The Rewards Gap: Why Hourly Employees Are Left Behind And How To Fix It

HR professionals have grappled with the challenges of engaging and retaining hourly employees for decades. While traditional rewards programs may resonate with your salaried, office-based workers, they often fall flat for hourly employees. Why? Because these programs fail to address the needs, motivations, and realities unique to your frontline workers.

This eBook examines the limitations of traditional rewards programs for hourly employees. We’ll also introduce an innovative, asset-based approach that drives employee engagement and fosters long-term commitment. Drawing on insights from behavioral science and using real-life examples, we’ll uncover actionable strategies to transform your employee rewards program into a powerful tool for retention and productivity.

What’s wrong with traditional rewards programs?

There are several reasons why traditional rewards programs fail when it comes to your hourly workforce:

1. Designed for salaried workers
   
   Most rewards programs are designed for salaried workers with predictable schedules and consistent manager oversight. Hourly employees, however, who are often distributed, usually don’t have regular access to computers. They work under operationally complex conditions and face entirely different circumstances. Traditional loyalty and rewards programs often rely on subjective manager decisions, delayed recognition, and periodic rewards that can feel impersonal and arbitrary.

2. Periodic and top-down
   
   Traditional rewards programs mimic payroll structures because they’re periodic, employer-driven, and often resemble cash-equivalent incentives, like gift cards. While these may seem practical, they fail to create a lasting emotional impact or connection for hourly employees. Workers often view these rewards as insignificant additions to their paychecks, offering no compelling reason to stay at your company or engage on a deeper level.

3. Disconnected from worker aspirations
   
   Hourly employees often face financial challenges, including difficulty saving. In fact, Americans making under $60k a year have a negative 2% savings rate. Traditional rewards do little to address these systemic issues and do nothing to align with hourly workers’ aspirations, such as saving for a family trip or funding their child's education. As a result, employees view these programs as irrelevant to achieving their personal goals.

You and your employees really want the same thing!

What would happen if you actually gave your employees what they want? And what if what they want isn't much different from what you want from them as an HR leader?

Rewards that are tied to an hourly employee’s work product bind employers to employees. Modern management theories have emphasized the importance of employee engagement and empowerment, recognizing that motivated employees are more productive and committed to their work. Incorporating these principles into your management practices can improve job performance and create a more positive work environment.”

You can foster a strong bond between your company and employees through an employee rewards program that has a meaningful impact on your frontline workers' engagement and retention. 

What works: A behavioral science approach to rewards

Several behavioral science principles can explain the connection between employee rewards and employee loyalty, motivation, and productivity.

The Endowment Effect

Ownership is a transformative concept in employee engagement. Behavioral science reveals that people place a much higher value on things they own — a theory known as the endowment effect. 

Let’s say you originally purchased a mug for $2.50, and one day, a friend comes over for coffee and tells you how much they love that mug. They would like to buy it from you and ask how much you’d sell it for. Suddenly, the mug feels worth more than what you originally paid, so you price it at $5.25 or even more. 

This is an example of the endowment effect at work. The fact that you own it increases its perceived value, even when the item has no unique attributes or sentimental value — like a plain coffee mug.

When workers feel a sense of ownership, their motivation, engagement, and retention significantly improve. This principle is evident in high-profile examples like Walmart’s employee stock program, which aligns worker interests with company success.

Recently, Walmart announced it would reward frontline managers with stock equity, making them literal owners of the company. This groundbreaking initiative reflects an understanding that workers today want to have a stake in their organization — participating in the value they help create. Walmart demonstrates cutting-edge thought leadership in labor management by issuing company shares and making employees owners. 

Their CEO stated, “We ask our managers to own their roles and act like owners — and now, they’ll literally be owners.” While not every employer can offer stock equity, one of the largest employers in the country has figured out a way to retain employees by giving them what they want — ownership.

Expectancy Theory

Expectancy theory suggests that people work harder when they believe their efforts will achieve positive outcomes. To motivate employees, employers need to clearly link good performance to meaningful rewards.

One part of this theory is valence, which measures the extent to which someone values a reward. For example, if an employee really wants a promotion, they’ll work harder to get it. Employers can motivate workers by offering rewards that matter to them.

The theory also demonstrates how goal-setting can be beneficial. Clear goals make employees feel their hard work will pay off, and involving them in setting performance goals increases their motivation and commitment to achieve them. 

Maslow’s Hierarchy of Needs

Maslow’s hierarchy of needs explains that people prioritize their needs in a specific order, starting with basic necessities like food and safety, then moving to relationships, self-esteem, and personal growth. For employers, this means addressing employees’ basic needs to enhance motivation and performance.

Source: Helpful Professor

A key takeaway from Maslow’s theory is the value of a supportive workplace. When employees feel secure, appreciated, and encouraged, they are more likely to be engaged and satisfied, which can boost productivity and reduce turnover. 

Goal-Setting Theory

Goal-setting theory explains how setting goals can increase productivity, motivation, and performance. Specific objectives help motivate employees and improve their performance. When your employees know exactly what you expect from them, they are more likely to stay focused and perform well in their roles. 

Feedback is also a key part of this theory. Regular updates on progress help employees stay motivated and on track. Feedback can come through check-ins, performance reviews, or simple recognition of their efforts.

When setting goals, it’s essential to strike the right balance. Goals that are too easy won’t inspire effort, while overly difficult ones will frustrate employees. 

The behavioral science behind asset-based rewards models

Asset-based rewards systems redefine employee recognition. By allowing workers to earn an “asset” for every hour they work, employees experience immediate, tangible rewards that accumulate over time. These assets can be redeemed for aspirational goals, such as family vacations or financial products, creating a powerful sense of progress and achievement.

Asset-based rewards leverage the behavioral science principles previously discussed in the following ways:

• The endowment effect creates meaningful and impactful rewards. Workers earn and manage their rewards independently, fostering a sense of ownership and motivation that traditional programs fail to achieve.

• Expectancy theory helps explain why employees work harder when they believe their efforts will achieve positive outcomes (i.e., rewards they can redeem with their accumulated points). When employees can set goals for rewards they want to earn, they’re in control. They’re not just receiving a random gift card when a manager just happens to notice them doing a good job. Asset-based rewards motivate workers by allowing them to exchange their rewards for something they value.

• Maslow’s Hierarchy of Needs emphasizes the value employees place on a supportive workplace. Providing them with an assets-based reward system shows your appreciation for their work. A loyalty and rewards solution that caters to each employee's unique needs demonstrates your appreciation for their work and motivates them to be more loyal and productive.

• An assets-based reward model uses goal-setting theory to encourage employees to set realistic goals for their desired rewards. A loyalty and rewards program should enable employees to achieve rewards based on challenging yet achievable goals. 

Key features of an effective rewards program

1. Real-time recognition
   
   Instant validation is crucial for hourly workers. Instead of waiting for monthly, quarterly or annual bonuses, employees should see immediate rewards tied to their daily efforts. Recognition doesn't have to be extravagant — consistent and genuine validation can foster a more engaged workforce.
   

   

   Source: UKG Aspire Conference

2. Employee-controlled
   
   A rewards program should empower workers to earn and manage their own rewards without relying on manager recognition. This eliminates bias and ensures fairness across distributed teams of workers.

3. Aspirational value
   
   Rewards must feel distinct from employees' regular pay and align with their personal goals. By reframing rewards as assets, employees perceive them as an accumulating store of value, rather than a one-time bonus.

4. Ease of access
   
   Technology is pivotal to ensuring employees’ seamless access to rewards. Mobile-friendly platforms that allow workers to track, accumulate, and redeem rewards in real time can drive significantly higher engagement.
   
   

Give Employees What They Want and They’ll Stay

Hourly employees want what we all want: meaning, purpose, and the feeling that their work matters. Traditional rewards programs, designed for salaried workers, fail to deliver on these wants. By embracing an asset-based, loyalty-driven rewards model, HR leaders can revolutionize how they engage and retain their frontline workforce. Why? Because it gives employees a reason to stick around.

Investing in a modern, personalized rewards program is more than simply an operational decision; it’s a strategic imperative. By giving hourly employees the tools they need to own their outcomes, you’ll improve retention and unlock their full potential.

Programs like asset-based rewards reframe the work experience, transforming it into something permanent and aspirational. Through these types of programs, employees view each work day as another step toward reaching a medium- or long-term goal. This ability to influence their own outcomes keeps workers engaged and motivated, reducing turnover by 62%.

Salt Labs, a Chime^® company, leaned into this methodology by creating a non-cash loyalty and rewards program designed to look and feel like an asset. Similar to consumer loyalty programs for flights and beverages, Salt^TM offers rewards that feel like a new asset to the employee — something they earn and accumulate independently of their paycheck. Because employees collect points independently and save toward self-elected goals, they experience a deeper sense of loyalty than they would if rewards were decided for them by managers, and are more likely to stay in their jobs.

In summary

It’s easy to see why hourly workers need a completely different type of loyalty and rewards program than their salaried colleagues. By offering them a program that provides meaning, purpose, and the sense that their work matters, employees are incentivized to work harder and stay longer because they are recognized for their efforts. When employees are engaged and motivated to come to work, everyone benefits, and that’s the ideal recipe for organizational success.

—

About Chime 

We partner with best-in-class employers to provide each of their employees with what they need to progress in their financial journey. For some, that might mean accessing wages on their own schedule. For others, that might mean more savings. It could mean building credit history¹ or even accessing a loan. Or it could be as simple as having a best-in-class, no-fee checking account.² 

Whatever the path, we are committed to each employee's financial health through our world-class suite of offerings. To learn more about Chime’s offerings to employers, visit chime.com/enterprise.