Nearly all businesses struggle with turnover and productivity, especially with their entry-level employees. Now, three new studies from the Families and Work Institute reveal the keys to retaining that group of workers and helping them be more productive on the job.
If you own or manage a business and you regularly employ entry-level employees, you personally know how difficult it can be to keep employee productivity at a high and employee turnover at a low. For employers, the costs of high employee turnover can be particularly staggering. Actual costs to replace a worker can range from the hundreds to the thousands.
A brand-new comprehensive analysis of entry-level employees may shed some light on how employers may be able to improve the productivity and retention of this segment of the workforce.
In three recently-released reports, the Families and Work Institute (FWI) details their findings on what makes entry-level, hourly employees more likely to be productive, engaged and satisfied with their jobs. Here are some highlights of what they had to say:
Report 1: What do we know about entry-level, hourly employees?
FWI defines low-wage employees as those whose earnings fall in the bottom 25% of the earnings distribution, which is less than $9.73 per hour in 2005 dollars. Low-income families are those whose total annual income from all sources falls below 200% of (2 times) the federal poverty threshold – $39,612 for a two-parent family with two dependent children in 2005.
Compared to mid- and high-wage groups, low-wage employees are more “likely” to be younger, female, unmarried, single parents, less educated, minorities, immigrants, recent hires with little tenure and part-time or seasonal workers. But significant numbers, says FWI, do not fit those descriptions.
For example, although low-wage workers are more likely to be single parents (14%) than mid-wage (10%) and high-wage (2%) workers, most (86%) are not, in fact, single parents. And contrary to stereotype, the majority (57%) of low-wage and low-income employees are white and non-Hispanic.
Perhaps the most important differentiator of low-wage and -income employees, says FWI, is education: they have much less education on average than other employees, and education is the single most powerful predictor of earnings.
Low-earning employees are most likely to have jobs as service and blue-collar workers. They are significantly over-represented in the retail, agriculture, forestry, fishing and mining industries – and under-represented in manufacturing, transportation, communications, utilities, financial services, real estate, educational services and public administration.
Additionally, low-wage and -income employees are much more likely to work for small employers that have fewer than 25 employees. Consequently, they enjoy significantly less generous fringe benefits on average; fringe benefits that might mitigate the impact of low wages.
Lastly, low-wage and -income employees who most need to increase their job skills in order to be upwardly mobile, says FWI, are least likely to be offered formal training or education programs for job skills improvement as a benefit on the job.
Report 2: How can employers increase the productivity and retention of entry-level, hourly employees?
The Families and Work Institute findings strongly suggest that creating effective workplaces – workplaces that empower and support employees – has broad positive impacts on entry-level, hourly, low-wage and –income employees that are similar to, and sometimes greater than, the impacts on more advantaged employees.
And just what is an effective workplace? FWI says it consists of the following:
Empowering employees:
- more job autonomy
- more involvement in management decision making; and
- a more flexible workplace
Supporting employees:
- more learning opportunities on the job
- employer-provided education/training programs to enhance job skills
- more supervisor support for job success
- more co-worker team support for job success
- more trust in managers
- more fringe benefits
- more supervisor support to manage work, personal and family life
- more co-worker support to manage work, personal and family life; and
- a work-life culture that is more supportive of personal and family life.
The effective workplace, says FWI, works for employers because it helps employees to be more engaged, committed, and satisfied with their jobs – in order to achieve bottom-line results for their employers. The effective workplace also works for employees because it helps them be more effective at work and achieve a better quality of life off the job.
Good news for employers is that many of the aspects of an effective workplace are low-cost or no-cost; they just have to do with how people treat each other. With the exception of (1) education and training programs on the job and (2) fringe benefits, says FWI, cost should not be a significant obstacle to providing low-wage employees with the same workplace quality as that provided for higher-wage employees.
The costs of training and education programs for low-wage and-income employees, they say, can often be offset with public funds from special programs designed to increase the employability of low-wage workers with limited educational background. FWI also asserts that certain fringe benefit costs such as health insurance and child care subsidies may also be covered from public sources.
A critical point made in the report is that relatively few low-wage employees who are eligible for public-sector benefits actually receive them. FWI states that this is an area in which employers could, in collaboration with local public and private agencies, do much to facilitate employees’ access to public support – to the advantage of both employees and themselves.
Editor’s Note: Benefits.gov has extensive resources for citizens to locate public-sector benefits. Launched in 2002, this site acts as a single source for locating assistance programs at all levels of government. Simply go to www.benefits.gov and you can get results by completing a questionnaire, browsing by category, or locating benefits by state. New benefit information is added regularly about Federal, State, and Local government benefit programs that become available.
A test search was performed by questionnaire for a low-wage and -income family of four living in New York State. After answering about 50 questions, GovBenefits produced an eligibility listing of 43 different assistance programs. This personalized list included the Earned Income Tax Credit, Low Income Energy Assistance Program, New York School Breakfast and Lunch Program, and the Medical Dental Expenses Tax Credit.
Report 3: What workplace flexibility is available to entry-level, hourly employees? What difference does workplace flexibility make?
In recent decades, flexible work arrangements have grown in popularity and use. Some of the flexible workplace policies and practices listed by FWI include:
- traditional flextime (may choose starting and quitting times within some range of hours periodically)
- daily flextime (may choose starting and quitting times daily)
- finding it relatively easy to take time off during the workday for personal or family matters.
- having some amount of paid time off for personal illness
- being allowed to work all or some regular paid hours at home
- if part-time, being a part-time employee by choice
- if full-time, being able to move into a part-time job in the same position
- believing (strongly) that one can use flexible work arrangements without jeopardizing job advancement.
FWI found that employees in more flexible workplaces exhibited the following:
- greater job satisfaction
- stronger job commitment/engagement
- less negative spillover from life off the job to work that impairs productivity
- higher retention
- less negative spillover from work to life off the job that reduces the quality of personal and family life
- greater life satisfaction
- better mental health
Failure to provide such opportunities for flexibility at work, says FWI, can be a major cause of disengagement and turnover among low-income employees who typically lack the backup systems that are available to members of the middle and upper-middle class. Furthermore, employers who want to reduce the costs of turnover and/or to increase productivity may want to view workplace flexibility not as an accommodation to employees’ needs and preferences, but as a strategic management tool that can produce positive business results.
In light of the above, it appears that employers would do well to consider providing as great a level of flexibility as possible in their places of business. Although certain industries or positions may not be particularly conducive to flexible work arrangements, efforts should be made to provide employees with some opportunity for workplace flexibility in order to meet the pressing demands of both work and family.
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The Families and Work Institute points out that many employers only consider one aspect of their employee – the work side: “They neglect the fact that employees are whole people, with lives outside of work.”
Efforts to create more effective workplaces, they say, recognize that people are the employer’s greatest asset, that people make the critical difference between profit and loss, between doing just okay and business success. Such efforts move beyond the hackneyed rhetoric of “people first” to actually put these ideas into practice.
Best yet, FWI says there seems to be little doubt that effective workplaces and jobs drive positive outcomes for both employers and employees.
