The US labor shortage raises two critical questions.
Where is the labor?
And when is it coming back?
Chances are, if you’ve suffered a never-ending wait for a restaurant table or stood in a snaking line at your local grocery store lately, you are probably wondering the same thing. Those in the logistics industry have been hearing about labor shortages for years now, but the war for talent intensifies as we prepare for the peak holiday shopping season this year.
According to the results of a survey by GlobalTranz Enterprises, LLC, a leading technology-enabled third-party logistics solutions provider, 9 in 10 US supply chain leaders indicate they need to increase hiring to meet customer demand.
The nation’s largest retailers all have big hiring goals. So how do most organizations plan to achieve their hiring goals?
AMAZON. Since the pandemic began, Amazon says it has hired 450,000 workers nationwide. In mid-September, the conglomerate announced plans to hire an additional 125,000 more workers to address peak shopping needs in the coming months.
WALMART. In early September, Walmart announced it would be hiring 20,000 new workers to keep up with increased shopping demand during the holiday season.
UPS. On September 9th, UPS announced plans to hire more than 100,000 workers to support an “anticipated increase in annual package volume” for the 2021 holiday season. While some experts expect labor shortages will recede a bit this Fall, many warn they could continue to play out over the next two to three years.
So how do most organizations plan to achieve their hiring goals? With money and benefits, that’s how!
It’s all about the money.
Nearly half (47%) of those who responded to the GlobalTranz survey said they would be paying higher salaries or wages to attract new talent and retain current employees before the end of the 2021 calendar year. Amazon, Walmart, and UPS, all announced starting salaries for new hires well above what might be considered the average starting wage rate.
AMAZON. Plans to pay employees $18/hr.
WALMART. Intends to pay their employees’ wages starting at $20/hr.
UPS. Will offer $21/hr. pay to nightside workers and $20/hr. for dayside workers.
It’s all about the benefits.
Free iPhones for all new hires, gas, hotel, and restaurant gift cards, and flexible hours — these are just some of the creative incentives that businesses are using to draw new employees into the fold and keep them there. Offering added benefits to employees has become imperative, and employers are becoming more and more creative with how they sweeten the pot.
AMAZON. Depending on the location, Amazon is offering a $2,000 sign-on bonus to entice new applicants.
WALMART. Offers weekly bonuses to retain warehouse workers and pays 100% of college tuition and books for associates through its Live Better U education program.
UPS. Will be paying full tuition for employees enrolled at the University of Louisville and Jefferson Community and Technical College.
What increased wages and benefits mean to you.
The impact of increased benefits and wages is having a domino effect in the industry. We are all having to prioritize spending more to stay in the hiring game. But paying employees more means it’s more important than ever before to ensure that we are getting a reasonable level of performance from our hourly team.
The key to achieving higher performance levels and retaining your employees while paying higher and higher wages is creating a culture that makes you an “Employer of Choice.” Critical components of creating a culture that results in the right level of performance and assures that your employees won’t be lured away.
TZA’s top tips for navigating labor shortages as you prep your DC for the peak season.
#1 Creating fair expectations and proactively coaching your team
To instill a sense of purpose in your employees, you need to establish and implement well-defined goals. Given higher pay levels, employees will diligently work to attain their goals if they are fair and attainable.
The use of dynamic engineered labor standards established using sound engineering techniques that consider variable work content, environmental conditions, and human fatigue factors, supported by Labor Management software, assures that your goals are fair and achievable.
Labor Management Software
The use of labor management software, which includes a host of real-time floor management tools such as labor planning, learning curve management, coaching, and more, is the best way to assure your managers are proactively managing their teams to the expected performance levels.
Having defined standard operating procedures and clear expectations in place is not only a sure way to achieve expected performance levels but a great way to create a safe and enjoyable working environment for your associates. Adhering to protocols required by law such as –
- Proper training, support, and leadership
- Timely and accurate payment and wages
- Safe and healthy working environments
- Full disclosure and explanation of the job responsibilities
- Company policies and procedures
- Regular feedback on performance from supervisors or managers.
These management practices go a long way in positioning you as a preferred employer.
And of course, employees should have access to everything they need to perform their tasks effectively, such as consistent and clear communication both individually and across the team. Credit and acknowledgment for work completed. Periodic check-ins to ensure all are on the same page.
#2 Offer incentive-based pay with clear expectations
For those unfamiliar with the term, incentive-based pay can be either a financial or non-monetary reward offered to employees based on performance, not the total number of hours worked.
It is helpful as a motivational tool to boost morale and ensure employees perform at their best. Companies can offer employee rewards individually or as part of a facility-wide performance metric, typically awarded monthly, quarterly, or at the end of the year.
Recognize high performing individuals and groups.
Additionally, to further create the culture necessary for high performance and retention, it is essential to recognize high-performing individuals and groups, increase your engagement programs, and offer smaller rewards in an impromptu manner from time to time.
A Labor Management Program, such as TZAs ProTrack LMS, gives managers access to the performance metrics needed to support a successful self-funded pay-performance program. Additionally, ProTrack provides all the tools assisting managers in proactively managing performance levels and increasing management/employee engagement.
With a well-designed Labor Management Program, you can ensure that the extra dollars are paid to employees while keeping them happy and working for you rather than the competition.
What can you do to ensure labor shortages don’t derail your peak season?
If you don’t currently utilize a Labor Management Program, you will face an uphill battle to Recruit, Retain and Reward the supply chain talent you need to survive and thrive.
If you have a Labor Management Program in place today, now is the time to fine-tune it to be sure you are using it to recruit and retain talent by offering the defined goals, incentives, and recognition sought by today’s workforce.
TZA is about empowering our customers with labor management software and services to optimize performance and retention. Our ProTrack Labor Management System gives managers the tools they need to communicate, coach more effectively, and counsel their associates, precisely what you need to navigate today’s labor shortages.
If you’ve read this post till this point, our bet is you’re wondering, if “I am not Amazon, Walmart, or UPS, what can I do to stay competitive today?”
I think the approach might be to say YES. These companies are paying high wages but also expecting their employees to be highly productive.
With these companies forcing wages up across the entire supply chain, everyone paying higher wages to stay in the hiring game, we must ensure that we are getting a reasonable level of performance from our hourly team. That is why having fair expectations and managing that with labor management software is critical to every organization’s survival/bottom line. (We can offset higher wages with better performance).
A combination of several different initiatives can go a long way in helping you hire, retain, and nurture your employees.