Fulfillment Centers Look to Mitigate the Impact of Employee Turnover

Fulfillment Centers Look to Mitigate the Impact of Employee Turnover

Employee turnover is not a subject most employers want to think or talk about, but it is a stark reality. The recent COVID-19 pandemic caused significant upheaval in the labor market. Although things are starting to normalize, the attitudes and preferences of workers have started to change.

The logistics industry is not immune to these forces. In fact, it has taken a hard hit. Now, more than ever, attracting and retaining the best workers needs to be a top priority. 

What the Latest Labor Statistics Tell Us About Employee Turnover

The United States of Labor Statistics Job Openings and Labor Turnover Survey (JOLTS) reports data regarding the health of the labor market. The economy experienced significant ups and downs during the pandemic. Unemployment was at 14.7% in April 2020; however, as of July 2022 it had fallen to 3.5%. There were 10.7M job openings, slightly lower than the month before. Things appear to be moving in the right direction, but there is still some cause for concern.  

During the pandemic, economists began noting a rise in the job quit rate (defined as employees who voluntarily left their position), calling it the “Great Resignation”. Until the start of the pandemic, the highest quit rate recorded (since the survey began in December of 2000) was in January 2001 and stood at 2.4%. The current record was set at 3.0% in November and December of 2021. Since the labor participation rate was below pre-pandemic levels, this indicates that some people found new employment, and some exited the labor force.  

This quit rate cannot be solely explained by tightening of the job market. More research is needed to quantify the contribution of pandemic-related factors on the quit rate (stimulus checks, health issues, childcare concerns, and attitudes about work) as well as which demographic groups are most affected. 

How the Logistics Industry Has Been Affected

Jefferson Hanson, writing for the employee engagement company Awardco, explains the impact of the Great Resignation on various industries. Almost all the ones represented saw spikes in turnover rates in 2020 due to the pandemic, some more than others. As they moved into 2021, every industry saw their turnover rates improve as businesses attempted to get back to normal. 

The logistics industry is part of the transportation industry. It is also considered to be a blue-collar industry. A recent Harris poll survey has found that blue-collar workers feel more proud, respected, and appreciated than before the pandemic. They were instrumental in keeping essential goods and services flowing during a difficult time. Job opportunities are numerous and pay rates have risen. However, a deeper dive into the mindset of these workers will provide some valuable insight. 

Why Employees Leave

With unemployment at a low level, blue-collar workers have a myriad of choices of where they can spend their workday. Reasons why they leave are multifactorial. 

Salary and benefits are certainly important considerations, but not the only ones. In the 2022 Voice of the Blue-Collar Worker (VBCW) survey, almost 19,500 hourly employees were asked to share their perspectives on attitudes, expectations, and preferences related to work. Approximately 48% of the respondents were employed in the logistics/warehouse industry and almost half of them had 1-5 years of experience. Half were women and half were 25-44 years of age. 

Ranked from highest to lowest, the survey found that 1) pay rate, 2) job security, 3) shift/schedule, and 4) enjoy the work were the top priorities of all workers together when considering a job. Female workers ranked shift/schedule ahead of job security. 

When considering staying at a job, 1) schedule, 2) consistent pay raises, 3) benefits, 4) workplace culture, 5) 401K, and 6) chance for advancement were the most chosen answers. 

Other factors that drive employees to leave the workforce are beyond the control of employers. Many of them have been discussed recently in the news, including the shrinking pool of workers due to lower birth rates, retirement of the baby boomers, mismatch of skills, and people choosing not to return after COVID-19. 

How to Retain Good Employees

In the VBCW survey, respondents were asked if they were actively seeking a new job. For males, 53% were actively looking, while for females the rate was 37%. Let’s look at what’s important to employees and what will make them stay. 

The survey says that compensation (pay rate plus benefits) and a flexible schedule are the things that matter most to employees and will keep them in your employ.  

It is easy to find other articles that discuss opportunities to volunteer, education reimbursement, on-boarding, on-the-job training, the right managers, rewards and recognition, work-life balance, a culture of inclusiveness, communication, and shift work pay differential as other contributors to employee satisfaction. 

Concerns around COVID-19 have subsided, with 57% of survey respondents saying they are not concerned, or only slightly concerned. Worker safety should continue to be a priority. 

There is a heavy cost to losing a valued employee. Gallup data says the cost to replace a worker is 1 ½ to 2 times salary. Employers should be aware of what others in the industry are offering in their benefit packages. Staying competitive will help mitigate the temptation to jump ship. 

Working with a 3PL provider who understands the forces that have been driving the logistics industry over the last several years, and who is open to change and adaptation, is important to your success. 

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