DC Velocity - IdeaBook 2014

companies are willing to offer, and that can cause chronic hiring and retention problems for such companies.

OTHER CONCERNS WORRY EMPLOYEES

In addition to the findings about the job dimensions just mentioned, our research and conversations with executives and others in the third-party logistics industry have brought a number of other human resources concerns to light. They include:

Job security. Naturally, job security is an important issue to any employee, and it certainly comes into play in the 3PL industry. Many large 3PLs have worked very hard to build their management base, but in some instances those efforts have been undermined by the reces-sionary pressures of the past decade. Those pressures have often led to large-scale management layoffs that have hit relatively new hires the hardest.

While such cost-cutting efforts have reduced short-term losses, they can also be devastating in the long term. Laid-off employees are often bitter, and those who remain are looking over their shoulders for the next wave of layoffs. In addition, companies incur the costs of severing employees, recruiting new employees when business rebounds, and hiring and training those employees, while also incurring the hard-to-es-timate costs of lower employee morale. These costs are substantial, and they must be weighed against the costs of minimizing layoffs during downturns. Obviously, this is a complicated issue that for public companies involves many players, including board members and the financial community. But the existing pattern of work force expansion, contraction, and expansion raises real questions in the minds of many potential managers about the stability of the industry.

Management style. Newer employees of large

3PLs often encounter management styles that are rather “old school” in nature. Communication is often seen as one-directional, and this leads employees to feel they have no effective way to communicate their ideas upward within the organization.

Continued globalization of the industry. Most large 3PLs now have global operations that have typically been created through acquisitions. In many cases, the integration of those foreign business entities into the acquiring company has been quite difficult because of differences in corporate culture, management styles, information systems, and methods of communication. This is often very stressful for all parties involved.

Meanwhile, many of these companies have found that the depth of available management talent is quite limited, particularly in emerging economies. This can make it difficult for them to provide the level of service desired by their key clients, which again puts added stress on the rest of the management team.

Training. Any company should not only prepare its new employees for their initial jobs within the organization, but it should also help them develop their skills over time. In the 3PL industry that support should not be limited to providing initial training about such areas as the company and its place in the industry, individual job responsibilities, and an understanding of new hires’ future roles within the company. Third-party logistics companies should also provide new employees with detailed information about the industry they are about to enter. In addition, 3PLs need to make a commitment to ongoing training that will help employees develop the ever-expanding skill set required to meet both the current and the future needs of the company.