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August 26, 2011
Motivating Hourly Employees: Don’t Focus On Money

Thomas B. Wilson, President of compensation consulting firm the Wilson Group, has spent his career trying to understand and address what motivates people. Much is written on incentivizing corporate leaders to keep the ship moving in the right direction. But a ship needs more than a captain; there are many other crewmembers who also contribute to keeping the ship afloat. Can you apply the same kinds of incentives to them as you do with corporate leaders?

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In short, we know how to motivate company leaders and the sales team. But how do you motivate hourly workers? That’s what one of Wilson’s clients asked recently. What, they wondered, can we do to engage and motivate this valuable part of our workforce? Wilson Group (www.wilsongroup.com) tackled the question by conducting a research study, released as Hourly Employee Engagement and Reward Systems.

“There were some very interesting findings,” Wilson says. “We looked at more than just pay plans; we looked at the whole context of engaging hourly people. There is a study (The Invisible Employee, also the basis of a book) by Boston College whose thesis is that in many organizations just do not know what goes on in the hearts and minds of some 60% of their workforce – primarily, their non-exempt, hourly workers. They design all these programs that are intended to engage them, or deal with retention or motivation, that are based on the premises the human resources people know. And what they know is what motivates professional-level people who have career orientations and who have a lot of power and make a lot of money.”

Two career tracks, two different motivations

In analyzing the data, at least two distinct categories of employees emerge. Wilson referred to the first in the above quote – professional, career-track employees. The second group has, generally speaking, made an intentional decision to take a job rather than what many consider to be a career.

People in these two tracks tend to value different things in life, he says, referring to a study by the Corporate Leadership Council: “There are striking differences between people in professional roles and people in non-exempt roles, at least in some respects. They are the same in that they all want to be involved if there is going to be a decision that will affect their work life. They want to get their viewpoint heard. But what the study found is that, while hourly, non-exempt workers want to provide some input and want to be listened to, they don’t want to have responsibility for the outcomes.

“Professional level people want the power, and the associated responsibility. They want that kind of career track, making decisions that allow them to accumulate more responsibility.” But for hourly workers, Wilson explains, “the whole work/life phenomenon is really important. They want balance in their lives. They like working overtime, because they make more money; but they don’t want an excessive level of overtime because then they can’t take care of their kids or go fishing or whatever their other interests are.”

“The essence of motivation is to understand what people value,” Wilson continues. And it isn’t always money. “You can’t make a person be motivated. Someone might be compliant, doing what you tell them to do so something bad doesn’t happen. But for me as a person to do more than that takes a choice. I will choose to work that much harder or take on a new procedure or equipment, but it is my choice. I’ll either work with resilience, or I’ll resist.

“The whole concept of engagement is about choice. For an individual employee, it’s about do I really care about the company? Do I care about my boss? Do I care about my senior management? Do I care about the mission of the company? Do I care if the product is right and on time?”

More engaged workforce means more success

“Studies show that only 27% of employees are truly engaged, and those engaged employees are much more productive,” he continues. “The companies that have a more engaged workforce are more profitable, have higher growth, and more resilience to a changing marketplace than a company with a non-engaged workforce. A really effective compensation system, in our view, makes people feel valued for the work the organization needs them to do, at a level where everybody wins.” In other words, it helps them feel engaged.

But it isn’t necessarily money that will motivate your non-exempt workers, Wilson says. “It’s about creating workplace conditions. You have to deal with what is meaningful to them, and it doesn’t take a lot of money. For professional-level people, it has to be 10% or 15% or 20% of salary to get their attention; hourly people don’t need that much.

“In fact, several studies show that if hourly people get beyond 5% or 10% of their salary in incentives, they physically can’t make the level of improvements that justify that level of cost. And it won’t make any difference to them. They are not more motivated if they’re offered 20% more than base pay versus 5%.”

“It’s important to find out what’s really on the minds of the hourly workers you employ. Usually we find that the number one thing is job security. They know that if the business fails, they lose their job. So they need to understand the business, and where they fit in. If they do certain things, then the business can create a little security. You must have a way to communicate what has to happen in order to protect jobs.”

“There are three things that really drive motivation,” Wilson explains.

  • “One is purpose, the sense that what you’re doing makes a difference in the world. So find a way to give some sense of higher order purpose. I find that employees will do wonderful things for their customers, because customers say ‘thank you’ and sometimes managers don’t.”
  • Mastery is another motivator. People want to know that they’re getting good at something. So build a base pay plan that really recognizes mastery and skills. That will help reinforce a person’s sense of progress relative to their skill set. Depending on the nature of the work, it might mean going from $8 an hour to $9 an hour because now they can do these seven different things they couldn’t before. Link in that kind of thing.”
  • “The third thing is autonomy. That’s a little more complicated with hourly people because sometimes they don’t have the bigger perspective. But recognizing peoples’ ideas about how to make things better, getting their thoughts on it but not making them responsible for implementation.”

“We need to let people know we want to create opportunities for them to earn extras, that these rewards are not given to them because they are breathing, but because they earn them.” The message that should accompany these rewards is “we are more successful, so we want to share it back with you,” Wilson says.

“No matter the kind of company, craft your rewards system so that people feel valued with the things you really need them to do. What happens out of that is you will have a workplace that is very successful, and adaptable to changing market conditions. Then you have people looking at ways to improve and feeling really good about what they’re doing, and making good money at it.”

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