The Logistics Service Provider Industry is Notorious for High Employee Turnover: Does that Really Matter?

The Logistics Services Provider (LSP) is notorious for its high employee turnover. Does this matter? Transplace – a provider of managed transportation, intermodal and truck brokerage services, as well as SaaS transportation management software – believes that it does.

In analyst briefings what ARC typically hears company’s boast about certain success stories, technology and service roadmaps, and other areas of company differentiation. In briefing us, Transplace covered those topics, but what struck me about their presentation is how much of the discussion focused on their mission in general, and their efforts as a company to respect and develop their employees in particular. I have occasionally heard suppliers talk about mission, I have rarely heard employee satisfaction discussed, and I have never heard employee satisfaction discussed in such detail.

But Transplace believes that employee satisfaction and engagement is critical to customer satisfaction and retention. Savvy prospects realize this too; consequently, not infrequently Transplace brings in Adrianne Court, their Chief Human Resources Officer, to share Transplace’s approach to talent engagement and development and how this directly results in achieving success with its customers – a clear competitive differentiation.

All of this is praiseworthy, I said, but what proof is there that these efforts are paying off? At that point in the briefing the Transplace executives offered to arrange a conversation with Ms. Court; an opportunity I was glad to accept.

I’m going to share Transplace’s mission and values to make it easier to put in context the logic behind Transplace’s human resources processes and how those processes contributed to measurable success.

Employee Turnover

Transplace Employee Retention Statistics: Average employee tenure, 5.4 years; 9 + years average manager tenure; 4 + years average manager tenure serving current customers.

Ms. Court began by saying if a company wants to truly live and express its core values, it has to be continuously reinforced, and it must to be reinforced by the organization’s leaders. For Transplace, the organization has articulated the fundamentals of what is expected of their leaders in the form of four leadership pillars (Lead by Example, Communicate Effectively, Build a Great Team and Deliver Results).  “Leaders” are defined as any person who has management or leadership responsibility for one or more Transplace employees.

Employee Turnover

Once leaders understand what is expected of them, the leaders are measured on how they perform in accord with the leadership principles and core values. So, for example, leaders are expected to perform 95 percent of all performance reviews on time and to support the annual goal of each and every employee to achieve 24 hours of professional development annually. To further validate, employees provide confidential feedback in an employee satisfaction survey. And, another phenomenal statistic is that 95% of the employees participate voluntarily in the survey. According to Ms. Court participating above 80% is consider world class. Leaders are expected to achieve an average of 5 or above on a 6 point scale among those they manage. The leaders are ranked worst to best in this category and the CEO reviews this report in detail.

As one indication these processes work, the company has reduced attrition to the mid-teens for new hires. In the logistics industry, in warehousing and trucking, 100 percent turnover is not uncommon. Ms. Court is the first to admit that benchmarking against other 3PLs does not make sense for Transplace because their employees work in an office environment. Because of this, Transplace benchmarks itself against call center environments, where turnovers ranging between 25 to 75 percent are not uncommon. Other indications of success include: close to 50 percent of their new hires are women, most 3PLs don’t achieve better than 15 percent here; and, another praiseworthy statistic, greater than 40 percent of new hires are based on referrals from other employees. And this high referral rate is achieved despite not paying existing employees any bonus for their referrals, which makes it a better indication for how employees truly feel about working at Transplace.

But it is also important that employee satisfaction correlates the company’s mission. In the employee satisfaction survey, employees are asked to rate 25 statements on a 1 to 6 point scale. The two statements that receive the highest scores are “actions at work are consistent with the core values” and “my manager treats me with dignity and respect.” Ms. Court believes the high scores achieved in these areas goes a long way toward explaining their success in hiring and retention.

The ability to score highly on the statement that “actions at work are consistent with core values” is also supported by an internal engagement survey. This survey looks at internal processes, for example IT processes, and asks how that area of the company is doing in reflecting the mission and values of the company.

But how does Transplace know that treating employees with respect is correlated with success? Transplace also does a customer satisfaction survey, again on a six point scale. And again, in this area, the company’s target is to achieve a very respectable 5 or greater out of 6, something they have achieved in recent years.

As a provider of transportation services, it is also important to keep their carriers happy. Again, on a 6 point score, carrier satisfaction is greater than 5.

When customers are surveyed, the two places where Transplace gets their highest scores are “Transplace is easy to do business with” and the “staff is professional and knowledgeable.” A high score on the first statement is linked to employee satisfaction, a high score on the second to employee retention.

A final indicator that respecting employees pays off is that Transplace’s customers have asked for help in duplicating some of their employee programs. USG has duplicated their new graduate development program, and other customers have copied what Transplace is doing in the selection and recruitment of talent. And, finally, Transplace has garnered national recognition for their investment in leadership. They have been listed four years consecutively for being among the top private companies for exceling in leadership development.

Ms. Court made the point that they have gotten these results without spending a lot of money. The core focus is embedding this way of thinking and acting into the culture of the company, and that is dependent on passion, commitment and process much more than money.

Perhaps the final word should be offered by a Transplace employee. One of their employees wrote, “I have never worked with a company that promoted ‘Respect the Individual’ as a core value. I believe it does make a difference in how we treat each other and our customers . . .”

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