Today’s workforce is highly competitive – and mobile! The prevalence of social media as a platform for job postings, and the fact that workers aren’t always motivated to stay in a single location, makes it easy for workers to entertain alternative opportunities.
As a result, Packers and Temp Workers working in fulfillment operations will often move on to better positions elsewhere if they aren’t satisfied with their current situation. If that happens to you, you could end up losing many experienced packers and other workers who make a positive contribution to your operations — along with all the training you’ve invested in them.
The True Cost of Turnover
With unemployment hovering around 4%, committed workers are becoming harder to find. That’s why many organizations are turning to temp workers to help sustain the capacity needed to meet customer demands. But temp workers turn over at an even higher rate than employees. When your “Plan B” walks out the door, supervisors are left scrambling to figure out how to close productivity gaps and meet deadlines.
Let’s begin to quantify the true cost of turnover with an example. Let’s say you are paying a veteran packer $20 an hour and s/he leaves. The replacement packer or temp with equivalent skills now is priced at $22 an hour. A $2 difference all tolled, right? Unfortunately, the costs associated with turnover are more complex and are 40% – 70% more than the wage difference alone due to tangibles and intangibles such as:
- Sourcing Costs: You’ll spend a lot on finding an equivalent replacement worker. While you may have sourcing contracts in place, there will no doubt be an incremental cost for every temp worker you replace.
- Training Costs: Filling a vacancy left by a departing experienced packer often requires re-training – even if it is for a short duration.
- Trade Secrets: You lose a lot of intellectual capital that walks out the door with the workers you just lost. Sometimes, even though you might have Non-Disclosure Agreements (NDAs) in place with the Temp Agency (or the individual worker), they are challenging to enforce. They could easily take their skills and the nuances of your fulfillment operation to a competitor for $1 more an hour, or even the same pay rate.
- Client Erosion: With a new worker taking over, there might be some ramp-up time required. Though the incoming worker may have the general skills required, they’ll lack the company-specific and client-specific experience of the departed worker(s). It disrupts your operation and compromises delivery schedules. This ramp-up time could result in a loss of customer satisfaction, trust and ultimately
- Staff Morale: In some cases, experienced workers might just walk off the job without notice or with little notice. This interrupts established work patterns (at least in the short-term), which demoralizes your remaining team who are left to pick up the slack, work extra hours and shifts, or work in unfamiliar roles.
Reducing Worker Turnover
Retaining workers at any level requires a holistic approach from recruiting to onboarding to full engagement and performance evaluation. Here is a best-practice retention toolkit:
- Recruit good workers from the start. When you are short-handed, it might be tempting to lower your standards but you’ll pay a higher cost in the long-run. Work with HR to get creative in your recruiting efforts.
- Onboard and train workers to set them up for success. It is tempting to put your new worker on the line as soon as possible. But rushing this step also has consequences and actually elongates their time-to-contribution. Take time to introduce your new worker to the organization, your customers’ needs, key partners, and the general “ropes” in addition to their specific job tasks.
- Provide clear goals, instruction and expectations. It’s amazing how often supervisors skip this all-important step. People generally come to work every day wanting to perform and contribute at a high level. Keep this in mind as you are making goals and expectations clear, and planning your daily communications.
- Use the right rewards to drive performance, engagement and retention. Offer competitive pay, absolutely, but there are many other often over-looked components of the reward system such as:
- Market competitive wages
- Gainshare or bonus incentive when goals are met
- Recognition for a job well done (FREE!)
- Job enrichment
- Effective communications
- Evaluate performance and give regular feedback. People want to know how they stack up against goals, expectations and the worker next to them. Strive to provide timely and meaningful feedback.
Set Up Yourself and Your Organization for Success
The aforementioned retention tips seem straightforward and easy, don’t they? Some organizations have institutionalized the tenets of engagement very well and enjoy strong retention rates. These same organizations, however, typically have beefy HR support systems: HR Directors, Recruiters, Trainers, Organizational Development folks, Compensation Analysts and HR information and performance systems. If you don’t have the luxury of an army dedicated to retention, step back and consider what could work in your organization.
- First, take stock in your own strengths. Know where you have the most organizational impact. It might be that if you are experiencing high turnover, then effectively managing a warehouse full of hourly workers is just not a personal strength. Your time might be better spent on more strategic initiatives, or continuous improvement projects.
- Consider “in-source” options with HR and other internal partners for various aspects of retention. Ask them to help you assess where your opportunities are and how a cross-functional or team approach to retention could work.
- Explore outsourcing your fulfillment operation. Minimize the total costs and risks associated with turnover by establishing a strategic partnership with a fulfillment operation like Productiv, Inc.
Fulfillment service providers, like Productiv, are solely focused on finding, managing and keeping hourly packers, handlers and shippers. How do we do it?
- Recruit best available talent leveraging long-standing relationships with staffing agencies, strategic partnerships and technology
- Provide lean-engineering-based skills training, and job enrichment through in-house rotational assignments, mentorships, job-sharing and paths to advancement
- Competitive wages and team gainshare incentives to achieve KPIs that are customer-critical
- Familial culture of fun, recognition and belonging
If turnover caused by the “Amazon Effect” and low unemployment are affecting your ability to meet your own high standards for your customer, consider dialing up all the tools in a holistically-engineered retention toolkit. Or, consider a strategic partnership with an outsource fulfillment partner. Not only will you continue to satisfy key customers, but you’ll have much more time to focus on moving your business forward with more strategic initiatives.