The last decade of the logistics world has been defined by the booming E-commerce industry. Every retailer on the block has been forced to take steps to assure their delivery methods are the most affordable and accessible in the business. For many, like The Home Depot and Amazon, to accomplish these goals means resorting to creating new distribution centers across the country. In terms of labor, the lack of truck drivers has taken the major spotlight of the logistics world as these changes unfold. But as E-commerce continues to grow at an unprecedented rate, a new labor challenge has been rearing its head: The deficit of qualified warehouse employees.
According to the Bureau of Labor Statistics, over the past 10 years the unemployment rate has been steadily decreasing from 10.0% (Oct 2009) to 3.6% (Apr 2019). Meanwhile, over the past 5 years warehouse employment opportunities have increased by a staggering 46% percent. This increase in labor demand coupled with the shrinking applicant pool has pushed supply chain decision makers to shift their focus when deciding on the location of new distribution centers. Where previously those in planning positions could focus on factors like proximity to market and minimizing rent costs, more and more companies are reporting to weigh availability of labor more heavily than before. With unemployment at a 50-year low and hiring more difficult than ever, industry leaders everywhere are beginning to ask, “What can I do to retain my workers?”
Why should I focus on Retention?
In addition to the struggle of finding new employees in a shrinking labor pool, the largest reason to focus on retention is pretty simple – turnover is expensive. Especially in an industry like warehousing where the 2017 average turnover rate was a hefty 41%, avoiding turnover can save millions of dollars a year. More and more warehouse leaders are realizing the affects turnover can have on their business:
- Cost of attracting, hiring, and interviewing new employees
•Cost of training and on boarding
•Cost of severance packages
•Lost productivity & more mistakes
•Worsened customer experience
•Lower employee moral
The good news is, employee retention is a human issue. There are many studies currently out there to discover what employees value in their jobs, and companies every day are piloting new methods to decrease turnover. With this in mind, there are a few things I’ve observed to be the most successful in keeping your best people around.
Increase Pay
This may be obvious however, it is easier said than done. If an employee earning $10/hour finds a similar position opening down the street offering 50¢/hour more, it could make or break your retention rate. According to a survey of warehouse employees, over half of workers would change jobs for as little as $1 more per hour. This leads to a delicate balancing act for decision makers in this field – but not impossible to overcome. By analyzing your specific company’s labor data, you can establish the cost of turnover and in turn what you’re willing to pay to mitigate it.
Managers: Treat your Employees Well
Louder for the people in the back! You’ve heard it before, “Employees don’t quit their job, they quit their boss.” Middle management plays a huge role in employee well-being, and thus, your distribution center’s retention rate. Investing time in training your middle management to be effective, amicable leaders will promote a healthy work environment your employees won’t want to leave.
Enable Exemplary Workplace Conditions
After salary and job security, the third most considered factor when looking for a place of employment is the benefits. While a 401k and health insurance are definitely at the top of that list, there are a lot of other “benefits” companies who are successful in retaining their employees are trying out.
- Flexible shift lengths & weekend hours
• A clean, air-conditioned, well-lit facility
• Paid lunch breaks
• Performance-based bonuses for high-performing workers
• Career development & mentorship opportunities
The list could go on and on. When deciding on benefits and other various workplace practices, business leaders typically start off by matching the industry standard. However, as competition increases, finding a way for your benefits to go above & beyond those of your neighbors in a few unexpected areas is one of the most effective ways to make your employees feel valued enough to stick around.
Ask Your Workforce
At the end of the day, no one knows what your employees need more than your employees. Not only will listening to your employees’ feedback give them a heightened feeling of belonging in your company, but you can also receive invaluable insight as to what it takes to maintain a low turnover rate. Instead of making costly investments in things you think will improve your retention rate, go straight to the source to find out what really matters.
To learn more about how labor management can help you realize your supply chain potential, contact Bricz at info@bricz.com
Contributor: Alyssa Candelmo Supply Chain Consultant at Bricz