DC Velocity - July 2017

S p ec i a l Re p or t WA R EHOU S E LA BO R ST UDY

full period they could have worked). When asked about their temporary labor “churn,” fewer than 30 percent of respondents reported turnover rates of under 10 percent. Some 37 percent reported turnover of between 10 and 50 percent, and 22. 5 percent reported turnover of between 50 and 100 percent. And that wasn’t even the bottom of the scale: More than 10 percent of respondents reported that turnover among temporary workers exceeded 100 percent per year. (See Exhibit 3.)

The survey also offered some insight into the productivity loss associated with that turnover. When asked how long it took to bring a new employee up to speed, only 28. 5 percent of respondents said they could do it in under a month. Another 43 percent said it took one to two months of training, while 20. 9 percent said it took two to three months. The remainder said the process required more than three months. (See Exhibit 4.)

It’s worth noting that the big DCs have a harder time retaining workers than their smaller counterparts do. Among companies with over 200 employees, only 28 percent of respondents reported employee turnover of less than 10 percent. Among companies with less than 25 employees, by contrast, nearly half of the respondents ( 46 percent) reported a sub-10-percent turnover rate.

That raises the question of what these “stickier” warehouses are doing that leads to better retention. In an attempt to get some answers, the ARC team examined more than 20 factors that could logically be linked to retention. But that proved to be an unrewarding exercise. Of all the attributes studied, just one turned out to have what the researchers termed “strong explanatory value,” or a solid statistical correlation to retention: providing a clean warehouse environment.

The researchers had slightly better luck when they narrowed their focus to temp workers only, finding three factors that correlated with retention. They were: operating a small warehouse (fewer than 25 employees), having a high proportion of full-time employees (more than 90 percent of the total work force), and—counter-intuitively— avoiding employment agencies that specialize in warehousing.

NINE PRACTICES OF TOP PERFORMERS

Although the survey failed to deliver a roadmap to boosting labor retention, the results did provide useful insights into practices that contribute to overall excellence in warehouse operations—in other words, what top-performing operations are doing differently from the rest of the pack.

To identify those practices, the research team homed in
on the top-tier operations—the 16. 5 percent of respon-
dents whose operations performed well across all four
dimensions studied (safety, productivity, customer service,
and people). Specifically, the team looked at 45 factors
that could possibly help explain that high performance.
Of those factors, the researchers found nine practices that
were common to high-performing warehouses. They are
as follows:

b Maintaining a well-lit warehouse
b Maintaining a clean warehouse
b Paying at least 50 percent more than minimum wage
b Offering non-financial remuneration (food, time off,
etc.) for high performance
b Using high-speed conveyors and sortation equipment
b Having managers frequently monitor individuals as
they do their jobs and provide on-the-spot positive rein-
forcement

b Conducting “360-degree” reviews of managers, which include feedback from the manager’s subordinates as well as from his/her peers and supervisor

b Training managers in providing effective feedback
b Monitoring workers at least once a month to make sure
standard operating procedures and best practices are being
followed.

While none of these business strategies had a high statistical correlation with a specific dimension of warehouse performance—such as customer service or safety—they were all standard practice at the top one-sixth of warehouses that demonstrated excellence across the board.

As for the practices themselves, Banker noted that there was one common thread among them: top-quality management.

“Management matters! More than half the practices that
contribute to excellence are related to management tech-
niques,” Banker wrote in the report. “Good management is
something that can be learned,” he added. “Being trained
in giving effective feedback helps. And 360-degree reviews
where managers see what their subordinates say about them
help managers learn what is working and what is not.”
In addition to adopting the nine best practices listed
above, Banker noted that there was one other simple thing
companies could do to up their game: encourage their
managers to be diligent. “Diligence counts,” he wrote. “A
good warehouse manager is not sitting in his office; he is
out on the floor observing and interacting with people.”