Article

Is There a Warehouse Employee Engagement Crisis Coming?

By Manhattan Staff,
Is There a Warehouse Employee Engagement Crisis Coming

Manhattan Associates surveyed distribution center (DC) leaders about employee engagement and found slightly half of them said their employees are “engaged” with their work. That leaves roughly an equal number of employees leaning toward an unengaged mindset.


Article Highlights

  • This article examines employee engagement challenges, the impact of unengaged employees and what DC leaders can do to get ahead of the trends.
     
  • Good employee engagement requires a mix of human and smart technologies working better together

Contrast this with the rate of engagement for the workforce at large, which is what Gallup examined recently. In its poll, Gallup found that 70 percent of all workers are unengaged.1 A significant percentage, this statistic shows that DCs aren’t alone in struggling with employee engagement.

No matter what the level of engagement, the indirect effects of unengaged employees—such as turnover and lower productivity—can hit DCs especially hard.

The good news?

Engagement can be increased by taking some concrete steps. In Manhattan’s study, DC leaders identified key engagement drivers that emphasize the importance of employee-supervisor relationships.

Warehouse Employee Engagement Drivers

The difficulties of managing distribution centers

DCs pose engagement challenges due to the need for employees to quickly adapt their skillsets. Greater work complexity, more automation, and a need for increased productivity all make training and retaining employees a challenge.

Turnover. In our survey, only 11 percent of DC leaders have seen turnover decrease. That’s not good when approximately 40 percent of employees turn over annually in the transportation, warehousing and utilities sector.2

Warehouse Turnover Compared to Other Industries 2

And warehousing turnover is expensive. A separation costs between 25 percent and 150 percent of an employee’s salary at a DC and adds up to about $7,000–$40,000 per separated employee.3, 4

Complex rapidly changing work. With so many crucial touchpoints driven by complex equipment, technology and processes, it’s essential that workers learn the skills to handle such complexity and effectively fulfill orders. That kind of training takes a lot of time and money—and it’s wasted time and money if an employee leaves.

Seasonal fluctuations. Seasonal peaks exacerbate these problems. DCs rapidly staff up in large numbers only to staff down abruptly after a temporary demand ends.

For example, in the 2016 holiday season, Target planned to hire 7,500 people in its DCs and Amazon planned to hire 120,000 people.14 Other retailers followed suit.

That’s a massive short-term growth in employees. With such a burst of new employees, DC managers must coach and fix problems that pull them away from regular employees. According to our study, 45 percent of DC supervisors say that managing exceptions takes up most of their time followed by 33 percent who say they spend the most time monitoring work. Already admitting that it’s difficult to spend time interacting with employees, these seasonal surges potentially create less engagement.

The Impact of unengaged employees. Put simply, companies with unengaged employees are less profitable than companies with engaged employees. Companies with engaged employees experience a 22 percent increase in profitability5 and 6 percent higher net profit margins.6 At the same time, engaged employees also affect other bottom-line costs when they show more attentiveness and caution on the job.

Benefits of Engaged Warehouse Employees

What can warehouse managers do to create an engaged workforce?

Engagement tactics such as incentives, bonuses, and perks serve as valid and even fun ways to generate engagement.

When people feel valued, heard and informed, they often work harder. Strong relationships between managers and employees increase morale even in situations when a company lacks perks or incentives. With higher engagement created through strong employee relationships, DC leaders can make operations nimbler and roll out new processes faster.

DC leaders pointed out two key engagement drivers based on relationships.

  • Recognize hard work. In the DC today, 64 percent of supervisors say recognition for high performers is the biggest driver of employee engagement and beats out every other engagement driver.8 Another survey covering all employers shows that 69 percent of employees said they work harder when recognized for hard work.11
     
  • Spend time interacting with employees. Supervisor-to-employee interaction—that intangible yet important human contact—forges one of the most crucial ingredients for employee engagement. Yet, only 18 percent of DC supervisors spend most of their time observing and interacting with employees.8

As mentioned earlier, most of a DC supervisor’s time gets eaten up with unengaging activities such as managing exceptions (45 percent) and monitoring work (32 percent). But when warehouse supervisors do interact with employees, top topics discussed are “performance” and “recognition for work,” followed by “process updates” and “attendance.

Top Topics for DC Manager and Employee Interactions

In other words, warehouse supervisors not only provide basic feedback but they also talk about the things that matter most to employees—and this interaction increases engagement. A general employment study also shows that 43 percent of highly engaged employees receive weekly feedback—implying that a lack of regular interaction can significantly lower employee engagement.9

Tools and tactics to increase employee engagement

DC leaders revealed several effective ways to implement an employee engagement strategy while leveraging technology to make their efforts more efficient and appealing.

  • “Mobilize” supervisors and managers
    Sixty percent of DC leaders told us that the top benefit of mobile is engagement10 and 81 percent said they had plans to add mobile to their warehouses.10 Yet, only 23 percent said they currently use mobile devices in their warehouse operations.8 Equipped with a mobile device and spending time on the floor, DC managers and supervisors can give immediate and more helpful feedback to employees in real time.
     
  • Provide continual feedback
    While 60 percent of employees—including 72 percent under the age of 30—want daily or weekly feedback,13 only 27 percent of employees feel they receive effective feedback.12 Most employees become more engaged when they receive ongoing assessments of their work.

DC Employees Crave Feedback

 

  • Measure engagement efforts
    You cannot improve what you cannot measure. While 54 percent of DC leaders use employee surveys and 57 percent use supervisor interactions to measure engagement, 20 percent do not measure engagement at all. Yet, 69 percent of DC supervisors do believe it’s important for employees to regularly access metrics that help them stay engaged.

The more employees dedicate themselves to their work and—ideally—to the company’s vision, the more they are considered engaged. Engaged workers:

  • Perform to the best of their abilities
  • Understand and believe in the company’s goals
  • Go above and beyond their expected work duties

__

Sources

1 Gallup State of the American Workplace
2 Bureau of Labor Statistics
3 Kain Is Able
4 Salary.com
5 Gallup State of the Global Workplace
6 Towers Perrin
7 National Safety Council
8 Manhattan Associates 2016 Labor and Warehouse Management Employment Engagement Study
9 Towers Watson
10 Manhattan Associates OUT/IN/UNbound: A Study on Mobility and the Modern Distribution Manager
11 Socialcast
12 Gallup “Amid Rapid-Fire Workplace Change, Pulse Surveys Emerge”
13 PwC
14 The Motley Fool
15 Target