Why companies are impact investing in the frontline workforce
May 4, 2023
By Steven Kramer, WorkJam CEO and Co-Founder, originally written for Fast Company
Tech industry layoffs have been grabbing headlines for months now, but in retail, hospitality, manufacturing, healthcare, and other sectors that rely on large numbers of frontline workers, employers are facing the opposite problem—a severe and ongoing labor crunch. Companies in these industries are still struggling to recoup jobs lost during the pandemic and are finding they can’t hire fast enough to meet rebounding demand. In the leisure and hospitality sector, for example, employers added 128,000 jobs in January, followed by another 105,000 in February. That same month, the number of information-related jobs fell by 25,000.
The difference in employment trends between the tech industry, which relies mostly on salaried desk workers, and industries that employ tens of millions of hourly frontline workers reflects a new, post-pandemic reality.
While COVID-19 prompted workers in many fields to reevaluate their roles and careers—leading to the Great Resignation, Quiet Quitting, and an increased willingness to jump jobs when a better opportunity beckons—the phenomenon was especially pronounced in frontline-heavy sectors. Talent retention has always been a major challenge for companies with large hourly workforces, but lockdowns, caregiving responsibilities, short staffing and impatient, impolite, and even violent customers drove many “essential” workers into different fields or out of the workforce altogether, leading to a historic frontline labor shortage.
On top of staffing challenges, companies are now grappling with higher interest rates, inflation, rising customer acquisition costs, geopolitical risk, consumers who are pulling back on spending, and a cloudy economic outlook. Given this tough business environment, many executives today are asking how they can better support and retain their frontline talent while boosting productivity.
Offering competitive pay and benefits is obviously part of the solution, and companies ranging from Walmart, Target, and Amazon to Hard Rock and Disney have all recently hiked hourly wages for frontline roles. This trend has particularly benefited people with incomes in the bottom 10%, whose typical weekly earnings rose 9.8% year over year in the fourth quarter of 2022 and were up a whopping 22.3% over the same period in 2019, according to Labor Department data.
But employers also need to demonstrate that they respect, value, and care about their frontline workers as much as they do their salaried corporate staff—and technology that supports frontline workers as knowledge workers plays an important role here. By empowering hourly employees with digital tools, companies can drive advancement and engagement, build stronger cultures, and create more productive teams.
GIVING FRONTLINE WORKERS DIGITAL TOOLS BOOSTS KNOWLEDGE, PRODUCTIVITY, AND RETENTION
Digital tools that give frontline employees more control over their shift schedules, help them complete tasks more efficiently, enable two-way communication across all levels of the organization, and facilitate personalized training and development can improve not only frontline retention and happiness, but also operational efficiency and revenue growth.
Open-shift management platforms, for example, give hourly workers more control over their schedules and more flexibility by enabling them to easily swap shifts with colleagues and pick up extra hours at their own location or a sister location nearby. Task management tools ensure employees have the information they need to complete tasks correctly the first time, streamlining their workdays and unlocking operational efficiencies that reduce energy, labor, and resource usage.
Two-way digital communications tools let leaders share consistent messages with potentially hundreds of thousands of frontline workers, in multiple languages, at the same time. They also drive employee engagement by giving hourly workers a voice and a way to communicate candidly with executives at HQ, ensuring employees feel recognized, heard, and supported.
And technology that facilitates training, upskilling, and career development can boost job satisfaction and retention at a time when the majority of hourly workers want to advance their careers, as evidenced by a 2022 McKinsey & Company study that found that more than 70% of frontline employees have applied for advancement opportunities either in-house or at another company.
LEADERS STRUGGLE TO PRIORITIZE TECH INVESTMENTS FOR FRONTLINE WORKERS
Despite the benefits frontline technologies provide, many decision-makers mistakenly think they have to choose between investing in tech that improves the employee experience or in tech that supports operational success—not realizing the two are inextricably linked.
My company, WorkJam, recently commissioned Forrester Consulting to conduct a study of more than 500 decision-makers at some of the world’s largest employers of frontline workers. The survey was designed to gauge how leaders in manufacturing, retail, hospitality, travel, healthcare, food services, and other industries view the frontline employee experience and how their companies plan to invest in improving it, if at all.
The research revealed that 80% of executives across industries want to leverage technology that helps frontline employees, but struggle to prioritize digital investments. In addition, nearly three-quarters (71%) of respondents say they are concerned their organization invests more in process and efficiency technologies than in solutions that directly empower frontline workers. This is a significant missed opportunity.
FASTER REVENUE GROWTH COMES WITH MATURE DIGITAL FRONTLINE PRACTICES
Forrester also looked at the maturity of companies’ digital practices across the four operational pillars of frontline work—scheduling, task management, communications, and training and learning—and found that more than half (52%) of organizations with mature digital frontline practices reported double-digit revenue growth year over year, compared with only 32% of firms with low-maturity practices. The findings indicate that frontline technology generates significant benefits, not only in terms of strengthening employees’ knowledge, productivity and engagement, but also in terms of boosting top-line growth.
While there is no definitive measure of the cost of frontline turnover, the Society for Human Resource Management (SHRM) estimated in 2019 that it costs companies roughly $1,500 to replace an hourly worker. That figure is surely many thousands of dollars higher today, once employers factor in the cost of recruiting, onboarding and training a new employee, as well as the productivity lost as the person ramps up on the job and the loss of morale other team members experience when a colleague leaves.
Given the current hourly worker labor shortage, challenging business environment and high cost of attrition, companies are looking for ways to drive frontline engagement and retention. While many organizations are struggling to prioritize investments in employee experience and business efficiency technologies, forward-thinking companies recognize the value of both. By equipping their employees with digital tools that support frontline workers as knowledge workers, these organizations are improving the employee experience and helping drive productivity, engagement, and revenue.