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 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.

I’d like to make two further points with respect to training. First, many companies reduce their commitment to training during hard financial times. That is a mistake. This strategy saves money but stifles individual growth. Second, many companies use internal “professional” trainers to deliver content. That is another mistake. Such individuals often train across a broad range of topics and are not expert in any of them. This is not a place to go cheap. Either bring experts in, or send the employees to outside programs that will provide the educational experience necessary for them to thrive in the industry.

Turnover at the top. Another factor that may contribute to
the industry’s chronic problem of finding and keeping tal-
ented managers is that many large 3PLs have seen consider-
able turnover at the top of the company. That was clearly
demonstrated in the responses to one of our annual sur-
veys, when we found that the CEOs who participated had
been in their jobs an average of just 3. 5 years at the time the
surveys were conducted. The issue of turnover at the top is
intensifying as the industry continues to consolidate and
grow through acquisitions. Such change introduces a sig-
nificant degree of flux into those organizations, and it often
leads to dramatic changes in company strategies and oper-
ations. That can be disconcerting to managers, who are
often uncertain as to what the change in leadership will
mean for them and for their careers.

Poaching management talent. One final market reality is that there is substantial poaching of management talent within the 3PL industry. In this year’s surveys, the large 3PLs reported that, on average, 45 percent of their new hires come from other 3PLs. In some cases, that figure was closer to two-thirds. Much could be written about the possible reasons for this, but that is beyond the scope of this article.

WHAT ARE 3PLs DOING ABOUT TALENT?

In this year’s surveys, the CEOs were also asked if their companies had instituted a variety of human resource management (HRM) programs aimed at finding and keeping talented managers. Their responses are shown in Exhibit 2.

As indicated, the majority of the companies that participated in the survey have active university recruiting programs, formal training programs for new employees, and mentoring programs. But less than half of them offer job-rotation programs for new employees, and relatively few offer profit-sharing and employee stock-ownership programs.

Among the other related steps taken by some large 3PLs during the past several years were:

▪ Expansion of internal recruiting efforts

▪ Use of outside firms to assist with recruiting

▪ Identification of “fast track” managers who are given expanded training

▪ Introduction of new coaching, training, and mentoring programs

▪ Development of succession programs across regions

▪ Institution of companywide programs emphasizing best practices, “stay” interviews, and regular employee roundtables.

str at e g ic i ns i gh t

P L s

3PL human resource management
programs and initiatives

Programs/initiatives Number of respondents out of total ( 25) reporting that program/initiative

University recruiting program 14 Formal training program for new employees 19 Initial job-rotation program for new employees 12 Formal mentoring program 15 Profit-sharing program 10 Employee stock-ownership program 8