Cracking the code for employee retention in logistics

Post By : Karvi Rana
Post Date : July 13, 2022
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Reading Time: 4 minutes

The post-pandemic world has led to structural shifts in the labour market. Demand for labour has outstripped supply, forcing many companies to face attrition and struggling to recruit and retain workers. The transportation and logistics sector have been particularly hard hit with the impact of worker-retention challenges. No wonder, we have seen several logistics companies, in the past few months, putting hiring signs to keep a balance in labour demand and supply. Although hiring new employees is the easy way to handle the shortage, it may not be the most efficient. Therefore, in this feature, we hope to answer a few questions in an attempt to crack the code for employee retention, while also trying to find the link between employee retention and the success of a business.

The logistics industry has been plagued by employee shortage for ages. The industry in the past has been often criticized and perceived as a low-level paying job. As the industry only began to see the dawn and caught the eye of many as a pursuable profession, the pandemic’s unparalleled impact on the industry once again changed the employee values and motivations in entry-level logistics jobs, leading to a shortage of available workers.

Employee shortage in the industry not only impacts local, and regional supply chain but also global supply chains.

For example, under-staffing at a factory will cause production slowdowns, resulting in inventory stock-outs for distributors and retailers. The shortage of available labour directly impacts the ability to move goods between parties.

Throwback

The unprecedented situation posed by the pandemic put employees at risk as front-line workers and increased the workload as demand rose.

“Without a doubt, the pandemic posed enormous challenges to logistics and thus, also to our employees. Global transport chains remain disrupted, which in turn means a considerable additional workload for our staff. Every single shipment now involves a lot more work. As a result, the strain on employees has increased considerably,”

Shubhendu Das, Managing Director India, Hellmann Worldwide Logistics.

Employees and job seekers in the industry now prioritize their feelings – they wish to feel that their career is meaningful and of value to the wider society. How their employer treated the workforce during the pandemic is also now among the new priorities.

In order to crack the code for employee retention in the industry, it’s important to understand the reasons behind the high attrition that is common in today’s date.

Misaligned expectations

The misaligned expectations of employees and employers are one of the biggest causes of attrition in the logistics sector. These misaligned expectations are, in part, due to a lack of understanding of the logistic function in general. The majority of applicants applying for logistics jobs fail to understand the working and what they are expected to do. They aren’t aware of what working in a warehouse or on transport like ships, trains or trucks entails.

Skill gap

One of the most competitive businesses across the globe, the logistics industry in India alone employs 22 million people as reported by the Economic Survey. But, a huge chunk of this workforce is semi-skilled or with minimal education. In such case, when employees are under-trained, they feel underappreciated, unhappy, and undervalued, and this results in them leaving in search of better career progression.

Upskilling and reskilling the logistics workforce seems to be a challenge in operationally intensive sectors. Industry players have still not invested resources sufficiently towards skill development initiatives and neither has the government’s focus been adequate. A finding by McKinsey & Company says that only 7% of companies feel prepared to address the skill gaps expected over the next five years.

Among the barriers to reskilling in logistics is the lack of understanding of the impact that automation and digitization would have on skill requirements (26%), the lack of tools or knowledge to quantify the business case for efforts to reskill the workforce (28%), and the HR infrastructure, which is not prepared for executing a new strategy designed to address skill gaps (30%) anticipated after automation and digitization.

Lack of advancement opportunities

The opportunity to learn and develop is prioritized by all applicants from entry level to C-suite  over any other aspect of the job. Employees are seeking satisfaction and individual development.

A study by CareerBuilder measuring worker satisfaction in the logistics industry found that 45% of workers were more likely to quit their current roles if they aren’t happy with the advancement opportunities in the company. 39% said they’d leave if they felt underemployed.

Corporate culture

Apart from income, the company culture also plays a large part in employee attrition. Everyone wants a workplace that makes them feel satisfied and happy, especially as we spend 30% of our lives working. Hiring employees that don’t fit into as particular culture negatively impacts morale and reduces team productivity.

A flexible working environment where employees have a good work-life balance, even in entry-level roles remains an important aspect to avoid employee attrition. While there is no gold-plated solution for the perfect scheduling, having no flexibility in the schedule can force employees to quit.

“In logistics, especially in the last mile, we need to adopt new approach and methods. In the future, we need to pay more attention to proper utilization of resources, to work  on retention of our employees, to provide them more than just the monetary value of their earnings and to build with them for the long term, a mutually beneficial relationship.”

Eugene Panfilov, General Manager (India)  at BORZO

This is an abridged version of the original interview that was published in the July edition of the Logistics Insider magazine. To read the complete article, get your copy of the magazine.

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