Want to Solve the Supply Chain Labor Shortage? Start by Retaining Your Existing Employees
The labor crisis is a hurdle the world can’t seem to jump. There are an estimated 10 million job openings with approximately a million fewer workers available to fill vacant positions. As the holiday shopping season nears, the pressure to fill these open roles escalates. Ninety-two percent of organizations plan to boost hiring over the next three months, but this won’t be an easy feat.
Big brands like Walmart have publicly declared plans to increase their supply chain workforces by adding up to 150,000 workers. But where are these workers coming from? In the midst of an ongoing labor shortage, it’s going to take much more than a quick fix like wage increases to create long-term improvement. Companies must hone their efforts by fortifying their hiring and retention strategies now to spark lasting change.
The Lurking Problem Before the Pandemic
COVID-19 isn’t the only factor fueling today’s workforce problem in the supply chain. Companies have struggled to retain hourly workers for years. From warehouse workers to truck drivers – the supply chain has been riddled with turnover with no lasting solution in sight.
Oftentimes employees have little to no interaction with their managers, leaving them uncertain about their future. Coupled with limited training, lack of visibility into potential career paths, and unclear opportunities for growth, it’s no surprise workers don’t hesitate to jump ship and pursue other opportunities.
Goliaths like Amazon that are backed with virtually endless troves of resources hardly bat an eye at this turnover. In fact, the company experiences approximately 150% workforce churn every year. Raises, tuition stipends, and the removal of marijuana testing have all been tossed around to attract and retain workers. But the fact of the matter is, it’s not working – and it’s bad for business.
The consequence of the issue is rooted in cost. Recruiting, hiring and training new workers is incredibly expensive. The process is a financial drain that concurrently eats away at other valuable initiatives, like strategic planning and driving innovation. Furthermore, churn defeats employee morale, compromises worker safety and decreases productivity.
The Real Solution: Engagement and Retention
The race to fill positions has been centered around hiring with little consideration for retention. But keeping the employees you already have matters – and it makes a difference. Company leaders are beginning to develop strategic retention plans that utilize insights directly from employees to reduce turnover. There are several key pillars in a successful strategy:
- Evaluate the root causes of turnover. It’s critical to know your current turnover rate, but even more so to understand what’s driving the turnover. Do employees have the tools they need to succeed? Is someone facing harassment at work? Is the facility they are working at unsafe? Looking inward to analyze your weak spots can uncover invaluable insights. Collecting this data from employees anonymously enables managers to address the right issues and map out a plan for success.
- Create more opportunities to engage. Workplaces throughout the supply chain are large and often dispersed. This can make engagement a real challenge, often one that is overlooked by management. It’s critical that employees have a space to voice their opinions, concerns, and needs. Communication and engagement should be a top priority to retain your workforce. Regular manager meetings and check-ins at key milestones during and after their onboarding are key to success. Ensuring your employees are getting consistent feedback so they can gauge performance is also vital to your operations. The more engaged employees feel, the more invigorated they will be – ultimately helping you retain your workforce and boost productivity.
- Keep the rising workforce in mind. Millennials and Gen-Z account for over 50% of today’s workforce. Companies would be remiss to leave this critical faction of the labor market out of their target audience when developing a strategy.
Appeal to this demographic by tailoring your approach to what’s important to them. Core values that matter to this workforce include sustainability and purpose, the use of innovative technology and advancement opportunities. Clearly articulating how your business can fulfill these needs will put you in a stronger position to retain this growing group. We are hearing more and more that frontline workers are looking for more than just a daily job, they are looking for career paths and progression.
Beyond the Rush – Look to the Journey Ahead
It’s a critical time to build a strong supply chain workforce – especially as demand continues to increase dramatically. Strategies involving temp agencies and job boards are proving to be ineffective. Costs associated with these methods are on the rise as well – sourcing a CDL driver from a job board has become 133% more expensive, with similar increases also evident in sourcing production workers. Coupled with the time it takes to manually sort through so many applicants, it’s clear there is a need for a better solution.
The bottom line: hiring will remain unsuccessful without a strong retention plan in place. It’s crucial to fight the urge to use short-term solutions that have historically yielded little to no lasting impact. With a smarter, more intentional approach centered on engagement and retention, you will lay the groundwork for a better future – with a pool of skilled applicants waiting to work for you.
They say life’s a marathon, not a sprint. Apply that mentality to supply chain workforce management, and you’ll be sure to win the labor race.