How Hourly Employees Differ From Those on Salary, And Why It Matters

With so many differences between employees who are paid hourly vs those who are on salary, employers must be able to adapt to the different needs of both.

“My employees drive me crazy!”

“We just can’t find enough people.”

“We can’t keep people.”

“They’re constantly calling out.”

“They’re so unmotivated.”

“They’re so thin-skinned.”

When I ask my audience members what they find most challenging about managing their frontline teams, I consistently hear some version of the above responses. In every industry, including ones that invest heavily in corporate culture, when it comes to managing hourly employees, they struggle. This is especially true with my clients in retail, one of the largest sectors employing hourly employees and one with the most exposure to these challenges.

I spent more than a decade operating my own retail Edible Arrangements franchises, and for the first few years, I, too, struggled with employees. I’d already been working as a motivational business speaker specializing in leadership when I got into that business, so it was a shock when I found my employees didn’t respond to my brilliant Jedi-leadership tactics. I had to unlearn what I thought to be true about building teams and return to management kindergarten. What I discovered through a lot of trial and error, experiments, and extensive research into other businesses that excelled with frontline employees is that hourly workers can, in fact, be coached into high performers. But that can only happen when you replace your judgment and frustration with curiosity and compassion. It starts with appreciating who hourly workers are and how they differ from those on salary.

Hourly Employees vs. Salary Employees

All employees share universal needs such as fair compensation and respect. But salaried employees earn more of both. There’s status with not having to punch in. They’re also more likely to work full time, receive benefits, and earn a reliable income, making it easier to plan a life and access credit. They enjoy stability.

Hourly workers are more likely to be juggling multiple jobs, going to school, playing sports, or revolving around other family members’ schedules. Their hours may be reduced or changed. This uncertainty in both income and schedule requires them to frequently adjust their daily lives.

Hourly employees tend to have fewer growth opportunities compared to their salaried counterparts. Their connection to the company is often more transactional than relational. If they feel less loyalty to the organization, they’ll feel less loyal to the organization. This, coupled with the absence of benefits such as healthcare, makes it easier for them to leave for new job opportunities.

With so many differences in their circumstances and work life (not to mention age and demographics), hourly employees require more understanding and empathy. They can’t be expected to respond to the same tactics companies use to build white-collar corporate cultures. You need to adapt. Here are a few ways to do that:

1. Get your values off the poster and onto the floor.

Abstract mission and value statements often don’t speak to the mindset of hourly workers. Are you sure your employees know what “Integrity” means? Do they recognize it when demonstrated? Make your values more tangible. For each one, come up with a list of behaviors that reflect that value. For “Integrity,” they might say:

  • We always tell the truth.
  • We follow through on our commitments.
  • We admit our mistakes.
  • We treat each other fairly.
  • We comply with all laws and company policies.
  • We respect confidentiality.

These actions reflect the value but are easier to understand. They make it easier to hold employees accountable. Discuss these behaviors and reward those who consistently demonstrate them. Reprimands also should reference these behaviors and a violation of the values agreement.

2. Identify and meet their “soft needs.”

Most companies focus on hard needs—the tangible things people want from a job. These usually include money, but they also could include other benefits. They are what employees get in exchange for their work.

But money alone (which may be less available for hourly employees) isn’t enough. Employees also have emotional desires, what I call “soft needs.” These include things such as recognition, personal growth, respect, safety (including emotional safety), and a sense of belonging.

Employees should be paid fairly, but employers who also elevate their team’s emotional payoff will win more loyalty, just as providing better customer experiences leads to more consumer loyalty. What you give them matters less than how you make them feel.

3. Give employees measurable work objectives.

Their work may be more physical or repetitive and less intellectual or creative than those on salary. Keep them motivated by establishing clear performance metrics. It’s intrinsically satisfying to meet or surpass benchmarks. Employees like being able to keep score. You can track units manufactured, processed, or sold. You can measure online reviews or your Net Promoter Score. I was always surprised that after a long, stressful Valentine’s Day making fruit baskets, my employees always asked how many they sold or created. They were more invested in their work, knowing it could be quantified—and that was before even offering them incentives to hit specific benchmarks. They just wanted the emotional payoff of hitting their numbers.

Clarify what’s expected and what success looks like. Then, appeal to their natural human desire to beat their own score, what I call “self-competition.” The alternative is to just keep them busy. That’s a quick way to lose people who hunger for improvement and intellectual stimulation. Workers, regardless of their pay structure, have an innate desire for growth, challenge, and recognition. Managers need to tap into these desires effectively and continuously coach them to improve.

You may not believe it’s possible to build a reliable team of frontline employees. I sympathize, but I can’t ignore the results I’ve gotten or the well-documented results enjoyed by Chick-fil-A, Trader Joe’s, and others whose cultures have been well-documented. And I can’t deny the success of the many diverse employers I’ve personally worked with and interviewed that are also thriving with the help of an outstanding hourly workforce. They’ve proven it’s possible. You can transform your frontline employees from your biggest challenges into your greatest asset. But only if you’re willing to provide them with the greatest management.

Scott Greenberg
Scott Greenberg is a business speaker, writer, and coach who helps leaders and teams per-form at a higher level. His upcoming book, “Stop the Shift Show: Turn Your Struggling Hourly Workers into a Top-Performing Team,” will be released in February 2024.