Help Wanted in Warehouses: Here’s How to Hire and Keep Warehouse Workers

Published on June 26, 2021

Most analysts predict online sales to grow—exasperating an already severe shortage of warehouses and warehouse workers. One thing confirmed during the pandemic: we love having stuff delivered to our homes. Why go to the store when the store comes to you? According to the U.S. Census Bureau, ecommerce sales totaled $1.581 billion during the first quarter of 2021, up 39.1% from the year before. According to Zebra’s Warehousing Vision Study, 60% of surveyed warehouse operators report labor recruitment and productivity are among their top challenges.

Cause and Effect

Some employers say enhanced unemployment benefits are contributing to the shortage of workers. Many workers have made the economic choice to stay home. Why risk your health for low wages when you can collect more on unemployment? Current unemployment benefits have given low-wage workers the liberty to leave less-than-satisfactory work environments and conditions.

Diane Swonk, the chief economist at Grant Thornton, told Mercury News she thinks part of the problem is the huge number of older workers who retired. “Retirements, which accelerated during the pandemic, are the primary challenge. Employers will need to cast their nets more widely and abandon ageism to bring back older workers who left the labor market during the pandemic.”

Analysts told USA Today that many people are not returning to work because of health concerns and worries about providing child or elder care. The Washington Post reports more people want to do something different with their lives after the pandemic.

The issue may soon be resolved as higher jobless benefits are eliminated in some states and will expire in September in the rest of the nation.

My company, Visible Supply Chain Management, recently released a technical paper called Labor Pains: What’s Causing the Warehousing Labor Shortage and What’s Being Done to Combat It. The 13-page report offers important lessons for those experiencing the challenges associated with growing shipping demands. The following are some of the highlights that warehouse operators should consider in the current situation.

Pay Is Not the Only Solution

Increasing wages is often the first way companies try to attract employees. However, Amazon controls about 51% of the ecommerce market—nearly 10 times the online control of its closest rival. Consequently, companies have to increase salaries even more to compete against Amazon for employees. It is now expected to cost at least $19 per hour to get workers interested. Some businesses are offering signing bonuses, flexible hours, better health benefits and employee discounts to entice new employees. But money alone may not be enough. Many companies have increased wages and still are experiencing hiring difficulties.

For instance, Forever Flowers in Ogden, Utah, increased wages by 30% and increased overtime for employees. However,  the company only gets about five job applications a week when it used to get 75 to 100. After increasing wages and benefits, we discovered a free lunch or breakfast was a huge factor in attracting and retaining workers. Warehouse operators will need to be innovative while finding ways to entice dependable people to join their workforce.

Attention to Retention

Finding employees is hard; keeping them is harder—and costly. The turnover rate for warehouse workers is about 33%. Multichannel Merchants estimates it costs between $3,000-$10,000 per employee in turnover expenses. Warehouse operators can take several steps to retain employees, like providing quality training, offering open communication, and rewarding top performers.

Some warehouses are using “gamification” to engage, incentivize and reward workers. For example, an employee could win cash or prizes for having the best speed or accuracy while handling repetitive tasks. For example, 3PL Kenco Logistics improved productivity by setting up a fantasy-football-like leaderboard that tracks call volumes and deals. Winning teams are rewarded with prizes like a pizza party.

Investments in Automation

During a roundtable discussion hosted by Visible, Jeremy Bodenhamer, author of “Adapt or Die,” offered this conclusion about the labor shortage: “There just aren’t enough bodies that are capable of doing the work and meeting the demand.”

Machines are needed to make up for the lack of human-power. More warehouse leaders are investing in physical automation—yes, we’re talking about robots and other technology. According to MHI’s 2021 Annual Industrial Report, 39 percent of surveyed supply chain companies said investing in technology is one of their top three focuses over the next decade.

The machines are reducing safety risks and ending some physically demanding, tedious and time-consuming tasks. Automation not only improves the retention of older employees, but it is also attracting younger tech-centered employees.

SupplyChainBrain notes how warehouse automation “makes the work environment more enjoyable and offers opportunities for prospective employees to gain highly marketable tech-oriented skills that contribute to their overall professional development.” The same publication’s webinar concluded automation will produce happy employees, executives and customers.

Process automation can also help you get more done with less. This step can include digitizing manual processes like collecting inventory data and using barcodes incorporated in a central depository.

Avetta, a supply chain risk management tool provider, states warehouse optimization software is “unquestionably one of the most pertinent pieces of the puzzle.” The company says handwritten spreadsheets won’t cut it anymore and automated, customized systems are needed to get a complete view of your warehouse operation.

Focus on the Future for Warehouse Workers

When workers re-enter the job market after the enhanced unemployment programs subside in the fall, the increased wages and benefits instituted by warehouses during the pandemic could give the industry the hiring advantage against the restaurant and hospitality industry—  known for low wages and limited benefits.

U.S Treasury Secretary Janet Yellen said starting the economy again is going to be a “bumpy ride.” We are facing challenges that will require us be creative and flexible to attract and keep employees. While the customer experience is always a top priority, warehouses must also improve the worker experience. Now is the time to adapt what you are offering warehouse workers or risk your company’s demise.

Casey Adams is a contributor to Grit Daily News and the President at Visible Supply Chain Management, the industry leader in shipping and fulfillment services for supply chain management. During this role, he has escalated Visible’s growth trajectory— increasing market value by 400%—all without tapping the well of private equity and with minimal bank funding. Casey began work at Pro Star (now Visible Supply Chain Management) as inside council in 2011 and became President in 2013. Casey has enjoyed helping clients and watching the business grow by keeping his perspective fresh and strategies unique. Casey appreciates the importance of teamwork, and firmly believes that working collectively has a more substantial impact than going it alone. Adams received his Bachelor of Science in economics from Brigham Young University and later his law degree from the University of Utah. Adams has been featured in articles by Forbes, American, Utah Business Magazine, and Fox 13 News in Salt Lake City, Utah.

Read more

More GD News