It Takes More Than Money!

With the U.S. unemployment rate at historically low rates, warehouse and distribution center managers face massive challenges in both hiring and retaining employees.  Compounding this problem is the ever-increasing demand for more warehouse workers.  The Wall Street Journal recently reported that an additional 452,000 warehouse and distribution center positions will be created in 2019. 

Naturally, the increasing demand for workers in combination with the current shortage of those available to work are resulting in an unprecedented increase in hourly compensation.  In 2018 the Bureau of Labor Statistics published that U.S. wages have increased 2.7% from 2017.  In this same timeframe, hourly rates for warehouse and distribution center labor increased by 6.7%, according to Prologistix.  One manager I recently spoke with suggested some companies are reaching the point where even if they could find candidates to hire, they couldn’t afford to hire that person without reducing margins or increasing their prices. 

What can managers do to overcome these monumental challenges?  Below are five strategies to consider.

1. Invest in Training

A recent study suggests that nearly two thirds of employees leave their job because of a lack of learning and development opportunities.  I’m an optimist at heart, but I truly believe that most people in this world strive to do a good job.  Without proper training, employees are not able to perform to their fullest extent.  After time, they become frustrated and eventually quit. Training leads to confidence, and confidence, more often than not, leads to success. Employees who are confident in what they do are generally motivated, happy individuals and the kind of employees that stick with organizations.

Employers that invest in training also see higher retention rates, as employees feel a sense of obligation to repay their companies for the investment made in them. According to Bridge, offering regular training and development would keep 86% of employees from leaving their job.

2. Create a Culture of Appreciation

The parking lots of most distribution centers these days are very full.  As a result, reserved parking spaces are extremely common, but the majority of the reserved spots I see are for senior managers.  Why not reserve your best parking spots for your best warehouse workers in recognition for their hard work and loyalty?

Perceived lack of appreciation is a major contributor to why workers decide to leave. In the simplest of forms, the words “thank you” are not hard to say, but in so many organizations aren’t said enough. While saying “thank you” is a great start, there are so many other ways to show employees they are appreciated. These include:

• Verbally recognizing employees in team meetings and in front of their coworkers.
• Recognizing employees in company newsletters and bulletin boards for strong performance and on their birthdays and work anniversaries.
• Cater a meal for each shift at least once per quarter.
• Implement an “employee of the month” program where employees can make nominations.
• Personalize work apparel or uniforms with the employee’s name.
• Learn each employees name and call them by their name when you see them.  Take the time to get to know them and ask about details that are important to them outside of work.
• Implement a suggestion box for employees and act on the suggestions the employees provide.
• Have an employee appreciation program — it could even involve a system that rewards points that people can cash in for small rewards, like leaving early.
• Plan an Employee Appreciation Day and make it a big deal.
• Invest in safety, ergonomics and worker productivity. 
• Recognize employees who stay with your organization for extended periods of time with wage increases, bonuses, gift cards, etc.  Often it is not how much you give, but simply that you gave at all.
• Recognize employees who refer friends to work for your organization.  One of our customers offers employees a $500 gift card for each recommended employee that is hired.

3. Consider a Performance Based Bonus Program

In the era of big data, companies have access to more performance metrics than ever before.  Statistics such as picks completed per hour, errors made per shift and overall worker efficiency are readily available for each employee.  Warehouse and distribution center managers should take advantage of this data to incentivize their employees to work harder. 

For example, one of our customers rewards their warehouse employees with a weekly bonus, based upon the number of picks each employee completes during his or her shift compared to their individual base line metric.  This same company also rewards all employees with a weekly bonus if the entire warehouse team out-performs their weekly throughput and error goals.  In the case of this customer, the potential bonuses available to each employee is not a trivial amount and can be as much as a 10% bump to an employee’s take home pay.  However, the bonuses don’t have to be strictly monetary.  Incentives such as additional time off, awards and public recognition have also been proven to be effective. 

If implemented correctly, performance-based programs can create a culture of teamwork and create bonds between employees. This is very important as a recent survey by Ajilon indicates 54% of warehouse workers stated their main reason for staying with their current employer is their loyalty to their coworkers, team, boss or company.

4. Make the Job Fun

It sounds obvious, but most people desire jobs that are enjoyable.  Too often I hear managers say “it’s a warehouse job, how fun can it be?”  Well, it can be as fun as you make it, and the majority of the time it’s little things that make a job and workplace fun.  Below are a few ideas to consider:

• Spice up shift changes – I’ve heard of companies implementing random fun events during shift changes such as paper airplane competitions.  I’ve also seen Ping-Pong tables and basketball goals in the warehouse.  Shift changes can be a good time for such events since there often can be an overlap in time between shifts.
• Outwardly show that you love your job – If the manager is visibly excited about his or her job and the overall company, it will be contagious to others.
• Play music and let the employees select it – I was in a distribution center a few weeks ago where the music was cranking.  The company has a subscription to Serious XM Satellite Radio and allows employees to pick the station.
• Provide “cool” uniforms or work attire – Employees who look good generally feel good.  By providing employees with swag, they are more likely to be excited about where they work.

5. Invest in Automation

So many people subscribe to the inaccurate belief that automation will lead to a loss of jobs.  The fact of the matter is that there are so many open warehouse positions available that companies must look to automate in order to simply stay in business.  The vast majority of companies that turn to automation don’t lay off a single employee.  Instead, these employees are reassigned to alternate jobs within the company or receive additional training to work alongside automation. This study by Deloitte on the effects of automation in the UK found that despite the 800,000 low-skill, repetitive jobs eliminated by automation, 3.5 million new, higher paying jobs were created as a direct result.

Automation should be celebrated within organizations, as it makes physically demanding, dangerous and mundane jobs easier and more exciting.  How exhausting would it be to load 35-50 lb. boxes in a truck all day?  How mind numbing would it be to take parts in and out of a machine over and over?  Automation, in combination with training, allows warehouse and distribution center workers the ability to advance and take on more satisfying positions. 

If communicated correctly, automation can be used to attract potential employees to your organization.  Who wouldn’t want to work alongside a robot or in a facility that is on the cutting edge?  

None of these strategies are revolutionary, so it’s surprising that more companies don’t implement these ideas. By simply investing in training, showing appreciation, rewarding performance, adding a little fun, and automating mundane tasks, your organization will see a big improvement in attracting and retaining the quality workers they so desperately need.

Author: Greg Conner