Attention Logistics Companies: Temporary Labor Is NOT the Answer

temporary laborEach year, as the holidays approach, logistics companies are in preparation for the anticipated peak season demand surges. Traditionally, to alleviate the pressure during peak periods, these companies have turned to temporary labor to increase outputs. In fact, holiday hiring hit a multiyear high in 2018, and is expected to continue to rise this year as companies like UPS, Target and Macy’s have announced plans to hire up to 130,000 seasonal workers. However, this year, as unemployment is at the lowest it has been in years, temporary labor is no longer a realistic solution and companies cannot rely on the interim hiring boosts to be successful during the peak season.

The market has shifted in recent years. While labor was once a commodity, it is now a scarce resource, and as a result, companies must change how they attract, retain and manage talent.  There are fewer workers available than ever before, and those who are available have their pick of jobs, making it extremely competitive and expensive to attract and retain seasonal talent. In fact, this year employers are expected to increase hourly wages offered to temporary employees by eight percent during the holiday season and Target has announced that it plans to spend $50 million on support for the peak season.  Resources were scarce before the holidays and the situation is only being exacerbated as companies become more pressed for labor.

Reimagining Employee Engagement

The key to overcoming demand challenges is reimagining how existing employees are managed. With record low unemployment and fewer workers available to supplement current employees, companies must ensure their workforce is as efficient and productive as possible. This has forced them to take a more thoughtful approach to managing labor. Rather than just eliminating under-preforming employees, logistics companies must focus on improving productivity in existing employees. Naturally, if employees are not performing at peak potential, the company will not be able to execute to the best of its ability, especially during the busy peak season. This can be remedied by improving job satisfaction, engaging employees through practices such as incentive rewards programs and gamification, and utilizing advanced labor management systems.

It is no surprise that a key component to talent retention is job satisfaction. A study conducted by Gallup found that over half of all employees are unengaged at work, and another study found that 81 percent of employees would consider leaving their jobs today, and even accept a pay cut, if it meant they could do a job they liked better. With this in mind, flexible hours have become a primary factor in job satisfaction. A global survey of nearly 10,000 workers found that a flexible work schedule is more important to employees than any other benefit.

This trend of flexible schedules is becoming a popular way for logistics companies to attract and retain talent. As hours become less traditional, more employees are attracted to flexible jobs that can fit in with their lives, whether they are working multiple jobs or managing personal responsibilities. Particularly with seasonal workers, a recent study found those who are looking to pick up an extra job around the holidays prioritize a flexible schedule over getting the highest pay rate. Providing flexible hours can help companies attract and retain talent and also help them compete against the big-box giants who have the capital to pay the premium for seasonal workers.

Clearly the stakes are high, and in a labor market like today’s, workers truly have the power. Therefore, employers must ensure they’re building a supportive and engaging work environment that fosters productivity. This can be done through encouragement and recognition. When employees feel recognized, they are motivated to work harder and are inspired to go beyond standards and benchmarks to contribute to their company’s success. This recognition can come in the form of leader boards, monetary compensation or even something as small as a being able to pick the music in the warehouse for the week. Regardless of what the reward is, giving workers a sense of accomplishment through recognition programs empowers them to increase their performance and maximizes their productivity.

Engage Employees with Gamifications

As the labor force becomes younger, a new and popular way to engage employees is gamification. Similar to games or fitness apps used daily on personal smartphones and devices, these gamification programs are easily downloadable on interfaces familiar to the user and use positive reinforcement to motivate employees. As employees perform better in their roles, they receive affirmation for their achievements.

In addition to encouragement through rewards and gamification programs, temporary labor management systems have become an increasingly valuable tool for both employees and employers. Employers can use these systems to view employee performance data and implement adjustments immediately. With real-time performance data at their fingertips, a manager can recognize if an employee is underperforming, locate where they are in the facility and immediately begin working with them to improve their performance by offering advice or assigning them to a different task.

Provide Employees the Tools to be Engaged and Productive

Instead of focusing on time-consuming temporary hiring and training that’s likely to not solve a long-term issue, logistics companies are better off revamping their current labor management strategies. Employees are a company’s best asset and should be given the tools to be as engaged and as productive as possible. If organizations can do this, they will be able to achieve success during the busy peak season without spending millions of dollars on temporary hires.

Peter Schnorbach is the senior director of product management for Manhattan Associates. Peter has responsibility for Labor Management and Slotting Optimization. He has been instrumental in pushing labor management to the forefront as a mainstream supply chain solution. Peter has published numerous articles, has been interviewed extensively and has been quoted in publications such as Information Week, Supply Chain Executive, DC Velocity and Modern Material Handling, among others.

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