Are white glove benefits the key to retaining blue-collar employees?
Employee retention has become more consequential than ever, especially among blue collar, trades-based, and hourly workforces.
There are a variety of reasons behind this “labor shortage,” but it appears to be primarily driven by the extreme demand for workers. Labor force participation rates are at their pre-pandemic levels for most demographics, yet labor demand remains incredibly high.
As such, we have increasingly seen companies invest more money in retaining the employees they do have. If companies aren’t in a position to easily find new talent— as is particularly the case in many traditionally “blue collar” industries like retail, construction, and warehousing that already face high turnover rates and costs — doubling down on retaining becomes more important. And in today’s labor economy, that means investing in benefits, perks, and incentives that help employees’ day-to-day lives, and were often only available in the most generous of industries.
What kind of value can employers offer that will help retain current employees?
The most obvious and seemingly simplest solution would be higher wages and salaries, as potential employees always look for a competitive salary. While increasing wages will certainly help, it will only go so far. Many younger employees value strong benefits and culture over a higher salary, limiting the impact of large wage increases among some populations. That makes investing in new policies more impactful than it would have been historically, and also increases their return on investment. In fact, policies that may not have been thinkable or financially viable five years ago could now have an outsized impact on retaining employees and accelerating hiring.
Implementing better benefits (and perks)
The demand for family-friendly policies and work-life balance has grown at the same time that labor has become harder to find. This has caused companies to implement policies for blue-collar workforces that were previously only considered available for those at the most generous white-collar firms.
This trend has been well documented, and has even been dubbed “the white-collar-ization of blue-collar jobs.” Throughout the pandemic, traditionally blue-collar workers have proven the importance of their roles to the functioning of society and have begun demanding to be treated as such, starting with requiring the type of benefits once reserved for white-collar employees: career path guidance, educational benefits, and even gender-neutral paid parental leave.
If budgets remain tight and large pay raises seem unlikely, offering highly-desired benefits, perks, and incentives such as paid parental and family leave, flexible work arrangements and hours, as well as professional development or certifications, is now commonly occurring.
Related: How both blue and white collar employees fight for their accrued benefits
Offering a strong benefits package with perceived high-value rewards is typically much less costly than 5% to 10% pay raises making them relatively inexpensive, though not always easy to implement. At this point, it’s become a make-or-break differentiator between potential candidates accepting or rejecting a job offer.
What can employers offer?
Flexibility in scheduling and attendance policies
Employees have a lot going on in their lives, from family responsibilities to transportation concerns, and a little understanding goes a long way. Implementing blue-collar-friendly HR policies and programs that take into account their daily financial and/or personal challenges can make all the difference between employees staying or looking elsewhere.
Offering shift flexibility programs such as staggered start times and/or flextime, compressed workweeks (e.g. four 10-hour workdays), or windowed work accommodates more schedules and allows for better work-life balance—and makes for less stressed employees. These can be paired with more reasonable attendance policies that account for issues outside employees’ control, like transportation problems.
Training and educational opportunities
These are vital to building a culture of professional development and potential for internal advancement. Offering these opportunities to develop crucial skills helps to fill talent gaps, promotes a culture of advancement, and shows that an employer is willing to invest in employees and help them grow.
Education and training opportunities vary from internal training programs for teaching entry-level employees more advanced skills, to covering certification programs, to contributing to degree completion. The latest trend has been an increase in funding for outside education, from easier funding for certifications to funding higher education. It may seem more costly to offer, but everyone benefits: employers gain more qualified employees and credibility due to the crucial skills and certifications employees now boast, while workers feel valued and important to the company while gaining valuable skills. This also creates a more qualified internal talent pool for the future, reducing future hiring costs. Additionally, tying such programs to performance evals will ensure they’re fairly and appropriately distributed.
Paid parental leave
Paid time off is one of the most desired policies for blue-collar employees, whether it’s for illness, welcoming a new child, or vacation. In Industry Today’s 2020 survey of blue-collar workers, when asked to choose between receiving current pay plus five days of PTO or a $1 pay raise with no PTO, 81% chose current pay plus PTO.
With a disproportionate number of blue-collar employees working hourly positions, many rely on every dollar to cover basic needs; missing even a few hours of work for a doctor appointment, family responsibilities, or personal business without PTO or sick days can lead to financial issues. Parents also need time off to bond with a new child, and it’s financially impossible to do so with only short-term disability insurance for birth moms and a few weeks or just unpaid time off for dads or adoptive and foster parents.
In fact, paid parental leave has become one the most desired and impactful policies, with employees taking jobs specifically for access to paid parental leave (or quitting one due to the lack of it). Companies you’d never have thought would offer paid parental leave have now prioritized its implementation, from trucking companies to national retailers, to warehousing and logistics, to manufacturers.
How to budget for increased rewards costs?
While the upfront cash costs of implementing some of these policies, including increased reserves for self-funded paid time off, may increase, the net overall benefits — both cash savings and productivity gains — will more than offset the costs in the short and long terms. Some of these policies have become critical in order to compete. With the rapid rise of access to paid parental leave, candidates will pursue firms that offer such policies, either to eventually use the policy themselves or just because it’s a sign that the firm is a good employer.
Think of it this way: As of 2021, large U.S. employers reported spending over $1 trillion annually on finding, recruiting, and onboarding replacement employees. That could cover high-value offerings for all employees multiple times over. The costs of turnover only grow when factoring in reduced employee productivity and morale, loss of institutional knowledge and necessary skills, customer service problems, delayed projects or production, and a myriad of other issues that arise as a consequence of high turnover or insufficient labor.
Dirk Doebler is the founder and CEO of Parento.