A New Approach to Make Your Frontline Employees Act Like Owners
Recently Salt Labs CEO and Founder, Jason Lee, and Jaime McDougall, VP of Marketing, hosted a webinar titled, “How to Make Your Frontline Employees Act Like Owners Through a Disruptive Approach to Employee Rewards."
As the entrepreneur who founded DailyPay, the global leader in on-demand pay, and recently Salt Labs, Jason Lee is consumed with thinking about the daily challenges associated with frontline, employees and the technology needed to address those challenges. He founded Salt Labs to introduce an innovative approach to employee rewards and to address the chronic issues that employers of hourly workers face — employee engagement and turnover.
By combining behavioral science principles with technology, employers can significantly enhance their frontline workers’ financial wellness and their overall work experience.
You can view the entire webinar on-demand here.
Ownership and Behavioral Science
There is a behavioral science phenomenon known as the endowment effect. The idea behind this is that ownership is a powerful force that causes a person to place a much higher value on what they own, which leads to them wanting to own more of it. The endowment effect is a type of behavioral science tool that employers can leverage in an employee rewards program to create this value for the employee.
Ownership is a very relevant topic in today’s culture. Workers today want to have some “skin in the game.” They want to participate in the value of the work they are doing today, at some point in the future.
Think about the Hollywood writers and actors strike that took place last year. The key issue behind the strike was residuals — these writers and actors wanted to participate in the earnings of the work they created today, in the future. With streaming services, residuals were practically eliminated, so Hollywood was fighting to restore them. Basically the writers and actors were saying, “I created this work, and I want the benefit of ownership and to get paid each time it’s consumed.”
Today’s workers want the same type of “residual” from each hour they work, the opportunity to create value through something they own because they worked for it.
Changing Rewards Landscape
Recently, Walmart announced that it was going to start rewarding its frontline managers with stock equity, making them owners of the company. This strategic initiative helps align the interests of workers with those of Walmart, driving accountability and productivity. Walmart’s CEO, John Furth, stated, “We ask our managers to own their roles and act like owners—and now, they’ll literally be owners.”
Walmart is demonstrating cutting-edge thought leadership in labor management by making employees owners through the issuance of shares. And while every employer isn’t a Walmart, the important thing to note here is that the largest employer in the country has figured out a way to keep employees by giving them what they want — ownership.
Challenges With Traditional Rewards
Historical rewards programs have not done a great job in terms of engagement and retention.
Since the world health crisis, frontline employees have seen their pay rates increase by about 30% — the most significant increase since World War II. Despite these increases in pay, younger employees are still feeling significantly more detached from their jobs and their employers. According to a recent Gallup poll, every single worker — except for Baby Boomers — is feeling less engaged at work year after year.
The other major reward category focuses on financial wellness, and it includes programs like the 401(k). Yet despite companies’ desire to make their employees financially healthy,
Americans making less than $60k a year still have a negative 2% savings rate.
So you can easily see that traditional reward mechanisms have been underwhelming in terms of changing employee behavior.
Understanding Employee Needs
When you look at employee needs, they’re really not all that different from what employers want for their workforce, which is to:
- Experience meaning and purpose in their work
- Work like they have “skin in the game”
- Set goals and see outcomes from their hard work
- Create enduring value for themselves and the company
Employers want employees to stay longer as a result of fulfilling these needs for their employees; employees don’t want to quit their jobs and start all over again at a new company. Employers want their employees to act like owners, and employees want the results and benefits from being owners.
Employers, therefore, need to find a way to align their employee rewards with these needs so that both the employer and employees have their needs met.
Designing Effective Rewards Programs
At Salt Labs, we believe employees can create ownership through a non-cash incentive program that’s designed to look and feel like an asset. When done correctly, we have seen that this has a meaningful impact on the engagement and retention of frontline workers.
Addressing rewards for frontline workers is extremely challenging. Generally, companies rely on the subjective judgment of the frontline manager who may not be best equipped to determine who is most deserving of a reward. Oftentimes, these programs simply devolve into the lowest common denominator, which is the manager giving out rewards to the people who happen to be around him, or worse, the manager’s friends.
When asked “How do you feel about your current employee rewards and recognition program?” webinar participants answered:
Are you looking to evaluate or select an employee rewards program for your workforce?
We like the employee rewards evaluation guide created by HR benefit advisor, herronpalmer. Email us at partnerships@saltlabs.com if you would like a copy.
If you're looking to design an effective rewards program for hourly employees, these are some key considerations:
- Administration: How is the program managed? Is manager intervention required? How do you ensure that rewards are distributed fairly and equitably?
- Activation: How often do program users engage? How does the program leverage behavioral economics and psychology to drive results?
- Efficacy: How do you track and measure success? Do you have data available to measure efficacy? How do these insights drive program enhancements?
- Rewards: What rewards are available? What goes into designing the overall catalog? When are employees eligible to choose their rewards?
The most important component of a successful rewards program is the employee’s perception of the value of the actual reward.
At Salt Labs, we have found that structuring rewards that evoke feelings of ownership is profoundly more effective. The reward should feel like a new asset to the employee — an asset they own that provides opportunity and choice.
Employees interact with their Salt on a continual basis, earning one Salt for each hour they work. It’s simple and transparent. Salt is deposited into their account as an instant form of validation and recognition for the work they have performed that day — very different from a periodic reward. Employees earn it on their own, instead of waiting (hoping) for a manager to reward them. Unlike other rewards programs, employees experience a deep sense of ownership because they work for, earn and make their own Salt.
Benefits of Salt
Salt is reframing the work experience — transforming it into something permanent and aspirational. Through Salt, an employee views each day of work as another step toward reaching a medium — or long-term goal. Each day the employee works, there’s another micro-deposit into something they’re dreaming of saving toward. And that ability to own that outcome makes them want to stay at that job, earning more Salt.
Salt is a tangible representation of their work that is highly motivating. It boosts employee engagement and reduces turnover by 56%. And that’s something you, as the employer, can take to the bank.
To learn more about Salt Labs' employee rewards & recognition program or to schedule an exploratory meeting with us, please contact our sales team at sales@saltlabs.com.