverage to efficiently compete with other companies in the hyper-local labor market.
Ensuring wage rates are competitive at the neighborhood level is a critical first step for attracting and retaining frontline workers. However, companies must continue to focus on their frontline workers through the course of their employment.
Leveraging premium and incentive pay is becoming increasingly common, but the secret resides in a robust total rewards package focused on compensation and benefit elements and where frontline workers understand their opportunities for advancement within the organization.
By broadening the labor market aperture on industry and role, wise total reward professionals can add significant value to their organizations, increasing attraction and retention and reducing the costly nemesis of turnover.
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